Blog: Leonie BarrieVF Corp splitting into two companies

Leonie Barrie | 20 August 2018

Last week started with news that US apparel giant VF Corp is to spin off the group's denim and outlet businesses into an independent, publicly traded company – in a move that will enable it to focus on more profitable brands such as The North Face, Timberland and Vans.

In contrast, its jeans business has underperformed, with revenue falling 3% to $2.66bn in its last financial year, compared to an 8% rise to $8.2bn in the outdoor and action sports segment.

Price negotiation is a critical, and often stressful, aspect of apparel sourcing – but it is also integral to the health of any brand's bottom line, so getting it right is crucial. Here we offer some key tips in negotiation tactics.

And as the threat of tariffs being imposed on all goods imported into the US from China continues to grow, new research says it would be a "credit negative" for the US apparel and footwear sector – leading to higher costs and gross margin pressures for up to two years until companies adjust their sourcing patterns.

Indeed, another analysis on just-style suggests punitive tariffs on Chinese garment imports into the US would simply subsidise every other apparel exporting country in the world, in the form of increased orders at higher prices.

Keeping on top of the changes can be a challenge, but our latest monthly round-up looks at updates to key free trade agreements and trade preference programmes involving the US, EU and Japan in July. All are covered in depth on re:source, the new online strategic planning tool from the team behind just-style.

Meanwhile, El Salvador's garment exports are forecast to rise 6% to roughly $2.3bn this year as the US lifts demand for the country's performance and cotton apparel, executives have told just-style.

But Malaysia's garment and textile manufacturers are worried their government's new minimum wage of MYR1,500 (US$368) for the private sector – which was approved last week – could make the industry less competitive.

And although the garment sector is a jewel in newly-democratic Myanmar's export crown, the ongoing Rohingya humanitarian crisis in Rakhine State and rising wages are the latest shadows on the horizon.

Yesim Textile, one of Turkey's leading vertically-integrated manufacturers of knit products for US and European retailers, has been piloting a new joint auditing model where brands supervise their suppliers under a single social compliance audit.

And ten of China's largest viscose fibre producers – who between them represent over 50% of the world's viscose staple fibre production – have released details of a three-year roadmap to improve the sustainability of the viscose industry from sourcing to production.

Researchers in the US are claiming a world-first by producing fibres with embedded electronics that are so flexible they can be woven into soft fabrics and made into wearable clothing.

While a team of scientists in Australia is working on a project to develop the next generation cotton fibre – which could feature many of the properties of synthetics, such as being stretchy, non-creasing and even waterproof, while retaining its natural fibre feel.

In other news, the Bangladesh government is taking steps to avoid worker unrest in the run-up to Eid-ul Azha; Reebok has unveiled its first plant-based footwear; and the latest second-quarter filings from US apparel and footwear brands and retailers continue to roll in.

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