Adidas Shares Hit Record as Ecommerce Boosts Profits

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Article by Emma Thomasson – Partnerwise

BERLIN (Reuters) – Adidas reported a forecast-beating rise in quarterly profits on Friday, helped by booming online sales, and said it hoped to fix supply chain problems in the North American market and revive growth in Europe by the end of the year.

Shares in the German sportswear maker, which have risen by a quarter this year, jumped 7 percent to a new record high, with the sector also buoyed by Under Armour Inc raising its full-year earnings forecast on Thursday.

The group’s profitability has long lagged that of bigger rival Nike, but has improved under Chief Executive Kasper Rorsted, who has focused on expanding in North America and Asia and pushing online sales, where margins are higher than wholesale.

In the first quarter, Adidas said its operating margin rose 1.4 percentage points to 14.9 percent, pulling ahead of Nike which recorded an operating margin of 13.5 percent for the December to February period.

“Earnings are much better than guided for the full year – leaving the door open for margin guidance upgrades in the course of the year 2019,” said Baader Helvea analyst Volker Bosse, who rates the stock “hold”.

Adidas is chipping away at Nike’s dominance of the U.S. market, pushing retro styles that have proved more popular than Nike’s basketball shoes, and teaming up with celebrities such as Kanye West, whose Yeezy line has driven recent strong growth.

Adidas announced last month it is partnering with singer Beyonce, which Rorsted said on Friday would have a “tremendous impact”, noting that the deal generated 1 billion online views, with the first products due for launch later in 2019.
ONLINE BOOM

First-quarter profitability was helped by lower sourcing and marketing costs, favorable currency developments as well as selling more higher priced products and the expansion of online, with ecommerce sales up 40 percent in the quarter.

Rorsted told journalists ecommerce had grown fast in all regions, helped by exclusive launches of new products and the fact the Adidas app has been downloaded 9 million times. He expects online growth to continue at 30-40 percent for years.

Overall, sales growth slowed in the first quarter to a currency-adjusted 4 percent rise to 5.883 billion euros ($6.57 billion), but was still ahead of analyst consensus.

Adidas had already warned in March that supply chain issues would hit sales growth in the first half, citing particular problems meeting North America demand for mid-market clothing.

Adidas said it was working to mitigate the shortages, including using more air freight to ship goods – implying higher logistics costs in the second and third quarters – but Rorsted said the problems should ease by the end of the year.

He also expects a recovery by then in Europe – where revenue fell 3 percent in the first quarter, as Adidas seeks to reduce its reliance on its Originals fashion line and boost sales of sports performance gear, with new product launches.

Sales of soccer jerseys ahead of the 2020 European soccer championship should have their first positive impact in the fourth quarter, Rorsted added.

Accessorize & Monsoon to Close Stores to Fix Finances

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Article by Rob Davies

‘Dozens’ of less profitable stores could be shut as chain starts insolvency procedure

Fashion chain Monsoon Accessorize has become the latest high street retailer to deploy the controversial tactic of closing stores and seeking rent reductions in a bid to mend its finances.

Accountancy firm Deloitte has been hired to help the retailer secure a company voluntary arrangement (CVA), an insolvency procedure used by numerous struggling retailers and restaurant chains including Mothercare, New Look, Debenhams, Giraffe and Byron.

The increasingly common strategy involves closing less profitable or loss-making stores, while seeking agreement from landlords to reduce rents on other properties, rather than risk the company going bust altogether.

Sources told Sky News that “dozens” of Monsoon Accessorize’s 270-strong store network could disappear if the plan goes ahead, although the number of closures is yet to be agreed.

The largest shops, in both the Accessorize and Monsoon chains, are thought to be most at risk.

A spokesman for Monsoon Accessorize, owned by its founder Peter Simon, told Sky News: “The UK retail trading environment is tough and we are continuing to look at options to reduce our overall costs as we restructure the business in the UK and internationally.

“We have made no secret of the fact that we have steadily reduced our store portfolio in recent years and shall continue to do so as leases expire.

“We are looking at options to accelerate these store closures.”

Deloitte declined to comment on whether it was advising Monsoon Accessorize on the plan.

CVAs are supposed to be the last resort for companies that have run out of options and are flirting with bankruptcy.

