Gapping down
In reaction to disappointing earnings/guidance:
- HOME -26.8%, GO -2.1%, SNX -1.5%, TGT -0.8%
Select ETFs showing early weakness:
- IWM -2.5%, SPY -1.4%, XLE -1.4%, QQQ -1.3%, GLD -1.3%, XLB -0.7%, DIA -0.5%, IGV -0.5%
Other news:
- TTEC -3.2% (withdraws guidance)
- ABMD -2.6% (response to the COVID-19 pandemic)
- FB -2.3% (discloses increased user engagement with apps in countries hardest hit by the virus)
- ALGN -1.3% (receives FDA 510(K) clearance for the Itero Element 5D Imaging System)
- JACK -1.1% (closes dining rooms system-wide; borrows under is credit facility)
- AMZN -0.6% (details warehouse changes and other COVID-19 updates)
Analyst comments:
- CTL -3.8% (downgraded to Sell from Neutral at Citigroup)
- DVN -2.2% (downgraded to Neutral from Overweight at Piper Sandler)
- CRC -1% (downgraded to In-line from Outperform at Imperial Capital)
Gapping up
In reaction to strong earnings/guidance:
- AIR +19%, TIGR +16.3%, NKE +8.4%, SCS +4.5%, WGO +4.4%, NOAH +4.1%
Other news:
- CTSO +64.9% (CytoSorb has now been used in more than 70 COVID-19 patients to help treat cytokine storm and life-threatening complications)
- TWO +34.1% ( to suspend Q1 common and preferred stock dividends)
- EVRI +10.5% (withdraws its 2020 guidance)
- EQNR +5.9% (presents updated outlook for 2020 and an around $3 bln action plan to strengthen the financial resilience)
- CAMP +4.6% (new CEO)
- AYR +3.5% (receives final regulatory approval in connection with pending merger)
- EXEL +2.2% (Exelixis' partner Takeda (TAK) receives approval in Japan for CABOMETYX )
- HNGR +1% (withdraws its 2020 guidance)
Analyst comments:
- TOT +4.3% (upgraded to Outperform from Mkt Perform at Bernstein)
- ROST +4.1% (upgraded to Buy from Sell at Goldman)
- KO +2.5% ( upgraded to Buy from Hold at DZ Bank)
- KBH +2.5% (upgraded to Overweight from Sector Weight at KeyBanc Capital Markets)
- LUV +2.5% (upgraded to Outperform from Market Perform at Cowen)
- TJX +1.7% (upgraded to Outperform from Sector Perform at RBC Capital Mkts)
- AAPL +0.5% (upgraded to Buy from Hold at Deutsche Bank)
Early premarket gappersGapping up:
- AIR +17%, TWO +16%, TIGR +14%, NKE +7.2%, EXEL +6%, NOAH +5.8%, SCS +4.7%, AYR +3.7%, EQNR +2.5%
Gapping down:
- SNX -12%, HOME -10%, TTEC -3.2%, GO -2.7%, AZN -2.3%, FB -1.6%, JACK -0.5%
After the Pandemic, Will the Fashion Industry Rebuild Sustainably?
After coronavirus, fashion industry experts foresee two paths for sustainability progress with risk of widening progress gap.
The sheer calamity that coronavirus has caused in the blink of an eye, severely impacting global industries, is foreboding of the challenges ahead.
They include a fashion industry and consumer that could look completely different than they do today.
Consumers are already professing to open their eyes to a new reality after the crisis passes. According to new consumer research from Coresight Research, surveying over 1,000 U.S. adults, close to half of the respondents expect to change their behaviors for the long-term after the outbreak ends.
“The gluttony of what we’ve gone through will subside, and we’ll buy what we need,” predicted J. Kirby Best, the chief executive officer and chairman of U.S.-based on-demand manufacturer OnPoint Manufacturing.
This includes upping hygiene, health precautions, as well as priorities of one’s loved ones. Trailing that are reduced physical interactions, more online shopping, less time spent in public places, less foreign travel, and as growing no-buy and low-buy consumer movements would forecast — less shopping overall.
“We’re moving away from disposable clothing. They’re going to be forced into it,” said Samuel Alexander, ceo of Austin, Texas-based firm C2C Fashion and Technology, LLC. “Less is going to be better.”
Production is going to mirror this change, according to Alexander, whose 40 years in the industry included the launch of brands like Willi Smith and Laundry by Shelli Segal, among others.
An Industry Reset?
Cabin fever is surely not so bad if time spent in isolation and thought can result in increased resilience or outright evolution of the industry, which is explored in the Tipping Point series by WWD. This time around WWD explores how sustainability priorities will shift post-pandemic, using the U.S. apparel industry as an immediate analysis.
A look back to mid-January in New York City shows how quickly things can change. Jacob K. Javits Center swelled with thousands for the National Retail Federation’s annual Big Show, a staple for the retail industry, which is the largest private-sector employer in the U.S. By the end of the month, the Trump administration announced the first of its travel bans in China, which would later include Europe, Mexico and Canada, as retail doors began to shutter and job losses piled up. This week, the Javits center is being converted into a 1,000-bed makeshift hospital as New York City plans for the outbreak’s worst-case scenario, as NRF, the CFDA, British Fashion Council and others seek stimulus relief from their respective governments.
