Bankruptcy filings and inventory mis-management weighed on some apparel retailers in 2015

Bankruptcy filings and inventory mis-management weighed on some apparel retailers in 2015

Online apparel sales, the right product mix at the right price points and a successful stance against counterfeiters helped lift some retailers during 2015, but bankruptcy filings and inventory mis-management weighed on others.



With speculation that will soon manufacture its own private label apparel, analysts at US-based financial services firm Cowen and Company predicted in July that the global e-commerce giant will become the largest US apparel retailer by 2017 in gross merchandise terms. Cowen estimated its US apparel business will grow from US$16.34bn in 2015 to US$52bn in 2020. Amazon's apparel sales are proving a disruptive force, with suggestions the online retailer has contributed to the 2.2% drop in US apparel prices in the six months to October 2015, according to US Bureau of Labor statistics.


Meanwhile, Irish value clothing retailer Primark showed once again how to hit the sweet spot with UK consumers by offering the right product mix at the right price points, with sales forecast to grow 13% year-on-year in the current financial year. The retailer now holds a 14.3% share of Britain's clothing and accessories market and is the country's third largest clothing retailer by value with a 5.1% stake. The group opened its first store in Boston in September with plans for another 10 stores in the northeast of the US by the end of 2016.

L Brands

Speciality retail and captivating store experiences kept customers coming back for more in 2015, according to US-based retailer L Brands Inc. The company – owner of lingerie brands Victoria's Secret and La Senza – lifted its full-year outlook after posting a 25% increase year-on-year in third quarter earnings per shares. Net income reached US$164m for the three months to 31 October, compared to US$131.8m in the same period last year. Sales rose 7% to US$2.48bn from US$2.32bn last year and comparable store sales were also up 7%.

Karen Millen

Another strong performer, Karen Millen Ltd, has scored a win against counterfeiters with a multi-pronged campaign to remove fake products from online marketplaces. The UK-based retailer worked with online marketplaces eBay, Amazon, Taobao and Alibaba to successfully stop the sale of more than US$3.95m worth of fake garments, according to the company, following a three-year campaign launched in 2012. The campaign not only targeted factories producing fakes and retailers, but also encouraged customers to send in tip-offs about fakes, with online sales entries for 23,000 counterfeit products shut down, the company claimed.

House of Fraser

Finally, UK department store group House of Fraser, acquired by the Shanghai-listed Nanjing Xinjiekou Department Store Co Ltd in 2014, seems set to follow its record sales of last year with another bumper year. In the half-year to 1 August, like-for-like year-on-year sales grew 6.5%, while ecommerce sales were up an impressive 30.8%, to account for a 17.5% share of total sales, according to the company. Total gross transaction value increased to GBP574.2m (US$872m). The retailer continued its international expansion programme this year, opening a second international franchise in the United Arab Emirates' Abu Dhabi in June, with plans to open its first Chinese store in 2016.



Struggling to keep its US head above water this year, Huntington Beach, US-based surf wear company Quiksilver Inc filed for chapter 11 bankruptcy for its US subsidiaries in September, with plans to close 27 of its American stores. In June, Quiksilver reported a net loss that had narrowed to US$37.6m from US$53.1m last year, while sales dropped 16.1% to US$333.05m, and gross margin fell to 47.1% from 48.9%. European and Asia-Pacific operations remain strong, according to the company, and were not part of the filing. The company's final financing package was approved in October.

American Apparel

American Apparel was another branded retailer to hit the deck this year, filing for bankruptcy in October. The company estimated a drop of 19% in sales for the three months to the end of September, to US$126.1m. Paula Schneider took up the role of chief executive officer in January, around nine months after the ousting of controversial company founder and former chief executive Dov Charney, who has been engaged in a crossfire of lawsuits with the company ever since. 

Target Corporation

American discount retailer Target Corporation closed its final three Canadian stores in April after the announcement in January that it would cease operations in the country. Analysts slammed Target's ill-fated foray into the Canadian market, pointing to store location and inventory mis-management as some of the retailer's biggest mistakes. Poor sales could not sustain the operational costs of its 133 Canadian stores, and the closures have left an estimated 17,600 Canadians out of a job.

Abercrombie & Fitch

Despite valiant efforts to turn around profit margins, upscale US teen apparel retailer Abercrombie & Fitch has struggled to improve its performance. Net losses widened to US$63.2m in the three months ending 2 May, from US$23.7m a year earlier, while sales dropped 13.7% to US$709.4m from US$822.4m. The retailer was praised for taking steps in the right direction to improve performance and core design and production processes, and make quicker decisions to speed up its supply chain, but that "significant room remains for improvement".

Gap Inc

US-based retail giant Gap Inc has similarly struggled to turn its mixed fortunes around, and the company lowered its full year outlook on the back of sliding net profits in the third quarter. Net income amounted to US$248m for the 13 weeks to 31 October, compared to US$351m in the same period last year, according to the company. Efforts to improve on-trend appeal failed to impress and sales fell – with a notable 12% decline at Banana Republic – although the Old Navy brand posted 4% growth and online sales also increased slightly. The unexpected departure of Old Navy president Stefan Larsson to become CEO of Ralph Lauren also prompted analysts to ask whether the retailer would be able to maintain efforts to turnaround its business.

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