But they have proved unpopular with landlords forced to slash rents, with some claiming that badly managed companies see CVAs as an easy way to cut costs rather than taking more fundamental action to improve their businesses.

The retail and hospitality sectors have been flooded with CVAs over the past couple of years. Philip Green’s Arcadia group, including Topshop and Topman, is expected to seek one imminently.

Second-hand Clothing Industry Turning the Tide on Fast Fashion

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Article from BizCommunity

“We don’t have enough resources to keep feeding this monster” – the stark words of warning about the new clothing industry from Maria Chenoweth, chief executive of Traid, a UK charity working to stop clothes being thrown away.

Chenoweth says the average lifetime for a garment in Britain is just 2.2 years and McKinsey’s State of Fashion report concluded that more than half of fast-fashion items are thrown away in less than a year. This trend is exacerbated by, what’s described by a British MP as, “the Instagram look and chuck mentality”.

One estimate is that 11 million clothing items a week in the UK go to landfill (or 300,000 tonnes a year). The equivalent South African statistics are hard to track but the move towards disposable fashion here has been just as marked, especially with the relentless rise of cut-price chains like Mr Price and H&M. And a recent Gumtree SA survey showed 65% of respondents owning 10 or more items of clothing which they never used.

On several levels, excessive consumption of new clothing is environmentally damaging and, according to many experts, unsustainable. Stephanie Campbell of the UK Love Your Clothes campaign, believes “the single most important action we can all do is to prolong the life cycle, which starts by never putting clothes in the bin.”

Fast-growing segment

Increasing awareness of this issue has given rise to a growing eco-movement in favour of second-hand clothing. Fashion blogger Charlotte Yau reports that “from reselling, recycling, gifting, swapping and reusing, the second-hand industry is becoming one of the largest growing consumer segments”.

Online trading sites like Gumtree are booming in this category and, globally, there’s a new genre of specialist pre-owned designer clothing consignment sites like HEWI (Hardly Ever Wore It). Even the legendary Selfridges in London had a second-hand pop-up store last year. Top fashion designers are starting to buy in as well with Stella McCartney launching ‘The Future of Fashion is Circular’ campaign to encourage consumers to purchase sustainable clothing that retains value and then resell it to expand its lifespan, avoiding landfill or an incinerator.

Estelle Nagel of Gumtree SA says the market for second-hand clothing is significant in South Africa with more than 20,000 second-hand clothing items listed, and there’s a definite shift in attitude. “The status issue was big for so many people – they weren’t confident to admit to buying second-hand but now it seems smart, savvy and eco-friendly. Previously unthinkable second-hand niches like wedding dresses and matric dance outfits are growing all the time.

“The secondhand market makes even more sense in a tough economy. As Nagel points out: “you win both ways by making money on your own old clothes and saving money on the replacements”.

The Human Cost of Fast Fashion

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Article by Aaisha Dadi Patel, Bizcommunity

Lauren Dixon-Paver faced a dilemma a couple of weeks ago when she needed to get a new pair of pants: for over a year now, the 25-year-old graphic designer has made a concerted effort not to buy new clothing from fast-fashion retailers. Dixon-Paver, who also runs a YouTube channel which focuses on craft and sewing tutorials, has been a consistent critic of the fast-fashion industry for two reasons: the ways in which it oppresses workers in far-flung countries, and encourages mindless shopping. She got her first sewing machine when she was 12, and has been making much of her own clothing since.

The fast-fashion industry exploits people in far-flung, often Eastern, developing countries, using cheap labour to quickly mass-produce clothing that keeps up with trends.

These trends are quick-evolving, and as soon as something’s outdated, people simply don’t want to buy it anymore; Bloomberg reported in March last year that H&M had a record piled-up inventory of unsold garments worth more than $4 billion.

A report compiled by Oxfam Australia called ‘Made in Poverty: The true price of fashion’ highlights the human cost of fast fashion. The report, part of the ‘What She Makes’ campaign, surveyed 470 workers at factories in Bangladesh and Vietnam, and found that they live on “poverty wages,” with many earning the equivalent of just over R5 an hour. 100% of the women surveyed in Bangladesh, who are employed at factories which supply brands including H&M and Cotton On, are unable to make ends meet.