The industry is more or less on its knees, but even while down, companies across the globe are rushing to support communities and meet the need for urgent medical supplies.
Some say, optimistically, the pandemic will last just a couple of months but more realistically it will be much longer (more likely the fourth quarter of 2020, according to analysts).
Fashion brands and retailers are desperate to determine the extent of the fallout, with most saying it depends on how long the crisis lasts. Weeks will be painful, but most firms should recover. Months, however, and even the strongest might find it difficult to survive. Mass bankruptcies and subsequently mass unemployment could result. And even if the recovery begins later this spring, the priority of every company will, in the short term, be simply getting their operations back on track and trying to make up some of the business lost during the shutdown.
So, amid all of this, what is to be said of the industry’s “sustainability” progress, and why is the question more timely than ever?
Because the climate crisis is a health crisis, and no industry is immune — or at all prepared in either case.
“Every year, the world spends far more responding to disease outbreaks, natural disasters and other health emergencies than it does preparing for and preventing them,” reads a January report from the World Health Organization listing the “urgent health challenges for the next decade,” that align with the United Nations’ Sustainable Development Goals. In no particular order, the WHO’s list includes infectious diseases, socioeconomic inequalities, water shortages, climate change and “preparing for epidemics” which are, naturally, “fanned by climate change.”
Speaking about the connection between climate change and near-term threats like an infectious disease, Kevin Eckerle, the director of corporate research and engagement at NYU’s Stern Center for Sustainable Business’s Return on Sustainability Investment Framework (ROSI), told WWD: “Planning for one, in isolation of the others, doesn’t prepare you to deal with the additive and multiplicative impacts of these things co-occurring – and they are co-occurring.”
Originally trained as an ecologist, in the past Eckerle was a senior sustainability strategy manager at Accenture. His work today involves helping corporate fashion partners like Eileen Fisher, Reformation and REI apply the ROSI tool to their business and quantify the financial impact of sustainable business investments.
But even he’s dishing a dose of reality on sustainability progress in the event of a worsening outbreak.
“The biggest challenge will be making new investments and continuing prior investments in sustainability if the negative economic impacts of COVID-19 continue to grow and reach the worst-case scenario,” said Eckerle.
If there’s a forecast for what lies ahead for the fashion industry in this unprecedented time, it may be seen as two lanes, that in either case, are to be navigated “responsibly and swiftly” by business leaders, in the words of Francois Souchet, lead of Make Fashion Circular at The Ellen MacArthur Foundation, a nonprofit advancing industry-wide, sustainable change.
“In many businesses, their sustainability efforts have sat outside of their core business and may be seen as an additional cost. We can expect some of those businesses to pause those efforts as they look to survive the crisis,” said Souchet.
He continued to present the other scenario: “Others, who have moved to adopt more holistic strategies and adapt their business models already, may find they do not have to make such a trade-off.”
Echoing Souchet, Eckerle points to the 2008-2009 financial crisis that showed a “marked division in how companies pursued sustainability,” with “those who maintained that focus” and those that had to “put sustainability on the shelf as a ‘nice to have’ issue.”
“As a result, the gap between leaders and everyone else widened. We run the risk of that trend reoccurring,” reiterated Eckerle.
“Business as usual died last week. We are operating in a new world where flexibility, agility and alignment with consumer values is paramount. Once a business is congruent with consumer consciousness, that is when things get interesting and we will see progress very quickly,” said Stacy Flynn, ceo and cofounder of textiles innovation company Evrnu that calls Target, Levi’s and Stella McCartney as brand partners.
But perhaps it’s not so straightforward after all, as restoring business will invite a “combination of measures, some from the ‘business as usual’ toolkit, and some novel ones,” reiterated Souchet, who believes the “shock” of COVID-19 can present a moment to rethink the future of the industry in favor of the latter.
Automation was already making way for higher-skilled employment to potentially phase out hundreds of millions of jobs worldwide by 2030, according to a 2017 report by McKinsey and Company, since updated. And from last week’s estimates from the International Labour Organization, COVID-19 could wipe out nearly 25 million jobs. By comparison, the 2008-2009 global financial crisis increased global unemployment by 22 million.
After COVID-19 wanes, Alexander predicts brands that are on a more advanced sustainability pathway are going to be “desperate” for technology-driven solutions coming out of this pandemic.
In reinventing the fashion industry, he dubs hemp as the change-making fiber, re-shoring of just-in-time production, retail showrooming, Internet of Things technology, the $150 billion wearables market and new circular mind-sets as the way forward.
Asked what the first priority would be in financing sustainable change for the U.S. fashion industry, if given aid, to which Alexander said: “We can use the military to reshore our industry. That’s where that money ought to be going to — building out manufacturing.”
