AAFA executive summit at the Conrad Washington, D.C.

Sunlight sloped in around columns lining the floor-to-ceiling windows on the second floor of the Conrad in downtown Washington, D.C., where supply chain officers, sustainability leads, accountants and other executives at apparel and textile companies milled around an elegant breakfast spread. 

But tension around the global outbreak of COVID-19, the disease caused by the coronavirus, was palpable at the American Apparel and Footwear Association’s annual executive summit held there this week. There are now more than 93,000 confirmed cases of the illness around the world, according to a March 4 situation report by the World Health Organization, which included an illness site map that showed the disease spreading through Europe and the Middle East and in the U.S. 

WHO has said that the illness has killed 3.4 percent of victims among the reported COVID-19 cases, though the actual mortality rate may be harder to pinpoint as there may be more unreported cases. 

“Coronavirus is really a humanitarian crisis,” Stephen Lamar, the AAFA’s president and chief executive officer told WWD at the event. “What our members are telling us is, first and foremost, they’re looking out for the health and safety, the well-being, of their associates, workers, consumers, their partners.” 

At the two-day event, which took place Tuesday and Wednesday, staff of the retail lobbying group had placed hand sanitizer bottles, disinfectant wipes, tissues and World Health Organization hygiene guidelines on drinks tables and countertops. Attendees gave one another wide berth as they networked, tapping elbows or bumping fists rather than shaking hands. As guests filed into the Grand Ballroom for panels, AAFA staff darted around disinfectant-wiping even the hand sanitizer bottles and nozzles. “If you think about it, that’s what everybody’s touching all day,” a staff member said as she rushed by.  

The summit drew roughly 200 attendees, with just a handful of unclaimed name tags left at the registration table on the event’s second day, and among those absent were guests who would have had to travel in from overseas.

The AAFA recognized the importance of implementing outbreak safety protocols given the timing of the event, Lamar said. 

“When we staged our summit this week, we were very mindful of that, very much looking out for the health and safety of the attendees, and instituted a number of procedures and protocols, all recommended by health experts about things we could do,” he said. “Things like, social distancing, making sure there’s hand sanitizers, other recommendations, so we could practice safe conferencing.”  

AAFA’s members, more than a 1,000 companies including Adidas America Inc., Gap Inc., and VF Corp., have generally reported supply chains ramping up after the Chinese Lunar New Year break, with factories running and products still being shipped, albeit in a reduced capacity, said Lamar. The slowdowns are more likely to affect back-to-school inventory a few months down the road than current spring and summer demand, he said.   

“The associates, workers, the artisans aren’t coming into the factories at the same level as they might normally have been, or if they are, perhaps they’re still going through quarantines, or…you don’t have the materials to run at the full level that you were,” he said. 

Attendees weighed in similarly on outbreak-related logistics delays. Chris Alt, senior vice president at Elevate Textiles, which includes thread-making company American & Efird, as well as textile companies Burlington and Cone Denim, described hearing about bottlenecks in land transportation within China hampering the movement of goods between factories and distribution centers to ports, which often involves crossing provincial borders. 

“We do know that there have been slowdowns in transportation to the ports, it’s making it challenging getting from inland to the ports, and I think everybody has that same opinion about getting through the provinces,” said Alt, speaking generally about what he has heard about challenges for apparel and footwear brands. Alt did not comment on A&E’s operations. 

As the outbreak spreads, apparel companies’ concerns are extending beyond the supply chain to the economy overall. Retail executives at the event said they feared that a prolonged outbreak could hamper not just supply, but demand, as consumers potentially hold back on spending or avoid tourism. 

On Monday, the Organization for Economic Cooperation and Development projected that a prolonged widespread outbreak could shrink global growth to 1.5 percent in 2020. The next day, the Federal Reserve cut the benchmark interest rate by 0.5 percent in response to such concerns. 

Lamar acknowledged the measure, but sought to make the case there was more the government could be doing. For instance, even after the “Phase one” trade deal between U.S. and China that halted some tariffs that had been scheduled to take effect in mid-December, other tariffs on Chinese imports, including textiles, apparel and clothing, remain in place. 

“This isn’t really a question about supply chains, as much as it’s really a question about what impact is this going to have on the global economy.” Lamar said. 

“There’s a lot of ways in which the federal government can use the many tools at their disposal to provide relief to address the crisis,” he said. “Certainly, one of the ones we talk about is, ‘let’s remove the tariffs.’” 

At the panels, retail executives were subdued in offering recommendations to cope with the outbreak, considering it is still unfolding, and affects companies differently. 

“One of the challenges is, every company is in a different place,” Colin Browne, the chief operating officer of Under Armour Inc. and AAFA’s vice chairman, said on panel.

“Some brands are much more heavily invested in China,” he said. “It’s very dependent on each individual brand and each individual company. We run a very different model than some of the other players here.”

In an earnings call last month, Under Armour’s chief executive officer Patrik Frisk said that nearly 600 monobranded Under Armour doors in China were closed at the time, and that the company expected a $50 million to $60 million hit to its first-quarter revenues in 2020

Sarah Clarke, executive vice president, PVH Supply North America, PVH Corp., and AAFA secretary, echoed Browne’s view. “We’ve put together what I’ve described as a SWOT team, [with] sales, marketing coming together to understand all the information,” she said at a panel. “We’re just sharing as much information [as possible] — what goods are coming in when and what are the alternative options.” 

Meanwhile, Lamar continued to emphasize the safety of product packages shipped from overseas, highlighting guidelines by the Centers for Disease Control and Prevention that coronaviruses don’t survive long on surfaces.  

“One of the facts that’s clear from the CDC is you don’t get the coronavirus from inanimate objections like products shipped through cargo,” Lamar said. “As production begins to move, you don’t want to be afraid.” 

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