The second and most deadliest wave of the “Retail Apocalypse” is now (Covid-19 empowered) more than three times it’s former might, and has left a path of destruction so powerful that it toppled fashion giants and greats (either died or on life support) to such a degree that it changed the whole fashion landscape…….Forever!
Leaving a whole niche (actually several) wide open for emerging fashion brands that reflect the times (Covid-19 times), and offer something of value to consumers. The CDC’s “recommendation” that all citizens out in public wear a face mask, or covering to prevent the spread (and now has become an essential outerwear item, much like men wearing hats in the 50’s and 60’s) as a preventive measure, boomed into a full blown fashion statement movement.
However a traumatized post Covid-19 world will require and demand a bit more. With the advent of Covid-19, 5G radiation, polluted air and water integrating PPE into fashion and everyday apparel makes sense, and in fact is starting now in it’s infancy (thanks to Covid-19).
Face mask’s made with copper is taking hold (due to it’s natural anti-viral/bacterial properties) is a perfect example of integrating Fashion & PPE. However in a post Covid-19 world, we must go further.
Upstart ‘s for this type of Hostile/Climate/Environmental Protective “future clothing” are already springing up, such as this upper body protective “space suit” designed to be worn at sporting events and concerts.
Radiation shielding and Conductive Fabrics will be merged with stylish design to create a “New Norm” in how with wear and perceive fashion that is protective for the wearer, while setting new trends in sustainability and protection in fashion street wear.
In mid March 2020 the Covid-19 pandemic caused a “New York on Pause” Shelter in Place, Social distancing between 1 and a half to 2-meters and everyone must wear a mask unfamiliar world. Businesses had to close (except essential ones, like food and medicine) over 3 million New Yorkers became unemployed, and major fashion retail chains either filed for bankruptcy or closed for good completely.
The Corona pandemic has plunged the global economy into a recessive contraction not seen since World War II. Every sector of industry have suffered, especially fashion. Between January and March 2020 fashion, luxury items and apparel have fell roughly 40% and is predicted to shrink further due to millions of job losses and economic hardship for consumers. Domestic and global fashion companies have begun to go bankrupt, with more expected in the coming months.
With little or no disposable cash, consumers concentrate spending on the “essentials” furthers the fashion industries woes. According to a Mckinsey & Company report: “Even online sales have declined 15 to 25 percent in China, 5 to 20 percent across Europe, and 30 to 40 percent in the United States.”
Consumers are rapidly shifting from “fast fashion” to a more “purpose driven, sustainable action” and transparency in their “quarantine of consumption”. Some of these shifts could include a more digital presence (which is already happening), the decline of wholesale and a switch to “seasonless design” releases.
Established fashion brands as well as emerging designers has dived deeply into mask making to donate to front-line workers (to stay relevant) or to sell online to raise much needed revenue to stay afloat (as well as plugging their brands), as they wait for the dust to settle from the Covid-19 crisis. Influencers are left with no direction and sensing their decline (or even their extinction) in a post Covid-19 world.
What will be the state of the fashion landscape look like after Covid-19 times?
Your guess is as good as mine. For now we have no choice but to wait, watch and see.
It’s such a shame to see good creative brands like Opening Ceremony go the way of United Colors of Benetton (you remember them, right?), as well as having been one of my favorite brands (Brands that we need right now) it carried with it a certain fashionable charm loved by many.
We reported Opening Ceremony being acquired by NGG (New Guards Group) back in January, and the plan was to have the Founders of OC Humberto Leon and Carol Lim, assume new roles as creative directors of the brand, and still operating all four stores. However that didn’t happen and all four Opening Ceremony locations will shutter for good. Opening Ceremony’s online store will operate into June of this year.
The good news is that the brand will also “re-launch” later this year as a fashion collection. But for now let’s say farewell to one of our fashion retail brand greats.
Renown Inc. in Tokyo Japan filed for bankruptcy on Friday, which is part of the Chinese fashion empire Shandong Ruyi (they own about 53% of the company) carrying roughly 13.9 billion yen ($130 million) in debt. The century old company is the largest profile fashion retailer to buckle under the Covid-19 infused retail apocalypse in Japan.
Renown Inc. The former owner of Aquacutum the British clothier, has been in a financial decline for years. Shandong Ruyi has become the majority shareholder from a decade ago, which Renown said is having much difficulty in collecting over 5 billion yen ($45.2 million) in debts from it’s Chinese parent company who is the major shareholder according to Reuters. “It was the first bankruptcy of a listed company in Japan since January 2019″, according to the Japan Times.
The Covid-19 pandemic was cited as the company fall, but the company was suffering from lagging sales and emerging competition from other younger brands like Uniqlo (Fast Retailing Company) for some time now. Renown, the maker of D’urban suits was founded in 1902.
On Friday the largest American Retail chain JC Penny filed for Chapter 11 as the current casualty of the Covid-19 empowered Retail Apocalypse, which so far has toppled Neiman Marcus, J Crew, John Varvatos , Gap Inc, and Aldo Group Inc.
While JC Penney blamed the bankruptcy (which was highly anticipated) filing on the Covid-19 store closures, it failed to cite a 10 year mismanagement streak and declining sales.
The company obtained from the chapter 11 filing $900 million in debtor in possession financing with $450 million of new cash to help during the restructuring process, but could end up in a third party sale or liquidation to satisfy creditors.
The company plans to permanently close stores, but gave no details of which locations (and how many) stores will be shuttered. JC Penney has been around for almost 120 years, but some question if the retail mall anchor should continue to operate.