While not an “either-or” solution, the interest of just-in-time production will increase post-pandemic as the current supply chain is bogged down in long lead times, with some retailers abandoning purchase orders at the first sign of trouble, leaving brands, non-essential staff and distant garment workers out in the dust.
Best believes “we’ll come out with a much better digital workflow. [Apparel companies] will start to focus on the bottom line, not cost per unit.” On the subjective demand he witnessed at his business, Best said: “The tipping point for us was in July,” to which he predicts “landslide” changes will come in the next six months.
As with any sustainable solution, there are upfront costs and time, but as Alexander stresses, the technology is readily available but siloed mind-sets remain a hindrance. His lasting advice to corporations: “You have to let go of what you think you know.
Neiman Marcus Group: Headed for Bankruptcy?
Options are on the table, but retail experts see bankruptcy to restructure and continue operating as the most likely scenario for the luxury retailer.
For the luxury retailer, severely impacted by its heavy debt load and the coronavirus pandemic, a bankruptcy filing is still weeks away while alternative strategies to keep the company alive remain on the table.
NMG is in active talks with its different constituencies, including lenders holding the debt as well as those that could provide debtor-in-possession financing for a possible bankruptcy. The retailer, responding to reports of a possible bankruptcy, said Tuesday it’s examining various strategies to insure its financial well-being and continuing operations. The company would not comment specifically on a bankruptcy or alternative strategies, and said it’s “evaluating all courses of action.”
Retail analysts believe a bankruptcy that enables the company to shed debt, downsize and keep operating is the most likely scenario.
Less likely scenarios are selling off parts of the business, such as Bergdorf Goodman and the Mytheresa luxury web site (which it already was trying to sell) to raise money, or working with debt holders on obtaining some level of forgiveness or extensions on loans while attempting to weather through the pandemic by aggressively cutting payroll, SG&A costs, closing stores, and using whatever support the government provides retailers, without going bankrupt. NMG could be close to, or already, tripping covenants with lenders.
Most, but not all, analysts and sources contacted rule out a liquidation since stores are closed due to the pandemic, there’s no telling yet when they might reopen, and Neiman’s is intent on staying in business.
Lining up bankruptcy financing would take at least two weeks, according to industry and financial sources. Despite the disruptions caused by the coronavirus, a bankruptcy court filing could be made online, according to legal experts.
NMG is owned by Ares Management LLC and the Canada Pension Plan Investment Board, which together bought the business for $6 billion in 2013, bringing long-term debt up to $4.46 billion.
The retailer has been paying around $300 million in annual interest expense, dragging down the profitability and resulting in losses. The company generates $5 billion in annual volume through its 43 Neiman’s stores, two Bergdorf’s stores, neimanmarcus.com, bergdorfgoodman.com, the Mytheresa luxury web site, the Horchow direct-to-consumer business and Last Call outlets.
“Most businesses today are facing some degree of disruption from the unprecedented global economic environment resulting from the COVID-19 pandemic. We are evaluating all courses of action to preserve our financial strength so that we may continue serving our customers and associates, and being a great partner to luxury brands globally,” a NMG spokeswoman said Tuesday morning.
“Our priority has been and will always be to ensure stability for our associates and brand partners.”
One source familiar with the situation said it was still “super early innings” for the process, but that things were moving fast and that a bankruptcy filing could come in as soon as two weeks or as long as six.
NMG has for some time been working with law firm Kirkland & Ellis and restructuring specialist Lazard and holding tentative talks with the three main investors holding the company’s term loan. Neither Kirkland nor Lazard responded to a request for comment Tuesday.
The general idea is to get the term loan holders to pony up the debtor-in-possession necessary for the retailer to operate while in bankruptcy, a source said.
“The term loan lenders have to defend their position,” the source said, mapping out how the process could play out. “If they don’t put up the DIP financing right now — and there’s going to be a real liquidity need given the stores are closed — it will be an immediate liquidation.”
Stepping in as lenders during a bankruptcy would give the term loan holders more say in how the process plays out.
NMG is still seen as a valuable and viable business, just stuck under a mountain of debt. And while it is exploring other options, the consensus among most financial experts is that the COVID-19 shutdown is just too much for it to ultimately endure since it has choked off the company at both ends, disrupting supply and the consumer side of the business.
But even though the company has been on distressed debt watch lists for years as it struggled to pay off debt tied to two consecutive private equity buyouts, any bankruptcy filing by NMG could be just the start of a wave of Chapter 11’s among fashion retailers selling non-essentials exacerbated by the global health crisis. Most vulnerable are those with weak operations or heavy debt loads, or those catering to middle or lower income groups which would be more financially hurt by the pandemic than upscale consumers.
Even before the coronavirus outbreak, there was speculation Neiman’s could be a bankruptcy candidate. The retailer did show some improved selling trends last year but decided to discontinue publicly reporting its financial performance regularly, decreasing visibility into its operating results. Bloomberg first reported Monday evening that NMG was considering a possible bankruptcy but that no decision has been made.
