Blog/News

Unmade Makes its Mark

Sadie Keljikian, Express Trade Capital

Unmade, a London startup, has a unique approach to sustainable, high-end knitwear. The company — as the name indicates — allows customers to customize colors and pattern arrangements before the garment is manufactured. Founded in 2013, the company has already received significant support from investors and consumers alike. The firm’s big-name backers include Connect Ventures, Felix Capital, and Jose Neves (CEO of Farfetch).

Each piece is specifically tailored to the customer’s exact specifications. This results in a method that involves almost no waste, leaving minimal off-cuts and no surplus merchandise.

Frédéric Court, Founder of Felix Capital said in a recent Forbes article “[Unmade] is a formidable enabler for creative talent to design and produce knitted garments that just couldn’t be created before, mainly because of supply chain and design technology limitations.”

Pieces are manufactured using the same type of industrial knitting machine that is used to mass-produced garments, meaning that the knitwear is high quality, but not nearly as expensive as a typical custom made garment. Each piece is created using recently developed software, called Knyttan, which automates the production process.

The plan is to eventually establish production facilities internationally, making the process even simpler by limiting shipping distances to allow customers to create their custom garments and receive them faster. If the investors involved with Unmade are as confident as they appear, we may see Unmade expand beyond its London home into the U.S. soon.

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American Apparel’s Rehab

Sadie Keljikian, Express Trade Capital

It’s been a complicated year for American Apparel.

Founder and former CEO Dov Charney was fired following an internal misconduct investigation involving sexual harassment, defamation of a colleague and misuse of funds back in December of 2014. Since then, the company’s resilience has been repeatedly tested by Charney’s character, internal issues and declining sales.

American Apparel (“AA”) posted consecutive annual losses since 2010 (long before Charney was fired) and filed for Chapter 11 bankruptcy protection in October. During the company’s time under Chapter 11, new CEO Paula Schneider faced an insurrection of employees who were loyal to Charney and felt that new management was not living up to the standards that had been set in AA’s Los Angeles manufacturing facilities. Schneider responded with a memo asking staff “not to be influenced by unfounded personal attacks.”

Since his (very public) removal from the company, Charney has made numerous attempts to win or buy his way back to corporate control. He filed a $30 million dollar defamation case against the hedge fund controlling the company last spring, further depleting AA’s resources.

More recently, Charney and his allied investors from Hagan Capital Group and Silver Creek Capital offered to buy American Apparel in a $300 million bid last month, but were rejected in favor of one that gave control to the company’s debtors.

Schneider has attempted to rebuild the brand since she took over last year and is confident, despite recently mounting difficulties, that the company has a bright future. A Delaware Bankruptcy Court judge approved the new reorganization plan and rejected Charney’s bid, allowing AA to exit Chapter 11 and begin to rebuild without Charney. Schneider says she is relieved to be in a position that will allow stabilization of the company. She plans to address and improve e-commerce operation, the wholesale business, and other “foundational” concerns. In a recent interview, Schneider said of the upcoming changes, “These aren’t sexy things. It’s making sure a size 6 is a size 6 in every pair of bottoms.”

Although American Apparel has had a rough go of it for the last five years, with Charney truly gone and the company refocusing on limiting overtime and creating a consistent product, it’s looking like the brand might finally be out of the woods.

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Gap Goes Green

Sadie Keljikian, Express Trade Capital

As a result of the recent Paris Climate Talks, Gap Inc. announced that it will reduce its absolute greenhouse emissions by 50% by the end of 2020. The White House said of the gathering that “[t]oday, more than 190 countries came together to adopt the most ambitious climate change agreement in history.”

Though the ultimate extent of the agreement’s impact is still undecided, the Climate Talk’s proposals singled out the apparel industry as a particular industry of concern. In terms of manufacturing, the participants were particularly concerned about the wasted and polluted water, toxic chemicals in dyes, and massive quantities of landfill produced by more disposable clothing in recent years.  Moreover, the industry relies on significant power usage and packaging in manufacturing and delivering its goods.

