How are fashion brands surviving the global pandemic?
For many wholesale companies, the writing was on the wall that they would have to furlough or lay off a good percentage of their employees, and for those remaining, give pay cuts in light of the pandemic and thousands of store closures. A few are managing to keep employees in place as they proceed cautiously.
As stores continue to extend their closings and furlough employees companywide at such retailers as Saks Fifth Avenue, Macy’s, Neiman Marcus and Nordstrom, the fashion brands have been taking needed steps to right-size the operation in these critical circumstances.
As reported, G-III Apparel Group said last week that it was furloughing about 60 percent of its wholesale operations segment employees, effective April 6. And its top executives, Morris Goldfarb, chairman and chief executive officer, and Sammy Aaron, vice chairman and president, agreed to receive no annual salaries, and top executives agreed to a 40 percent reduction in their annual salaries.
In addition, the base annual salaries of other senior personnel will be temporarily reduced by 10 percent to 40 percent, depending upon salary levels.
Capri Holdings said Monday its top executives, including John D. Idol, chairman and ceo; Michael Kors, chief creative officer of Michael Kors; Donatella Versace, chief creative officer of Versace, and Sandra Choi, chief creative officer of Jimmy Choo, have voluntarily elected to forgo their salary for fiscal 2021, and the company will be exploring opportunities to reduce overall salaries at various levels by about 20 percent.
Among other companies, Ramy Brook said it was furloughing all of its 45 employees, Tibi laid off employees, Rebecca Minkoff laid off all its wholesale employees, and Elie Tahari completely shut down, as reported, although its web site, Elietahari.com, is still operating. Lafayette 148 said it was asking its employees to take a 15 percent pay cut.
PVH Corp. said it was taking a hard look at expenses and reducing or canceling discretionary spending and variable expenses in many areas to navigate successfully and take the pressure off business. “This includes our marketing expenditures, although we continue to invest in our digital business, as this is a critical channel for us to maintain our connection with our consumers and to transact globally with our customers,” said Manny Chirico, chairman and ceo, on the earnings call last week.
Many sportswear firms declined to comment, saying that their plans were still being formulated, and the picture appears to change daily. But a few gave some insights into how they are proceeding. Many sportswear firms are working hard to shift April and May merchandise into later deliveries in an effort to salvage the inventory. And firms are taking advantage of their e-commerce operations to move spring merchandise, often at discounted prices.
According to Deborah Weinswig’s weekly Coresight Research report on April 5, during the physical shutdown, she said most remaining discretionary demand will head online, although essential retailers such as mass merchandisers remain open and will continue to sell nonfoods in stores, capturing some residual demand. “How much discretionary demand remains over the course of such a shutdown is not yet apparent, but we expect it to be significantly depressed,” said Weinswig.
In the U.S., e-commerce would have captured about 22 percent of all nonfood sales in 2020, had the coronavirus outbreak not impacted events, according to Coresight Research estimates from Census Bureau data.
“We expect much lower demand (even online) in categories such as apparel, some beauty categories and some home goods, due to less need by consumers stuck at home and lower interest from hard-hit shoppers,” wrote Weinswig. She said e-commerce will see some gains as sales transfer from closed stores, but with depressed demand, “we do not anticipate online sales to be anywhere close to the value of in-store sales and that most store-based discretionary sales will be lost or postponed,” said Weinswig.
Brands, meantime, are adjusting their staff levels.
Jane Siskin, ceo of Jaya Apparel, which owns Cinq à Sept and Likely, said, “Despite all the uncertainty in the world right now, it has never been more clear that we have two great brands, the greatest team in the industry and great business partners worldwide. We have faced adversity before and have fought to get through it every single time.
“It is our commitment to come out on the other side of this, stronger and better than ever. In order to do that we had to make some serious and painful decisions that include the furlough of staff members in both our New York and Los Angeles offices,” said Siskin.
Anthony LoRusso, senior vice president of wholesale at Eileen Fisher, said the company has also had to furlough employees and reduce salaries.
“Our employees are a top priority as is our company’s vitality and purpose. In light of the current challenges we all face and the retail climate in front of us, we had to review all areas of the corporate side of the company to determine what is needed right now inclusive of wholesale. Decisions to furlough, reduce salaries and in some cases reduce scope have all been part of the steps we’ve taken to keep our company healthy and to sustain our work into the future,” said LoRusso.
Asked for specifics, he said, “We must be responsible to the impact this crisis is having on our business. Through the lens of our values, we determined what is essential work in this moment, and how to best effect these points of focus in order to survive. Now more than ever, access to health care is essential and we made our decisions so that all of our employees will have continued access. To do this, we had to furlough or reduce the job scopes of more than half of our employees, and reduce salaries for those remaining full-time.”
Some firms are keeping their employees in place.
In a statement from Veronica Miele Beard and Veronica Swanson Beard, cofounders of Veronica Beard, they said: “We are struggling like everyone else during this difficult time. Our top priority is the well-being of our Veronica Beard team and we are managing without layoffs or furloughs.”
Jed, the New York-based luxury sweater company founded by Jed Krascella and Ashley Leeds, sent out an e-mail late last month saying that in light of the unprecedented COVID-19 pandemic and because they operate “in the epicenter of the outbreak in the U.S.,” and want to protect the safety of their colleagues and community, they have decided to temporarily suspend the fulfillment of all orders placed via their web site, Jedofficial.com.
Meanwhile, 3.1 Phillip Lim has taken to social media to encourage people to shop online. The company ran a sponsored post on Instagram and Facebook: “To Our Friends and Family. The health of our independent business depends on the support of our global citizens. By shopping with us, you make artistry, innovation, and the creation of beautiful products possible. As a valued member of the 3.1 Tribe, we want to thank you for your continued support by offering 25 percent off pre-spring and spring styles.” It is also offering archival looks up to 75 percent off.
Proenza Schouler, as well, is offering for the first time a curated edit of past seasons, up to 75 percent off on proenzaschouler.com. Its current spring merchandise is offered at full price on its web site.
Elsewhere, Tanya Taylor is offering a 25 percent discount on all full-priced merchandise on its web site, along with donating funds with every purchase for five non-medical grade masks to be created in conjunction with its fundraising effort, while Altuzarra is giving 20 percent off pre-spring and spring/summer collections on its web site for a limited time. It is also donating 10 percent of online sales to NoKidHungry.org.
On its web site, Rag & Bone ran a letter to its customers Friday from cofounder Marcus Wainwright.
“This is a crazy time. You don’t really need me to tell you that though. At Rag & Bone we have had to adjust like everyone else. We have had to make some incredibly hard decisions to keep our company healthy. Decisions I personally thought I’d never have to consider, let alone make,” wrote Wainwright.
“As the industry in which we work has come to a crashing halt, we’ve also been given an opportunity to re-evaluate who we are, what we do and why we do it….But like the rest of the world and the rest of our industry we are doing our best to navigate our way through this…To that end we have decided to lower our retail prices across the board until this is over, or until we are allowed out of our homes and back to work,” he wrote.
Wainwright said everything at rag-bone.com is discounted from 25 to 70 percent. The reduced pricing will end on May 1 at 11:59 p.m., but may be extended at Rag & Bone’s discretion.
While many brands are relying on their e-commerce sites to help weather the storm, it hasn’t been without its challenges.
The Row, which couldn’t be reached for comment, has temporarily closed its U.S. distribution center in line with local government guidelines, effective March 25. “You may continue placing your orders and we will deliver them to you as soon as our warehouses reopen,” according to the company’s web site.
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