A Neiman’s bankruptcy would be an opportune time for Hudson’s Bay Co. — operator of Saks Fifth Avenue, Saks Off 5th and Hudson’s Bay — to pursue a takeover. It’s no secret that Richard Baker, executive chairman and chief executive officer of HBC, has long been interested in combining Saks and Neiman’s to create a dominant North American luxury retailer. A bankruptcy would bring the price on Neiman’s down, though retail sources question whether Baker could raise the money required to buy NMG, considering HBC has its own operating difficulties and has been losing money, and much was spent to take the company private this month at 11 Canadian dollars a share. Baker has a track record for devising innovative financial deals and partnerships.
“Absolutely, Richard would go after Neiman’s, even if the virus hasn’t subsided yet. He could still be able to reduce costs through synergies of combining the businesses,” said one former high-ranking retailer, who requested anonymity. “If he could get the business now, he would do it in a minute, but he’s not going to go after Neiman’s until they do a restructuring. Richard has been talking to the owners for ages.”
“I think it’s going to happen,” said Walter Loeb of Loeb Associates, when asked if he thinks NMG will go bankrupt. “There’s over $4 billion in debt and no money is coming in. I believe they explored a partnership with Saks Fifth Avenue several times but in the current environment with the coronavirus, it became impossible. It saddens me that a company of this quality is coming to this. Neiman’s will be a smaller, more manageable company as a result.”
“Neiman’s has three choices,” said Eric Snyder, partner at New York City-based law firm Wilk Auslander, and chairman of the firm’s bankruptcy department. “Neiman’s could reorganize, or liquidate and go the way of Barneys and other retailers, or try to do a sale as a going concern. But you can’t have a going-out-of-business sale because everyone is locked down,” due to COVID-19. “And I don’t think anyone can bid if you don’t know when you are going to start operating again. I don’t see any buyers out there at this point because of the uncertainty of the lockdowns. At this point, until there’s more clarity [about the pandemic], nothing is going to happen in the next few weeks. But they will be reaching out to lenders and studying their restructuring options. Of the three choices, using the bankruptcy process to cut debt and stay in business, that’s their best alternative.”
Snyder said that despite the disruption caused by the pandemic, it’s possible to file for bankruptcy. “That’s not an issue. It’s all done online. The issue in this environment is getting debtor-in-possession financing.”
“You always need to look at a chain and say, ‘Do they have a reason to be, should they exist?’” said Antony Karabus, ceo of HRC Retail Advisory. “Neiman’s 100 percent has a reason to be, it’s a uniquely differentiated business, which has a very loyal and deep trust with a client base that is the most discerning clientele in the industry, in the country.
“It would be unimaginable for me if Neiman’s were to go away,” Karabus said. “I believe there’s a financial problem that needs to be worked out, but that Neiman’s should be a part of our lives for a long time to come.”
There’s no certainty that NMG will go bankrupt. In the event of a bankruptcy, its owners, Ares and CPPIB, would wipe out their investment in the business for pennies on the dollar.
Also, lenders are likely to be more forgiving considering the challenges created by the pandemic, and allow for more time to pay off debt and see if Neiman’s, post-pandemic, can improve business performance.
The impact of the pandemic on business is often compared to the Great Recession. During those years, NMG saw its volume sink by about one-third. As the stock market goes, so goes the spending at Neiman’s, Bergdorf’s and other luxury retailers. Affluent consumers do curtail their high-end shopping when Wall Street tanks.
NMG, led by ceo Geoffroy van Raemdonck, is in the midst of a four-year “transformation” plan intended to create a “luxury customer platform” involving becoming “seamlessly” multichannel, delivering new kinds of experiences and products — fashion and nonfashion — no longer being considered simply a department store business, sharpening the focus on full-price selling, personalization and strengthening customer relationships. The plan also targets those spending less than $10,000 annually at its stores and web sites and to win over new customers, while still focused on much bigger spenders. Van Raemdonck launched the transformation plan in August 2018, but a bankruptcy would likely derail the transformation effort.
The company is also streamlining, and closing most of its 22 Last Call clearance outlets. The retailer earlier this month said it’s letting go of about 500 Last Call workers, and another 250 associates or so at Neiman’s department stores though some new roles would be created for team and client development. NMG has 13,700 corporate and store associates.
In addition, NMG is considering selling two distribution centers, in Longview and Las Colinas, Tex. NMG also has distribution centers in Pittston, Pa.; Whittier, Calif., and a third in Pinnacle Park in the Dallas area.
To protect workers, customers and the business itself from the pandemic, NMG has temporarily closed all stores, told associates to work from home and is encouraging them to contact their senators and urge them to support the retail industry during the COVID-19 crisis.
Additionally, NMG is partnering with Joann Stores to produce nonsurgical, personal protective equipment including masks, gowns and scrubs for front-line health-care providers. Alterations departments will receive product from Joann Stores to create the equipment. While these materials are not medical grade, Jo-Ann Fabric secured patterns and templates and is shipping fabric and materials recommended for medical settings, including the guidelines provided by the Providence Hospital System in Washington. While social distancing, NMG’s alterations specialists will create these products. Because of the critical shortage, health authorities and hospitals have changed guidelines for what level of protection is recommended. The CDC says homemade fabric masks are a crisis response option when other supplies have been exhausted. NMG and Joann will cover the cost of shipping and delivery.