In response, Gap Inc., owner of Gap as well as Banana Republic, Old Navy, Athleta and Intermix, issued a report mandating halving emissions over the next five years. Representatives from the company claim that the reductions will be made throughout all of its subsidiaries, meaning that retail stores and factories alike will be revamped with a more conscientious model.

A significant part of the changes to take place will be measures to save electricity in the retail locations owned by the company, of which there are more than 3,000. Gap Inc. plans to replace light bulbs with more efficient LED lights, use smart thermostats, turn off unnecessary lights at night and use an industry shipment program to limit fuel wastage.

With a large portion of these improvements coming from energy usage, Melissa Fifield, senior director of sustainable innovation at Gap Inc. says: “The beautiful thing about energy savings, unlike some other areas, is it’s very directly tied to cost, and as the cost of energy goes up, there’s an incentive in the business to save that energy as well.”

Gap also plans to divert 80% of the waste from its domestic facilities away from landfills by recycling clothing materials as well as boxes, hangers, and plastic packaging used to ship merchandise.

But Gap isn’t stopping with environmental responsibility. Shoppers have shifted their focus away from cheap goods and have begun to gravitate toward companies with more ethical practices. Consumers consider whether factory employees worked under fair and safe conditions. Gap says they also plan on making a more concerted effort to manage the safety and well-being of factory employees abroad as they enact their new, kinder model.

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Cambodian Factory Pactics Breaks the Mold

Sadie Keljikian, Express Trade Capital

Dutch factory owner Piet Holten, president of Pactics, a manufacturing company in Cambodia, is creating a modern, conscientious model for manufacturing companies in Southeast Asia.

Cambodia has the second highest number of non-government organizations (NGOs) which aim to stimulate local employment by supporting workshops that make goods for tourists. Unfortunately, Holten says the “NGOs are trying hard to do good. They have a good heart, but in the end the effect is minimal.”

Pactics manufactures soft cases and microfiber cleaning cloths for glasses, sunglasses and goggles. Their clients include several high-end brands including Oakley, Rayban, and Tiffany. Contrary to the unfortunate standard of manufacturing in Southeast Asia, Pactics places a high-emphasis on employee well-being as well as the environment.

The naturally lit, wheelchair accessible factory derives 40% of its power from solar panels. Power is supplemented with a backup generator, which runs on biofuels. Rainwater is collected and used for plumbing purposes and there is a purification plant for drinking water on site. The workforce, which is mainly young women, receives a daily subsidized lunch, four months of paid maternity leave, health insurance and accident insurance. The facility also contains a daycare with rooms for nursing mothers and a first-aid room with a staff nurse.

Interestingly, Pactics pays its employees based on productivity, a practice which has allowed factories to pay their employees as little as possible historically. However, Pactics staff not only have a minimum guaranteed income of $125 a month, far more than the national average of $1,000 a year, but they also receive 44 days of paid vacation per year. The business also offers genuine upward mobility, with training programs that not only address basic things like machinery operation, but also relations within the workplace, sexual harassment education and prevention (Pactics has a very strict policy against harassment), and hygienic use of restrooms.

Pactics also contributes $50 per year toward each employee’s education and pays for half the cost of a crash helmet for each. The crash helmet is a necessary safety accessory for the workforce, as they commute primarily via motorized scooter in a country notorious for its highly dangerous traffic.

Creating an efficient and happy workforce means that employees are more likely to stay and improve, allowing the factory to run better and the staff to become better acquainted with this type of work. With the factory running smoothly, Holten says his next mission is to convey the importance of responsible business management to his clients, in hopes that they will make more active choices to support ethically run factories.

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Express Client Featured on The Steve Harvey Show

Urban Intimates, a company founded and operated by wife and husband team Psyche and Vontoba Terry, is being showcased on The Steve Harvey Show today (EST 3pm – WNBC). Express Trade Capital has financed and supported the growth of Urban Intimates since early 2014.