Jehan Ara Khonat, co-owner of modest fashion and lifestyle store My Online Souk, says analysing the social structure of trends is integral to understanding how fast-fashion operates. “As soon as the fast-fashion industry catches on to what’s trending, an elite group creates something else to differentiate themselves. Fast-fashion companies make it available for the masses, and the cycle continues.”

What She Makes

The What She Makes campaign is calling for big clothing brands to pay the women who make clothes that they sell a living wage. “The women who make our clothes do not make enough to live on – keeping them in poverty. Despite long hours away from their families, working full time plus many hours of overtime, big clothing brands do not pay garment workers enough money to cover the basics of life – food and decent shelter,” the campaign website reads.

According to the report, available on the website, one factory owner in Bangladesh reported the extensive measures a company had taken to keep the clothing they produced safe in case of a fire, but a lack of interest from the very same company in fire safety measures for the workspaces where the people who sew the clothes spend the better part of their day.

One of the workers that Oxfam spoke to, 20-year-old Fatima, lives in a two bedroom apartment with 10 other people, including her landlord, and sleeps on the floor. When Fatima gets paid late, she stresses about paying rent on time and getting money to her sick mother, who lives in a rural area in Bangladesh. As is sometimes the case with outsourced contracts, Fatima’s seniors don’t always pay her and her colleagues their full agreed-upon wage. “The owner doesn’t know about this, that the line chief keeps our money,” she says. If Fatima has low wages some months, she forgoes her budget for food, sending the money to her mother instead.

Another woman that Oxfam interviewed, 22-year-old Forida, earns the equivalent of R3.50 an hour. This is below the minimum wage in Bangladesh, because deductions have been illegally taken from her overtime wage for mistakes and not meeting unrealistic daily targets.“I feel embarrassed when I am scolded in front of so many people [when I make mistakes] and then I feel bad about myself because I’m not able to do the work properly. If I could do the work properly, then I wouldn’t be scolded so hard and this makes me cry.”

Forida and her family – her husband, mother-in-law, and toddler son – live in a hot and cramped compound with six other families, including her landlord’s. There is just one toilet and place to bathe for the whole compound, and two shared cooking areas. Her income usually runs out before the end of each month, leaving them without food. “If we were paid a little more money, then I could one day send my son to school,” she says. “I could provide food for the last week of the month. We could live happily, we could lead a better life.”

As part of the campaign, Oxfam have initiated a company tracker to monitor the progress that brands are making, with both Cotton On and H&M ranked as having taken action to be transparent and committed to change.

But for now, stories like Fatima’s and Forida’s still remain a reality. “People are working in awful conditions to make clothes for us, so we can buy fantastic bargains,” says Dixon-Paver.

Iconic Fashion Designer Karl Lagerfeld Dies

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Article from BizCommunity

NEWSWATCH: Celebrated fashion designer and Chanel creative director Karl Lagerfeld has died at the age of 85. The cause of death has not yet been released.

German-born Lagerfeld began his career as an assistant to Pierre Balmain in 1955. He also served as the creative director of the Italian fur and leather goods fashion company Fendi and his own eponymous fashion label.

But it was his role as artistic director for luxury fashion house Chanel that cemented his status as a visionary. Lagerfeld held his role at Chanel for a record-breaking 36 years, and he’s credited with turning the label into one of the most profitable and admired luxury brands in the world.

Known for his slick white hair, black sunglasses and gloves, Lagerfeld died in Paris following rumours of ill health.

The designer was a no-show at Chanel’s haute couture shows during Paris Fashion Week. The company later said that Lagerfeld had skipped out because he was tired, however his absence fueled speculation about his health, reports IOL. This was the first time he had ever missed giving a bow at the end of a Chanel catwalk show.

In addition to his design talents, Lagerfeld was a photographer and filmmaker, and he shot and creatively directed all of Chanel’s advertising. According to Business of Fashion, he also designed hotel rooms, video games, motorcycle helmets, a BMW, and a cosmetics range inspired by his also-famous cat, Choupette, and directed an ad campaign for Magnum ice cream bars that featured a life size sculpture of model Baptiste Giabiconi rendered in chocolate.

In 2017, he was awarded Paris’ highest honor, La Médaille Grand Vermeil de la Ville, on top of many other accolades, including the Outstanding Achievement Award at the British Fashion Awards in 2015 and the Couture Council Fashion Visionary Award in 2010.