As Stores Cancel Orders, Brands Scramble to Adapt
Some brands said retailers canceled spring orders that hadn't arrived yet, while smaller brands said they're trying to negotiate with the stores so they can stay afloat.
Many said they’re trying to negotiate with stores and push the deliveries back a few weeks since the brands have already produced and paid for the merchandise. Others have accepted their fate.
Others, such as Ramy Brook, have furloughed their employees while giving them health-care benefits, while firms such as Elie Tahari permanently shut down the company March 20 with immediate termination for all its employees. Rebecca Minkoff, which is continuing its e-commerce business, has laid off all of its employees in its wholesale division.
Lafayette 148 confirmed that stores canceled the line’s spring merchandise that hasn’t come in yet.
“Spring is cancelled. Whatever hasn’t been shipped is canceled,” said Deirdre Quinn, cofounder and chief executive officer. Asked what she does with all the merchandise, she said, “I have one outlet.”
“Luckily for us, we had tightened up our inventory a lot in the past year. It was discipline for the future of the business model. We decided to tighten a lot. That was good luck,” she said. “We have a tight window. I wasn’t able to stop spring. What was manufactured, if it’s not here, it’s on its way. Basically, April and May groups were canceled.”
But she said Lafayette 148 has a direct-to-consumer catalogue that it had already printed, and they were able to slow down the drop of that book from early April to closer to the end of the window. “And now it’s exclusive product,” said Quinn.
When told that some smaller firms said stores hadn’t canceled spring orders yet, Quinn said that maybe the stores know that if they cancel the little guys they’ll put them out of business. “We’re pretty big, depending on when business turns around, they can come back to me, because my stuff sells, but they have to get rid of what they have. I’ve accepted my fate. I ran my numbers, I’m running my business on the fact that spring isn’t going to happen for me,” said Quinn. “I’m going to have to take those units and get creative.”
The brand hasn’t discounted merchandise on its own web site yet, although she knows others have.
Quinn said her employees are her biggest asset, and she hasn’t had to lay anyone off. “We’ve spent 24 years building this company, and I’ve had people with me for 24 years. I have full intentions of weathering this storm and staying in business,” said Quinn.
“As owners of the company, we have put our earnings completely on hold, we have asked our employees across the board to take a 15 percent pay cut. It’s really hard. We told them this morning, [Monday].”
She said she didn’t have to lay anybody off, unless they came from an outside service agency, such as a receptionist. “It can change from week to week, but I don’t want to do that. I truly believe when they get it together, those of us who figure it out will survive it,” she said.
The company owns its factory in Shantou, China, which now doesn’t have the work since stores canceled the orders. She said they hadn’t cut pre-fall and fall yet. “I know that’s not the case with everybody else. Having the tightest window in the world is good and bad. If everyone else gives discounts because they have the goods and they have no choice, we might be cut [discounted] more.” She noted that she can’t control what retailers do for spring with the merchandise on their web sites. “But I can control what happens starting with pre-fall and fall. I truly believe we are an important vendor and a good partner,” she said. Lafayette 148 has 25 stores globally.
She said they’re shaving back style-wise about 20 percent, but they can react again since they have the fabric. “If business comes back strong in our stores, I’ll be able to react. Our advantages are our disadvantages, and our disadvantages are our advantages. The game is how much nerve to do you have to withstand it all? It’s like a roller coaster ride. You have to have a good stomach.” she said.
“One day at a time, that’s the way we’re working,” added Quinn.
She said her sales people are working at home, revising the orders. The design team is working on the next season and it’s going to be smaller. They’re working on resort for November-January delivery. That is expected to be shown in June.
One alternative would be to put the buys together and virtually show retailers. “In some ways I look at this as maybe this is a new way of working in the future,” said Quinn.
See Also: Marc Jacobs Discusses the Coronavirus Impact
Lafayette 148 has 300 employees in the Brooklyn Navy Yard headquarters, and 50 employees outside New York.
The company is partnering with the Economic Development Corp. and the Brooklyn Navy Yard to make personal protective equipment for New York-area hospitals. Over the weekend, one of Lafayette 148’s pattern makers created patterns for surgical gowns, which were then digitized and sent off for prototyping. They have sample makers on standby waiting for instructions from the group to start production as soon as they get the go-ahead. “We’ll farm it out to anyone who wants to help us sew,” said Quinn.
Rick Darling, chief executive officer of Global Brands Group, said that retailers have canceled spring orders. His roster of brands includes Juicy Couture, Spyder, Sean John, Jones New York, Ellen Tracy and Tahari Arthur S. Levine.
“We have been in close contact with our retail clients and are working their cancellation requests. Given the circumstances with stores closed for an unknown period of time, we would expect a fairly significant impact on spring/summer orders,” he said.
At this stage, he hasn’t had to furlough corporate employees. “We have downsized our warehouse associates and have closed our retail stores in the U.S. and Europe. I think the question of furloughs or other reductions needs to be reviewed as we get better visibility into how long the retail closing lasts,” said Darling.