Psyche will appear and represent her line on the show. Today she is a successful designer and entrepreneur who rose from humble beginnings in Michigan to build a brand that is now sold in over 3,000 retail locations. Her lingerie brand, Urban Intimates is tailored to women with curves, a traditionally under-served group in the lingerie category. Among other topics, Psyche will discuss her keys to success. A short blurb is available directly on Steve Harvey Show’s website.

In NYC market you can watch Psyche and Urban Intimates on the Steve Harvey Show today at 3pm EST on WNBC. Showtimes in your other regions are available here.

In addition to lingerie, Urban offers a line of skincare products.

Express is proud to be part of Psyche and Vontoba’s success.

 

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Macy’s Announces Cuts After Brutal Holiday Season

Sadie Keljikian, Express Trade Capital
With overseas markets in turmoil on Wednesday Macy’s announced that approximately 4,500 jobs will be eliminated, roughly 3% of its total workforce, as part of a significant restructuring move. According to Macy’s, a surprisingly weak holiday season has hurt the business’s bottom line.

The struggle to keep sales up has been felt throughout brick and mortar retail businesses this winter, particularly at Macy’s, with sales falling 4.7% in November and December. With temperatures higher than they’ve been in years, consumers were not looking to buy outerwear as early in the season, or in as large quantities.

In addition to unseasonable weather, Macy’s faces fierce competition from heavy discount retailers like T. J. Maxx and “fast-fashion” brands such as H&M and Zara. Fast-fashion refers to brands which produce and sell garments at an accelerated rate, allowing for mid-season merchandise adjustments when necessary. The shift to predominantly online shopping has also hurt the business, with online giants like Amazon gaining increasing market share. A stronger dollar is taking some of the blame as well, as Macy’s claims that international tourists have curbed their spending as a result.

Cutbacks will be distributed among some 3,000 store employee positions, 650 back-office positions, and 165 senior executive jobs, as well as a call center in St. Louis, which will be closed.

Along with downsizing the workforce, Macy’s plans to eliminate 36 of its department stores in favor of new off-price locations known as Macy’s Backstage, introduced last year. The company also plans to open new Macy’s and Bloomingdale’s stores in Abu Dhabi in 2018.

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Vietnam Climbs Garment Supply Chain

Sadie Keljikian, Express Trade Capital

After a prolonged malaise, Vietnam’s manufacturing industry has re-emerged as a significant player in the global clothing supply chain. For years, the Vietnamese garment industry has suffered a shortage of local raw materials stymieing opportunities for growth. For instance, its garment economy requires 400,000 tons of cotton for production per annum yet only 3,000 of it is supplied by the local market. As such, the industry has had to rely costly imports.

Previously, Vietnamese manufacturers focused on developing and showcasing their specific strengths in the field, rather than devoting to develop a competitive advantage in the field. As a result, a combination of a lack of raw materials and minimal systematic assistance led to underwhelming profits and very little business growth.

No more. Industry analysts have proclaimed that Vietnam’s manufacturers have entered the “cutting and sewing  stages of the global supply chain, meaning that the need to import raw materials will no longer limit the growth of the local garment industry. Supply chain integration will allow Vietnam to join other countries in the process of turning raw cotton, wool, etc. into finished garments while diminishing costs.

Several new factories and sewing plants will be built to accommodate the newly expanding industry, but it will be quite costly. The plan will, in all likelihood be easier to accomplish if the Trans-Pacific Partnership is fully passed, as the deal promises to eliminate or dramatically diminish tariffs and other trade-barriers among members.

