Uniqlo Affected
We all know that Japan’s situation will affect the global economy, but it’s also notable that Japanese consumers are slowing down in their spending in general.
For example, the March sales numbers for Fast Retailing’s famous Uniqlo, which is catching on like wildfire in the United States, took a hit as same store sales for the month dropped 10.5%, which marks the first fall since the earthquake. In Tokyo, Japan youth simply are not buying as much, which is understandable, with the rolling blackouts and lack of certain commodities. Also, about 12 Uniqlo stores were closed in the earthquake area and 37 stores where inoperable for over a week after the March 11 quake and tsunami.
For more information on Japan relief efforts, read our story here.
H&M Feels the Pinch
Fast-fashion retailer H&M reported a 9% sales increase in local currencies, but converted into SEK, sales were down 1%. The difference is due to the negative currency translation effect of the strong Swedish krona compared with sales in other countries and their currencies.
H&M did do well with a positive effect coming from Easter, and they opened 2 stores in Romania recently which have been popular.
However according to Karl-Johan Persson, CEO, “We increased sales in local currencies by 9 percent and 1 percent in comparable units in a continued tough market. The quarter was also characterised by the fact that many external factors had a negative effect on the results, in contrast to last year when they had a favourable effect in the corresponding quarter. These external factors, which were beyond our influence, were for example strong negative currency effects and cost inflation in the sourcing markets with for example, significantly higher cotton prices. Instead of passing on these cost increases to customers, we chose to strengthen our price position in order to build further on our strong market position for the long term.”
The question of raising prices for consumers to make-up the difference for higher production costs has been an ongoing concern in fashion recently and looks to only get worse by this summer. This has also sparked many retailers and brands to re-consider their options for where they manufacturer and also analyze different methods for distribution.
More on this topic soon.
American Apparel Warns of Bankruptcy
American Apparel has been struggling now for ages and its deadline for payments is looming just around the corner on April 30. Its cash crunch has forced the brand/retailer, which remains quite popular among youth culture, but has slipped according to our Spring Youth Culture Study 2011 regarding youth preferences for brands and stores, to announce that it may have to file for bankruptcy.
American Apparel’s stock slid 15 cents to 81 cents last Friday.
Unfortunately, the founder Dov Charney is also being sued for sexual abuse by a former employee. However the company has said they expect the lawsuit to be dropped because the former employee signed an agreement not to sue and settle the dispute in arbitration.
As we’ve seen in our recent data and research reports, American Apparel’s slide has created a hole in the first layer business, which certain brands have been able to capture. This is especially the case with the changing dynamics and strength of the T-shirt industry among youth culture.
Urban Outfitters, another popular brand/retailer among youth culture, has also taken a hit reporting that sales are actually flat for their fourth quarter 2011 earnings. This is under financial estimates for performance.
Net sales were $668.4 million, up from 13.6% from last year, but short of Zacks Consensus Estimate of $674 million. High production prices have affected the brand, which also owns Anthropologie and Free People.
The company plans to open about 50-55 new stores in the coming year. During the quarter, the company opened 10 Urban Outfitters stores, 3 Anthropologie stores and 4 Free People stores.
Adidas X Justice
We’re loving the latest campaign from Adidas utilizing Justice and French film director Romain Gavras in their “Adidas is all in.” Images of pro athletes mixed with top musicians, ranging from Katy Perry to David Beckman to Dennis Busenitz and The Like during a day-in-the-life all to the new single “Civilization” from Justice, is a hot combination.
The single was just released today, April 4th, with a new album to be completed in September.
“