The company continues to work on fall and holiday programs and is in the process of developing spring 2021. “All of our people in the U.S. and Europe are home and we have provided all of the means to communicate and use our systems to look forward to the other side of this. I am actually really pleased at how well that is working,” said Darling.
Asked what he plans to do with the spring merchandise that’s been canceled, he said, “We are working through that with our supplier partners.” He isn’t halting production of fall merchandise in its factories. “At this stage, we have impacted spring/summer, but are moving forward with fall and holiday. Those orders could be adjusted as we get a better feel for the market,” said Darling.
Ramy Brook Sharp, founder and co-ceo of Ramy Brook, the advanced contemporary firm, said that her orders haven’t been canceled yet. “They understand we have product in the works, and nothing’s been officially canceled,” she said. “It’s a dialogue.”
She said that on Monday she had to furlough all of her company’s 45 employees, but would be paying their health insurance. “We’re continuing to pay health insurance and also paying any accrued sick and vacation days,” she said. She is paying health insurance on a week-to-week basis. The intention is that the employees will be able to return to their jobs when this is over.
Sharp said the company would continue with its e-commerce. Up until a week or two ago, “we were doing really well,” she said. “I really believe once we get through this we are going to soar. There will be changes, but I feel confident we’ll get through this.”
They’re in the process of making the fall line, which has been designed and sold at market. All their orders are in. They are receiving prototypes for November, December and January. “I’m continuing to work and move ahead,” she said. Right now, she’s not making any changes in the fall production. She produces in China, India and Peru. She makes her denim in L.A., which has come to a halt.
She also said her company is keeping its showroom at 231 West 39th Street in New York.
“It’s so sad. You have to do whatever it takes to keep a business afloat,” she said. “There still is a need for product. We’ll come out strong. That’s my whole message. If I have to do 100 jobs myself, that’s what’s I’m going to do. Maybe 20,” she said.
Rebecca Minkoff, which still has a sizable team, decided to lay off its wholesale employees. They still have full design and operations teams in place.
See Also: Online Business Waylaid by California Coronavirus Orders
Uri Minkoff, ceo of Rebecca Minkoff, said that with stores shut down and not taking in product, the company decided to let go of people in wholesale and customer service. “We can always scale up,” he said. As Rebecca Minkoff is a direct-to-consumer company for now, he said there are certain functions that are tied to what they can control over the foreseeable future. He said he wanted to give the wholesale employees the best opportunity to maximize whatever the government is giving them. “We’ll hire them if stores open up again,” said Minkoff.
“The big thing is we have the proper full complement of the team needed to run a direct-to-consumer business in what looks like will be at least a 60-to-90-day timeframe. We have design, marketing, operations, finance and shipping,” he said. There’s also a skeleton team that can service whatever store is open.
Discussing cancellations, he said some stores will allow spring goods to flow in late, and those that would traditionally ship in April can ship in June. Other stores are trying to cancel spring and jump into fall. “Our position is we have a legally binding P.O. [purchase order}. They legally can’t cancel,” said Minkoff. He said that’s how he’s been spending his days, with many back-and-forth negotiations.
“The ones that cancel say they’ll just jump into fall. Obviously that’s tough, but it doesn’t give me a great taste to want to work with them, and we’ll still have to find places with those products,” he said.
Elie Tahari didn’t return numerous phone calls seeking comment, but sources said that the business shut down permanently Friday without any severance packages.
Susan Sokol, cofounder of the High Alchemy showroom, a luxury showroom of emerging fashion and accessories designers, explained that she is in frequent contact with retailers to prevent cancellations.
“We’re trying to be supportive to our 20 designers who are from all over the world,” she said. “What we’re trying to do is be sensitive to the retailers, but also be extremely supportive of our small designers,” said Sokol. She said that if orders got canceled, it would have a huge impact on a small designer, who has already invested money in raw materials and labor.
She believes that when stores reopen, hopefully sometime in the spring, they’ll be sitting on a lot of spring merchandise, which arrived in the stores in February and March. “We’re looking at May/June deliveries and pushing them out so it’s almost a fall delivery,” she said. Since a lot of companies offer buy now-wear now merchandise, May/June merchandise can be pushed a few weeks into August. “Most of our designers do transitional clothing,” she added.
She also feels that the resort market should move from early June to later in that month, or have designers video their look books and work with retailers to do a virtual market. “The industry needs to come together with leaders and collectively agree to come up with a solution to have that market later,” she said, adding that especially since factories are closed, a resort line wouldn’t be ready for early June. Also she questioned whether people would be comfortable traveling to their factories.
For resort and pre-spring, she’s also suggesting that her designers keep their lines smaller and focused. “If we have it by the end of June, we’ll do it virtually and Skype, there are all different ways to think outside the box,” said Sokol.
“I feel the fashion industry in the U.S., where New York leads the pack, it’s very important for the industry to work collectively and come up with a united approach to the next pre-fall market.” said Sokol.