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A Warm Start to Winter Leaves Apparel Retailers Out in the Cold

Sadie Keljikian, Express Trade Capital

This past weekend marks the highest December temperatures in 142 years, so naturally, consumers are not overly eager to buy winter coats, boots and gloves. As a result, many clothing retailers are suffering massive drops in cold weather apparel sales.  Among them is Stuart Greenberg’s Corniche Furs in Manhattan, which has seen a 30% drop in sales this month. In a recent New York Times article Greenberg said, “For the first 10 years of our business, we never even paid attention to the weather. It always just got cold.”

The warm weather is even impacting businesses like Macy’s, the Gap, and Nordstrom. All predict the need to offer winter wear at steep discounts to move surplus merchandise as the season goes on, but a company like Corniche Furs relies on the winter and, specifically, the holiday season to bolster its profits for the entire year. Many of the suffering businesses stocked particularly large quantities of boots, coats, and winter accessories at the start of the season, expecting a long and cold winter like last year, but weather analysis company Planalytics says that the volatile temperatures of the last few years cannot be expected to repeat themselves.

Companies like Zara and H&M have done reasonably well so far this season, largely due to their ”fast-fashion” approach. Fast-fashion retailers, or those which receive small shipments at a time and have a higher rate of turnover, have a much easier time adjusting when circumstances are less than favorable.

If temperatures drop dramatically in the next week, fortune may smile on retailers who rely on cold weather apparel. Otherwise, they may need to adjust their merchandise to accommodate the ever-changing weather patterns.

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East Africa Gains Traction in the Garment Industry

Sadie Keljikian, Express Trade Capital

East Africa is slowly becoming a popular location for apparel sourcing. Two years ago, European companies including H&M, Primark, and Tesco began sourcing some of their casual wear from Ethiopia. Others in the industry quickly followed suit. East Africa recently gained additional attention due to the African Growth and Opportunity Act (AGOA), which granted some sub-Saharan countries duty-free access to the US market. While East Africa’s growth as a destination for manufacturing is still nascent, the availability of land for development and access to low-cost labor force are promising for the region’s potential for growth as a competitor in the international textile and apparel industry, provided that governments, buyers, and manufacturers work together to improve business conditions in transportation, labor skill, and technological development.

Although Bangladesh leads the race to take over the apparel industry from China, the massive quantities of cheap and available labor in Ethiopia and Kenya are particularly drawing attention from global buyers. According to projections from the UN, the sub-Saharan region will have the highest growth in working-age population globally in the next 20 years. By 2035, that number will equal China’s working population today, with more than 900 million people. However, the relative lack of manufacturing experience (as opposed to seasoned veterans in apparel manufacture in Southeast Asia and Central/South America), is a major difficulty that requires further time and attention to address. Naturally, as investment and interest in the region grows, competency and manufacturing capabilities are sure to increase.

Beyond labor and available land, Ethiopia has cost advantages like cheap hydroelectric power and labor, and a rich supply of natural resources, but it still lags in production efficiency. In contrast, Kenya has high production efficiencies such as sources for bulk quantities of apparel basics like t-shirts and trousers, but has comparatively high labor costs and lacks a local upstream industry for raw materials, requiring the import or fabrics. While initial outlooks and projections for East Africa’s potential for progress are encouraging, countries in the region have a number of hurdles to conquer before closing the gap enough to challenge countries like China, India, Bangladesh, and Vietnam.

At present, East African apparel manufacturing is still a niche market and does not yet have the stability that many of its competitors have established over years and decades of trial and error and government investment. While East Africa still contributes only a small portion of apparel manufacturing, if businesses and governments confront the deficiencies aggressively, Ethiopia, Kenya, and other surrounding countries have the potential to grow into a major players in apparel sourcing and to forge a new standard for the garment industry.

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Bangladesh Exports to U.S. Surge in September

Mark Bienstock, Managing Director

Bangladesh showed a significant turnaround in the level of exports to the USA in September.  Financial pressures regarding labor increases in China have forced many importers and retailers to focus on increasing their Bangladesh expansion. There is also higher confidence in Bangladeshi manufacturing since a number of enhancements have been made to the major factories over the last six months.