Milan Digital Fashion Week

MILAN Milan’s digital fashion week kicked off on Tuesday with a digital press conference hosted by Carlo Capasa, president of the Italian Camera della Moda, Milan Mayor Giuseppe Sala and Carlo Ferro, chairman of the Italian Trade Agency.

While Sala touted the potential of the city to recover its “past brilliance” and prestige as a fashion capital, and Capasa also delivered a message of positivity, “hope and trust” in the industry, the Fashion Economic Trends reported by the Camera reflected the impact of the coronavirus pandemic.

In April alone, sales plummeted 78 percent, and in the first four months of the year they decreased 28 percent, compared with the same period of 2019.

The contraction occurred on both domestic and foreign markets, due to the lockdown and the general world trade drop of 7 percent.

According to a study just published by the country’s National Institute for Statistics ISTAT, 48.2 percent of companies in the fashion supply-chain are at risk. On the other hand, fashion is also the sector with the highest share of companies that claim to have started reorganization strategies.

Export figures for Italian fashion were in line with the general dynamics of international trade in the first quarter, showing an 8 percent decrease. The eyewear, jewelry and beauty sectors reported a 12.9 percent drop in sales.

Uncertainties, including fresh outbreaks of the coronavirus, cloud forecasts for the end of 2020.

Given the easing of lockdowns in Italy, as well as a resumption of international trade flows, the Camera estimates a decrease in 2020 fashion revenues close to 15 percent, for a total of 57.2 billion euros. A second scenario, factoring in new outbreaks, sees sales dropping more than 18 percent.

“For both scenarios, it is assumed that the financial support measures will prevent the crisis of 48 percent of fashion companies deemed at risk by ISTAT,” the study said.

As per the positive scenario, exports are seen decreasing 12 percent to 48.2 billion euros in 2020.

In the two months of lockdown for which official data are available, the turnover of the fashion sector (textiles, clothing, leather, leather goods, footwear) fell by 42 percent in March and 78 percent in April, with an average decrease of 28 percent overall in the first four months of the year.

“The negative impact of the lockdown was greater on fashion than on the rest of Italian manufacturing,” according to the Fashion Economic Trends study. “Indeed, fashion was the sector that suffered the largest turnover drop in the manufacturing industry. The second sector in this negative ranking is automotive, hit almost as hard as fashion. Order figures also remained still extremely negative in April, as can be easily guessed, with fashion, once again, the sector most affected within the Italian manufacturing industry.”

Jewelry showed a “collapse” and eyewear “a very strong fall” in March and April, the study noted.

The beauty sector was helped by surging demand for soaps and sanitizing gels.

“While the size of the drop recorded in the past months is now clear, a big question mark remains about the companies’ capacity to survive the shock and to react. A study just published by ISTAT shows that fashion is in a peculiar situation, characterized by a strong polarization. On one hand, it is the manufacturing sector with the highest share of businesses at risk of survival [48.2 percent], and on the other hand, it is the sector with the highest percentage of companies that claim to have initiated reorganization and change strategies [38.4 percent],” the Camera said.

The overall volume of world trade in goods fell by 7 percent year-on-year in the first quarter, according to World Trade Monitor statistics published at the end of June. The organization forecasts a significant deterioration with a year-on-year decline close to 20 percent for the second quarter, when the pandemic spread globally.

Italian fashion exports in the first quarter mirrored the general contraction in international trade. In the first quarter, exports to China and Hong Kong fell 27.5 percent and 29.3 percent, respectively.

“Expectations for the second quarter are even worse than those of the first,” the study stated. Should the WTO estimates be confirmed, “fashion, which has been affected by the crisis more than the other sectors, could suffer a drop of 25 to 30 percent, compared to the second quarter of 2019,” Capasa said during the digital conference.

Based on the figures available up to April, provisional estimates point toward a drop in turnover of around 30 percent in the first half compared to the same period of 2019.

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