Anthony LoRusso, senior vice president of wholesale at Eileen Fisher, said, “We are committed to sustaining our long-term and newly entered partnerships. In this fast-changing landscape, we have been connecting more frequently than ever to address how we shape the immediate and future demands of our businesses together. We are working strategically to achieve the strongest scenarios we can at this time.” He declined to be specific about what he’s doing and whether Eileen Fisher merchandise for spring, that hasn’t been delivered yet, has been canceled.
Minnie Rose sent a letter to its retail partners explaining a new program it developed called #MinnieRoseCares. It’s an opportunity for its retail stores, which may not have an e-commerce business or Instagram accounts, to generate sales while their stores are shut down. They are asking their stores to e-mail their customers and let them know that if they buy something on minnierose.com, and mention that store at checkout, the customer gets a 10 percent discount, the store gets a percentage, and a percentage will be donated to # nokidhungry. “This is my way of paying it forward,” said Lisa Shaller-Goldberg, president of Minnie Rose. “I am extremely grateful for all of the customers I have who are loyal, who love and support Minnie Rose over 18 years, Without them, Minnie Rose would not have become the success that it is.”
She said she’s not laying off anybody. “We’re taking it day by day, and I’m waiting for what the government is doing to help. The most important thing is the loan that will keep employees paid, so I don’t have to lay off people.” She has 20 employees at her company.
She said stores are still writing fall orders and seem confident things will bounce back. “Until fall, I have to keep the business going. That’s the biggest challenge right now.” Ironically, she said January and February shipping was the best it’s been in years. “Being a seasonal business, that’s a big deal for me.”
>>> Up
* AB InBev Raised to Buy at Bryan Garnier; PT 60 euros (+)
* Akzo Nobel Raised to Buy at Citi (+)
* Alcon Raised to Hold at SocGen
* Assura Raised to Buy at Berenberg; PT 75 pence (+)
* Bachem Raised to Neutral at Credit Suisse; PT 163 Swiss francs (+)
* Bankia Raised to Neutral at UBS; PT 90 euro cents (+)
* Big Yellow Group Raised to Buy at Berenberg
* Bodycote Raised to Neutral at JPMorgan; PT 615 pence
* Boohoo Raised to Sector Perform at RBC
* Centamin Raised to Buy at Berenberg; PT 143 pence (+)
* Chr. Hansen Raised to Hold at Berenberg; PT 450 kroner
* Civitas Social Housing Raised to Buy at Berenberg; PT 100 pence (+)
* Continental AG Raised to Buy at Jefferies; PT 78 euros
* Daimler Raised to Buy at Jefferies; PT 40 euros
* Derwent London Raised to Buy at Berenberg; PT 3,600 pence (+)
* Deutsche Boerse Raised to Buy at DZ Bank; PT 130 euros (+)
* Enagas Raised to Neutral at JB Capital Markets; PT 19.30 euros (+)
* Entra Raised to Buy at Arctic Securities; PT 167 kroner
* Getinge Raised to Reduce at AlphaValue
* Glanbia Raised to Buy at Berenberg
* Greencore Group Raised to Buy at Peel Hunt; PT 170 pence
* Hannover Re Raised to Buy at SocGen; PT 145 euros
* Helical Raised to Buy at Berenberg; PT 375 pence (+)
* Hella Raised to Buy at Jefferies; PT 31 euros
* Hexagon Composites Raised to Neutral at SpareBank; PT 25 kroner
* Hufvudstaden Raised to Buy at SEB Equities; PT 175 kronor
* Informa Raised to Buy at Berenberg; PT 625 pence (+)
* IWG Raised to Hold at Berenberg
* Latte d'Italia Raised to Buy at UBI Banca; PT 3.40 euros
* LEG Immobilien Raised to Buy at Deutsche Bank; PT 120 euros
* Lok'nStore Group Raised to Buy at Arden Partners; PT 480 pence (+)
* Mediolanum Raised to Buy at Citi
* Novozymes Raised to Hold at Jyske Bank; PT 290 kroner (+)
* Pearson Raised to Hold at Berenberg; PT 450 pence (+)
* Primary Health Raised to Buy at Berenberg; PT 150 pence (+)
* Publicis Raised to Buy at Berenberg; PT 38 euros (+)
* REN Raised to Buy at SocGen; PT 2.75 euros
* Rightmove Raised to Hold at Berenberg; PT 400 pence (+)
* Scor Raised to Buy at SocGen; PT 30 euros
* Schibsted Raised to Buy at Danske Bank Markets; PT 257 kroner (+)
* Shaftesbury Raised to Buy at Liberum; PT 900 pence
* SKF Raised to Neutral at JPMorgan; PT 130 kronor
* Square Raised to Neutral at Nomura Instinet; PT $49
* Total Raised to Outperform at Bernstein; PT 38 euros
* Vestas Raised to Buy at Jyske Bank; PT 680 kroner (+)
* Vitrolife Raised to Hold at Danske Bank Markets; PT 136 kronor (+)
* Wolters Kluwer Raised to Buy at Berenberg; PT 69 euros (+)
* Workspace Raised to Hold at Berenberg; PT 700 pence (+)
>>> Down
* Air France-KLM Cut to Sell/HighRisk From Buy, Target Cut to EUR1 From EUR9 by Citigroup (+) !!!!!!