Thursday May 7th 2020 will be remembered as Dark Thursday as the Corona Virus Lockdown toppled major fashion retailers into bankruptcy. The Canadian based Aldo Footwear & Accessory fashion chain filed for bankruptcy protection in Canada and the U.S. citing financial hardship due to the Covid-19 pandemic, and claiming Aldo as it’s latest victim.
After being forced to close all of it’s 3,000 stores amid the pandemic shutdown, and the Montreal-based company employs about 8,000 workers globally. Aldo Group Inc. filed for protection from the Creditors Arrangement Act in Canada and is looking to do the same in U.S. and Switzerland.
Aldo Group Inc. laid off 270 employees at the Montreal corporate headquarters as it start’s the process of restructuring it’s business model.
On Thursday May 7th Neiman Marcus has declared and filed for Chapter 11 bankruptcy protection, and became the biggest U.S fashion retailer to fall to it’s knees from the Covid-19 pandemic economic fall out. According to a current financial statement made public, the high end fashion retail chain was doing about $5 billion in yearly sales. “facing unprecedented disruption caused by the COVID-19 pandemic, which has placed inexorable pressure on our business,” Geoffroy Van Raemdonck CEO said in a statement according to CBS News.
Neiman Marcus plans to come out of bankruotcy by the fall of 2020. “The binding agreement from our creditors give us additional liquidity to operate the business during the pandemic and the financial flexibility to accelerate our transformation. We will emerge a far stronger company.” The CEO also said in a statement.
Neiman Marcus Inc. has for years been operating and juggling with an unsustainable capital structure. Back in 2013 when the company was acquired by Ares and the Canadian Pension plan Investment which paid a ridiculous amount of money for the buyout, and burdened the company with an enormous amount of debt (sound familiar?), filing for bankruptcy was only a matter of time. However Neiman Marcus appears to have what it take takes to weather the storm, even if it means merging with Saks Fifth Ave. Let’s hope that the economic climate doesn’t get any worse (or thrown another curve ball) or Neiman Marcus Inc. and others like J Crew and Gap Inc. could go the way of “United Colors of Benetton” (remember them?) the Elegant Classy Gentleman Magazine will keep you updated as events unfold.
Rock Star Menswear Fashion Designer John Varvatos Enterprises Inc, being the 2nd fashion brand to buckle under the weight of the Covid-19 pandemic via being in a weak position before the pandemic forced them to close all stores, which nixed it’s corporate comeback efforts. Delaware is the state where the Chapter 11 bankruptcy was filed, with an asset listing of about 50 million with debt and liabilities of about $140 million. To make matters worse, the brand is entangled in a class action suit with a $3.5 million claim.
The New York company is planning to sell itself for an unknown amount to one it’s creditors which is an affiliate of Lion Capital LLC. The brand started in 2000 with it’s edgy modern classic aesthetic, which appealed to celebrities and rock stars. The trouble began in 2015 when an attempt by manager to implement “cost cutting measures” which altered the brands style to attract a more “mass market” customer backfired when it’s “existing customers” didn’t take kindly to the change.
(John Varvatos, Ringo Starr and Barbara Bach)
Nordstrom Inc. three years later, removed a few of Varvato’s brands from it’s stores, which caused an 2018-2019 profit loss of $2.6 million for the company, and launched an internal reorganization which seemed to be gaining traction, but was derailed by the Covid-19 epidemic. on March 18th they laid off 200 employees as they had to close all stores. Online sales is unable to meet debts, with rents of about $2.1 million a month, and inventory orders for spring 2020. The current “Retail Apocalypse” seems to be wreaking havoc on existing brands already laden with huge debt, spurred by the Corona Virus pandemic. Some of these brands may disappear for good.
J Crew the once American retail darling brand has filed for bankruptcy on Monday 05/04/2020, falling victim to the Covid-19 shutdown. However the retail brand was already carrying huge debt, along with fashion stagnation, and went into the Corona Virus pandemic in a extremely weak position on both fronts. J Crew has become the first national chain to fall victim to Covid-19.
On top of the fact that in 2017 J Crew began to lose currency (both financially and Brand cred) and was blind to the fact people began to realize that the brand didn’t stand for absolutely nothing. They were accused of becoming self satisfied and stagnant as a brand, and started to loss sales, carrying a debt of 1.7 billion from a leveraged buyout back in 2011, in addition to losing “Cultural Capital” it’s hard to see J Crew surviving.
However miracles happen everyday, as Texas based TPG brought J Crew for $3 billion, and plans to come out of bankruptcy after the bondholders and lenders exchange their debt for a 82% equity stake in the reorganized company, despite the fact that the brand may never become relevant to who we are today.
The Gap Inc. has become a casualty of the Covid-19 pandemic. First they cancelled all Spring/Summer 2020 orders, furloughing most of it’s workers in the U.S. and Canada and last month in April failed to make rent payments for all stores closed by the Corona Virus pandemic saving about $115 million a month. Since February the Gap has run out of it’s 1 billion in cash, and alerted the SEC in a filing that they have run out of cash to continue to operate.
But on late Thursday via a company press release, announced an offer of about $2.3 billion in new senior secured notes, using intellectual property and real estate as collateral. The Gap Inc. ratings was downgraded by S&P and Moody’s following the offer, to BB- from BB and Ba1 from Ba2 respectfully.
Gap Inc. also said that pending the outcome of lease negotiations, some stores may never reopen. It is quite possible that the Gap could disappear forever, if it cannot rebound from it’s huge debt and the beating from the Covid-19 pandemic.
The Gaps other brands include: Banana Republic, Old Navy and Athleta.