Scaling e-commerce in Africa

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Article posted on BizCommunity by Dean McCoubrey

 

At present, e-business in Africa remains a challenge. It may be better than it ever has been, but the truth is that lower literacy and internet penetration levels continue to limit the growth on the continent.

However, this will not remain the status quo for long, as smartphone proliferation increases, data costs decrease, and usability improves. E-wallets, now commonplace, are an excellent example of this, bypassing the continent’s challenges around depositing, withdrawing and transferring cash, as well as buying airtime and electricity.

Untapped market

Africa represents one of the world’s finest untapped markets, pointed out by MTN’s Herman Singh during his presentation on ‘Scaling in Africa’ at the recent edition of Africacom.

Unpacking the success story that is Jumia, Africa’s largest online marketplace, he illustrated that the growth of the platform across the continent is comparable to, if not more impressive than Paypal. In addition, 41,000 active merchants in the ecosystem offered over 6.1 million products ranging from hotels, to real estate, jobs, TV, airtime, restaurants, flights and more.

He explains, “Africa’s e- and m-commerce opportunity has a potential client base of 400 million internet users, and a rapidly emerging middle class expected to grow by 54% between 2020 and 2030 and decreasing data costs in some countries (43-45% decrease in the lowest data plan in both Egypt and Nigeria between 2016 and 2017.”

Additionally, in building out financial ecosystems – stores that offer a diversity of products or even online “malls” – Africans will no longer be limited by their location, as long as logistics and payment issues can be solved. Singh stated that Jumia has created a network of over 4,000 logistics partners in order to work across the 15 countries they had been working in. And payment by cash at this stage was still commonplace, causing significant challenges.

Regulatory issues

With respect to payment, enterprises on the continent are seeing the opportunity as well as global merchants now eager to be active in Africa but need to understand and fast-track the regulation – or lack thereof – across infrastructure issues, handling of cash, wallets and alternative payment methods that they are not accustomed to. They want a one-stop payments provider to get them to these markets, so they don’t have to deal with the complexities.

Payment intermediaries

Karen Nadasen, country manager of PayU South Africa, the country’s leading payments provider, explains that the role of a ‘payments intermediary’ will be critical, having already dealt with the complexities in these countries and created its own relationships, partnerships and agreements but underpinned by the credibility, infrastructure and proven results of a global brand.

Nadasen says: “Global enterprises do not have the time to make mistakes. Hyper-localisation means we are knowledgeable about the markets we are in and ‘speak’ the local language. This is particularly important with regards to licensing. As we know, some markets in Africa are not as regulated as SA, but this is starting to change. Our partnerships in SA, Kenya and Nigeria have been an essential springboard as we branch out through these ‘hubs’ to cover the rest of Africa.”

Smart device growth

The opportunities will be compounded as sub-Saharan smart device growth is now the fastest in the world. As literacy levels increase, amidst Africa’s new dawn, digital services such as microfinance will improve lives and enable people to do business, while marketplaces will bring products and stores to people so they can make purchases – assuming enterprises like Jumia continue to expand the delivery network and solve logistics challenges.

“From an African perspective, we use our single integration point for merchants to springboard into Africa using our global infrastructure – leaders in emerging markets in India, Eastern Europe, and Latin America – and then hyper-localising the expertise through our groundwork in Africa, offering cross-border execution on payments, compliance and fulfilment. It’s our experience across these emerging markets that has allowed us to deliver a user experience that works in these types of market, keeping it simple and accessible.”

In his “What it takes to win” conclusion, Singh outlined why Jumia has been Africa’s most successful online case study to date. He attributes the company’s explosive growth to ten factors – establishing a community of users, building trust, access to the channel itself, a robust payment and micro-payment partner, fulfilment and logistics, merchandising, location and maximising customer insights.

Research firm Statista estimates that the e-commerce sector in Africa’s 54 countries and 1.25 billion people generated $16.5 billion in revenue in 2017 and forecasts revenue of $29 billion by 2022, despite internet penetration lying at only 35 percent. The potential most certainly exists.

Six UK Fashion Retailers fail to cotton on to Sustainability

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Article from The Guardian

 

Audit committee singles out firms who take no action to reduce impact on environment

Major UK fashion retailers are failing to promote environmental sustainability or to protect their workers, a parliamentary committee has said.