* Aker Solutions Cut to Neutral at Credit Suisse; PT 6.70 kroner (+)
* Akzo Nobel PT Cut to 80 euros from 102 euros at Deutsche Bank
* Andritz Cut to Neutral at JPMorgan; PT 33 euros
* Arkema PT Cut to 90 euros from 115 euros at Deutsche Bank
* BBVA Cut to Neutral at UBS; PT 3.30 euros (+)
* Covestro PT Cut to 45 euros from 58 euros at Deutsche Bank
* DS Smith Cut to Hold at Berenberg
* EasyJet Cut to Neutral From Buy, Target Cut to GBP5.90 From GBP14 by Citigroup (+)
* Endesa Raised to Buy at Grupo Santander; PT 23 euros (+)
* Equiniti Cut to Hold at Berenberg
* Evonik Cut to Hold at Berenberg; PT 21 euros
* Faurecia SE Cut to Hold at Jefferies; PT 30 euros
* Givaudan Cut to Hold at Berenberg
* Grifols Cut to Neutral at Citi
* Groupe Crit PT Cut to 45 euros from 70 euros at Oddo BHF (+)
* Intu Cut to Sell at Berenberg; PT 1 penny (+)
* JD Sports Raised to Buy at Stifel; PT 540 pence (+)
* Johnson Matthey PT Cut to 2,700 pence at Deutsche Bank
* Johnson Service Cut to Hold at HSBC; PT 100 pence
* Kering PT Cut to 525 euros from 635 euros at Citi
* Lindt & Spruengli Cut to Hold at Berenberg
* Liontrust Asset Cut to Hold at Investec; PT 870 pence (+)
* *Lufthansa Target Cut to EUR0.50 From EUR10.00 by Citigroup (+)
* Mears Cut to Hold at Liberum; PT 150 pence (+)
* Mediaset Cut to Hold at Berenberg; PT 1.75 euros (+)
* Merck KGaA Cut to Add at AlphaValue
* Merko Ehitus Cut to Neutral at Swedbank; PT 8 euros
* Mitie Cut to Hold at Liberum; PT 80 pence
* Nestle PT cut from 122 to 116 CHF at Berenberg
* Nexans Cut to Neutral at JPMorgan; PT 29 euros
* OVS Cut to Neutral at Banca Akros (ESN); PT 1 euro (+)
* ProSieben Cut to Hold at Berenberg; PT 10 euros (+)
* Prysmian Cut to Neutral at JPMorgan; PT 15.50 euros
* RDI REIT Cut to Hold at Berenberg; PT 80 pence (+)
* Staffline PT Cut to 25 pence from 100 pence at Liberum (+)
* Swatch Cut to Add at AlphaValue
* Synthomer PT Cut to 265 pence from 410 pence at Deutsche Bank
* Taaleri Cut to Reduce at Inderes; PT 6.50 euros
* TechnipFMC Cut to Neutral at Credit Suisse; PT $9 (+)
>>> Initiation
* Anglo American Resumed Equal-Weight at Morgan Stanley
* Calisen Rated New Buy at HSBC; PT 225 pence
* Electrolux Professional Rated New Buy at Handelsbanken (+)
* Equinor Reinstated Hold at Berenberg; PT 140 kroner (+)
* HBM Healthcare Rated New Buy at Baader Helvea (+)
* OMV Reinstated Buy at Berenberg; PT 33 euros (+)
* Repsol Reinstated Hold at Berenberg; PT 8.60 euros (+)
>>> Call
* Akzo Double-Upgraded as Citi Expects Ebit Growth in 2020 (+)
* Daimler Double Upgraded on Valuation, Asset Strength: Jefferies
* EON’s Strategy Should Be Well Received by Market, RBC Says (+)
* Grifols Cut as Citi Sees Major Virus Disruption for Rest of Year (+)
* Nordic Bank Dividends Seen Cut on ‘Social Reasons’: Citi
* German Residential Resilient in COVID-19 Crisis, Berenberg Says (+)
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ThyssenKrupp (TKA TH) +11%
- Thyssenkrupp Expands Job Cuts in Overhaul of Ailing Steel Unit
- Fraport (FRA TH) +10%
- TUI (TUI1 TH) +9.7%
- Grenke (GLJ TH) +9.1%
- OMV (OMV TH) +8.3%
- Alstria Office (AOX TH) +8%
- VW (VOW3 TH) +7.9%
- Hochtief (HOT TH) +7%
- Rheinmetall (RHM TH) +5.7%
- HeidelbergCement (HEI TH) +5.7%
- Kering (PPX TH) -1.9%
- Kering PT Cut to 525 euros from 635 euros at Citi
- Credit Agricole (XCA TH) -2.1%
- Unibail (1BR1 TH) -2.3%
- H&M (HMSB TH) -3.5%
- Stock gained 13% yesterday