Blog: Leonie BarrieMartin+Osa on the way out

Leonie Barrie | 15 March 2010

In a move that was not entirely unexpected, US teen apparel retailer American Eagle Outfitters has finally decided to pull the plug on its loss-making Martin+Osa business after it failed to justify further investment. The closure affects all 28 Martin+Osa stores and its online business, and comes after the concept generated a loss of US$44m in fiscal 2009.

American Eagle said it would focus its efforts and resources on its remaining brands, including AE, Aerie and 77kids. The decision was announced as the retailer revealed higher sales and lower markdowns had combined to end the fourth quarter on a high, with profit soaring 81.3% to $59.3m.

Foot Locker, meanwhile, is poised to enter a new era of expansion, vowing to lift annual sales by 25% to US$6bn over the next five years. Outlining its "strategic vision" to investors in New York last week, the retailer said longer term increases will come from a more diverse customer base, expansion and potential acquisitions. Growth in apparel and in new markets such as central and south America and Asia are all key to its vision.

For retail giants Wal-Mart and Marks and Spencer (M&S), however, greener business practices are the focus for bottom line growth and better efficiencies. But while the garment industry's global supply network gives it a key role to play in leading the push towards sustainability and eco-friendly production, there are also calls for the sector to work together if it is to avoid the errors of compliance.

Auditing and compliance also raised its head last week in Bangladesh, after workers' unions and international labour-rights organisations called for an overhaul of safety regulations after a fire killed 21 people at a garment factory last month. The labour rights groups also hit out at Wal-Mart and Marks Workwear House - even though the two companies no longer sourced from the factory. This now raises the question of how accountable retailers should be for the parts of the supply chain they don't control?

Retaliatory measures are top of the agenda for Brazil, which is set to impose a 100% tariff on imports of US cotton in a series of moves against US cotton subsidies. The action, which also includes the imposition of tariffs against other US products, has the backing of the World Trade Organisation (WTO), which ruled last year that the US had spent too much on cotton subsidies and export credit guarantees. The measures will come into effect within 30 days unless the two countries can agree a compromise.


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