The six companies, which include Amazon UK, JD Sports, Sports Direct and TK Maxx, have not taken any action to reduce their carbon, water and waste footprint. None of them use organic or sustainable cotton and only two – Sports Direct and Boohoo – use recycled material in their products.

The interim report by the environmental audit committee singles out Amazon UK for its notable lack of engagement in sustainability.

It said: “Though Amazon and TK Maxx are subsidiaries of international corporations that manage their initiatives, the committee believes this does not absolve them of their responsibilities.”

None of the six retailers singled out as the least engaged, have signed up to the Action, Collaboration, Transformation living wage initiative (Act) or to voluntary targets in the Sustainable Clothing Action Plan to reduce the carbon, water and waste footprint of UK firms.

The committee wrote to 16 leading UK fashion retailers in autumn after revelations that Burberry burned £28.6m worth of unused products in 2017 to protect its brand and prevent excess stock from being sold at knockdown prices. The committee said it welcomed a commitment by Burberry to end its burning of unsold stock.

Its report said Next, Debenhams, Arcadia Group and Asda Stores were “moderately engaged”, while Asos, Marks & Spencer, Tesco, Primark and Burberry were the “most engaged” in addressing issues of sustainability and fair wages. Kurt Geiger did not respond to requests for written evidence.

Mary Creagh, the Labour chair of the committee, said: “It’s shocking to see that a group of major retailers are failing to take action to promote environmental sustainability and protect their workers.

“It’s disappointing that only a third of the retailers we wrote to are signed up to Act, an important global initiative working towards getting a living wage for all garment workers.”

She said she hoped the report would motivate underperforming retailers to start taking responsibility for their workers and their environmental impact.
The report concluded that the business model for the UK fashion industry was unsustainable. It said exploitative practices must end and that retailers must lead change.

The final report will be published in the coming weeks, setting out recommendations to government.

Prague buckles up for Bata Fashion Weekend 2019

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Article by Bata

 

Prague, the historic capital of the Czech Republic, is to host the Bata Fashion Weekend 2019. This year, as the brand also celebrates its 125-year anniversary, the event will take place on 12-14 April at Žofín Palace.

Bata Fashion Weekends always feature catwalk shows, exhibitions, great stories from history to the future and much more. This is the second time that Prague has hosted the event. Bata representatives, celebrities and designers from all over the world are expected to attend. The public can also join, and entry is free.

This year’s Bata Fashion Weekend is expected to be doubly special. Not only will the event feature its usual high energy performances and catwalk shows, but the brand will also celebrate its 125th anniversary.

Bata’s Head of Global Marketing, Jana Chadova Barbati explains the theme of the event this year: “After the themes of ‘The Essence of Style’ in 2017 and ‘The Sound of Style’ in 2018, 2019 will all be about ’The Evolution of Style’. Evolution represents the Bata brand, connecting its roots and showing that brands with a strong heritage and with such a long history can indeed be modern, fresh, innovative and dynamic.”

As well as a range of events, including a fashion show, Bata Fashion Weekend will also see the announcement of the winners of the Bata Young Designers’ Challenge 2019. This is a competition which sees the most exciting design students from three participating countries – the Czech Republic, Italy and Kenya – competing to find out whose designs will be chosen to be put in production and sold in selected Bata stores globally.

How to Relaunch a 90-year old South African Clothing Brand

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Article from BizCommunity

 

Edgars, the 90-year old South African clothing brand is back on the fashion radar. The once aspirational icon of the local fashion industry, has had some well-publicised ups and downs over the past few years, but new leadership and a fresh approach to customer engagement has seen a complete turn-around for the brand, making it relevant to local shoppers all over again.

VML South Africa has been integrally involved in the creative relaunch of Edgars – from designing the new logo and evocative adverts to developing a fully integrated brand connection between Edgars and its customers, both current and new.

It’s all about a renewed focus on the celebration of self-expression, inspired by South African trendsetters, culture creators and custodians, who are admired by hundreds of thousands of South Africans regardless of age, culture or race. And now the new Edgars story puts real South Africans at the centre of its narrative.

Ryan McManus, chief creative officer at VML South Africa, gives five important facts about how a new feel for an old brand is going to create renewed excitement.

