Blog: Leonie BarrieWikileaks - love it or loathe it

Leonie Barrie | 28 February 2011

Love it or loathe it, there's no doubt whistleblowing website Wikileaks has helped to shed new light on world issues. And none more so than the latest batch of documents, which is designed to offer an insight into the turmoil currently gripping Egypt but has inadvertently cast a revealing sidelight on the country's apparel sector.

The picture painted in the communiqués - which concern events in 2009, not 2011 - illustrates Egypt as, in the eyes of US businesses, a competitive sourcing country, an increasingly important destination for cotton exports, but also a country troubled by worker unrest and questionable ethics. There are probably more questions than answers, but together they add to the image of growing disquiet and fermenting potential revolt.

For apparel exporters in India, worries about rising cotton prices have overshadowed figures that show the value of shipments is set to jump 6% to $11bn this year, an industry group warned last week. While a cap on exports of cotton yarn has helped keep rising prices in check, there are concerns about what will happen when it expires. Indian makers have also welcomed a free trade agreement to boost business with Japan, which was signed earlier this month.

The CEO of Brandix, one of Sri Lanka's largest apparel suppliers, has told just-style the county is managing to overcome the loss of its GSP+ status on exports to the  European Union, in part due to customers seeking alternatives to China. Ashroff Omar also believes the apparel industry must offer more value to the end consumer, and that spreading their sourcing across multiple countries means retailers are spending too much time monitoring their suppliers.

Wal-Mart Stores, meanwhile, has finally accepted that it's going to take longer than expected to turn around its US business after the world's largest retailer recorded "disappointing" domestic revenues in its fourth quarter. "Some of the pricing and merchandising issues ran deeper than we initially expected, and they require a response that will take time to see results," president and CEO Mike Duke, told analysts last week.

Likewise, specialty clothing retailer Gap Inc has just ended a five-year run of declining same-store sales, but says it is planning conservatively for the year ahead as it tries to dig its North American business out of a rut. Higher revenues at its Banana Republic and Old Navy chains contributed to a 4% rise in fourth quarter earnings - but the retailer warned soaring costs are likely to dent operating margins in the year ahead.


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