Covid-19: the clothing sector is suffering

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By: Pauline Gleize Follow

The clothing sector, like many others, is rocking after the epidemic wave has passed. The announcements of safeguard procedures and other judicial reassessments have multiplied in recent months in France.

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La Halle, by the Vivarte group; the shoe maker André, an old brand of the group; Naf Naf have been in receivership since the start of confinement. The “Big Bad Look” brand has since found a buyer, who will only keep 75% of the jobs.

Celio, specializing in men's fashion, last week asked for a safeguard measure because it could not find an arrangement with its banks. And with 100 million euros in shortfall between March and May, the course is hard to pass. Especially since the deconfinement was not enough for ready-to-wear boutiques to return to normal activity. According to the Alliance du commerce, clothing brands recorded a 20.9% drop in turnover, including online sales, on a like-for-like basis in May.

Several of these signs were already very, very fragile. This also makes Yves Veyrier suspicious. During a demonstration by André's employees, the general secretary of Force Ouvrière, deemed it inadmissible to use "  the health crisis for financial operations  ".

In addition, it is true that the signs strongly established in France entered the confinement already weakened by the strike in transport and, before that, the demonstrations of "yellow vests". However, the shock of the coronavirus crisis was indeed taken head-on far beyond the borders of France.

Almost 40% of companies in the sector expect a “much worse” impact than that of the 2008 financial crisis, according to a survey by Euromonitor International.

First net loss for Inditex since 2001

The flagship brands of ready-to-wear are not spared. Starting with the Spanish Inditex, number one in fast fashion with Zara. The group suffered in the first quarter, its first net loss since its IPO in 2001. And it is not the least: 409 million euros in negative.

However, its financial strength and its inventory management enabled Inditex to continue paying wages without resorting to short-time working. An exceptional case.

The British brand Primark would certainly have laid off staff if some 68,000 employees in Europe had not benefited from partial unemployment. It must be said that the low-cost brand claims to have sold nothing between March 22 and April 21. In the second quarter, the turnover of the Swedish H&M was halved. The American GAP accuses him of a net loss of $ 900 million in the first quarter.

What recovery for fast-fashion?

It remains to be seen whether fast-fashion , fast fashion, will be able to resume in a short time. The collections are renewed very quickly, the March stocks therefore no longer necessarily correspond to the season.

In addition, consumers will no doubt remain cautious during this period of crisis.

And then, will shopping enthusiasts still enjoy it in the weeks, months to come? Margueritte Le Roland, analyst at Euromonitor, is rather pessimistic on the question because of the new health rules and measures of social distancing. The buyers of the British TM Lewin shirts are now betting everything on the internet. The stores will not reopen.

Finally, desires may have changed. During confinement, sales of sportswear and loose clothing increased. So, back to "sophisticated" or sustainable mode of "comfortable"? This is a question that brands must try to elucidate.

The poor mediocre results in the stores obviously have consequences on the other side of the production chain.

Shock for Bangladesh

The shock was severe, particularly in Bangladesh, the world's second-largest exporter of ready-to-wear. Shipments dropped 84% year on year in April. Almost 3 billion 200 million euros of orders have been canceled or postponed according to the Association of Garment Manufacturers and Exporters of Bangladesh.

Before the pandemic, ready-to-wear represents 80% of the country's exports and more than 4 million jobs. Overnight, hundreds of thousands of workers were left without work.

To survive, some companies adapt to the 'fashion' of the moment: protective equipment like suits. At least thirty factories have already launched into this production. And according to BMGEA, this figure is increasing. Nevertheless, many workers remain unemployed.

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