1. What is a connected brand?
A brand is not just a logo or a clever and well-crafted advert. A connected brand ensures that where ever its customers find it, it offers a consistent application of look and feel and emotion, whether in-store, through advertising or digital channels like a website or social media. Being connected to your customers is really the only way for a brand to succeed in this day and age, because consumers are clever and connected and demanding of consistent quality experiences, and if a brand can’t deliver on this, it’s failing.

2. So how has this played out for Edgars
We’ve refreshed the logo, and designed new-look stores, with the flagships already running in major centres – shoppers can expect an exciting in-store experience, from window display to the check-out. The concept spans fashion, beauty and home stores. We’ve also created an advertising campaign inspired by:

  • What does South Africa look like from a style perspective
  • How South Africans express themselves through their wardrobe, makeup and home environments
  • How the brand can inspire self-expression from its customers

The most exciting part of the campaign is that we’re working with well-known local personalities across all communication touch points. But instead of having influencers endorse the brand (which is the typical influencer marketing model), we’ve shifted the focus to endorsing and collaborating with local trendsetters like:

  • Sho Madjozi (dynamic rapper, writer, actress and fashion icon)
  • DJ Arch Junior of South Africa’s Got Talent fame
  • Siphokazi Veti (writer and female activist)
  • Jonathan Boynton-Lee (Top Billing presenter)
  • Kay Ngonyama and Jessica van Heerden (online make-up mavens)

The collaboration takes Edgars and its products into the lives and homes of all South Africans, making it clear that everyone can and should #ownthelook by making the most of the cool content available in all of Edgars’ range of stores.

3. What attracted you to the brief?
Edgars is one of those truly iconic South African brands that has changed and evolved over the years and we had the opportunity to go back to its origins to celebrate its unique South African-ness and reconnect with customers throughout their brand journey.

Edgars is an important client for us as they’ve always worked with Y&R, and in early 2018 when Y&R, Native VML, Labstore and Native Media merged to create the fully integrated company we are today, it gave us the perfect opportunity to showcase our integrated approach to brand strategy, including above-the-line, below-the-line, shopper and digital experiences that create that true connected brand experience.

4. Beside the store experience, how do South Africans get the feel for the new Edgars?
All of our brand custodians are talking about how they use Edgars’ products on their various social channels, blogs, shows, etc.

The above the line campaign is live and can be viewed online here:

 

And anyone who knows Sho Madjozi (and she has hundreds of thousands of South Africans fans) would know that her latest release, Don’t Tell Me What To Do, was written to support the Edgars campaign, and is the track used in all TV adverts. She has also launched a new clothing range available only in Edgars stores.

5. So what is your 5-second pitch?
At VML South Africa, we understand the fundamental human need for connection and know how to help brands re-imagine the entire connected consumer experience by inspiring connections at every touchpoint.

Takealot Records Over R196m in Black Friday Sales

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Author: BizCommunity Article

 

Takealot.com’s annual, five-day Blue Dot Sale went live at 12:01am on Friday, 23 November and generated record sales for the e-tailer on Black Friday.
Thousands of shoppers took to the site with 68% choosing to shop deals from their mobile phones on the Takealot apps and mobi site. Within the first hour, R11,5-million in GMV (Gross Merchandise Value) was generated and by 08:30 the retailer surpassed its entire Black Friday 2017 GMV. The total transaction value for Black Friday 2018 on Takealot.com amounted to over R196-million – a 125% year-on-year growth in GMV and 127% growth in orders.

CEO, Kim Reid says: “We are humbled by the incredible support from our customers on our biggest sales day of the year. Black Friday is a great opportunity for first-time shoppers to trial online shopping and this year we saw a record number of new buyers make the most of the deals on offer.”

Reid shares that bestsellers included Christmas stocking fillers like Tommy Hilfiger Girl For Her perfume to December holiday camping essentials like the Nu Camp Folding Table. “Electronics again proved to be a firm favourite with over three thousand TV’s sold on the day,” she said.

Shoppers took the opportunity to save on everyday essentials from Pampers nappies to digital devices such as WD Elements 1TB portable hard drive and the new DSTV Explora 2. The bestselling toy of the day was the Jeronimo My First Sewing Machine while the best selling book was Prooi by local author Deon Meyer.