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Fashion, luxury and lifestyle news aggregator - July 2020

Posted: 11/08/2020

Surviving, thriving and new ventures

Despite retailers continuing to struggle, there have been some signs of promise as total retail sales in June returned to pre-coronavirus levels. In particular, e-commerce platforms continued to trade well. Sales increased 1.5% year-on-year over the month. From the record declines in March and April, May and June brought increases of 13.1% and 13.5%, respectively.

However, since the easing of lockdown, only half of UK stores have reopened. Likewise, footfall fell by 56.6% year-on-year in June; albeit showing a slight improvement from the equivalent figures for May.

With active wear and exercise being a main focus for many throughout lockdown, Lululemon has its consumers, including celebrities such as Meghan Markle, willing to splurge $120 dollars on leggings and not too dissimilar amounts on yoga wear. Unsurprisingly, this has led to a $500 million cash deal for ‘Mirror’, an exercise equipment start up.

Amazon’s shares increased by more than 5% whilst profits continued to soar in its second quarter, regardless of the substantial costs relating to Covid-19. Online shoppers increased sales by 40%, meaning the company recorded $5.2 billion in net income at the end of June, double the earnings for the same period last year.

Amazon has also promised to provide a free grocery delivery service, Amazon Fresh, to its Prime members, which is set to challenge the UK’s current supermarkets’ online shopping businesses. On the same day Amazon announced its scheme, Tesco, J Sainsbury and Ocado’s shares fell by nearly 1%.

Perhaps there will be enough room for a significant new competitor, as Ocado’s profit has doubled within its grocery delivery service. It predicts that this service will long outlive the pandemic, as there are more than 1 million users on a waiting list for its service. Plenty to go around.

Things are looking brighter for Next, which has confirmed better than expected trading; it expects to make a profit this year and generate earnings in the region of £195 million. L’Oréal is to return to projects that were halted due to Covid-19 and plans to go on the offensive with new product launches, including new luxury perfumes from Giorgio Armani and Valentino. The delivery giant Hermes intends to create 10,500 new jobs to match the surge in e-commerce.

Sir Philip Green’s Arcadia Group is reported to be heading for another restructuring. The group, responsible for brands such as Topshop and Miss Selfridge, has submitted proposals to the Pensions Regulator, as it is reported to have a deficit of £727 million in its pension funds. During the Covid-19 pandemic, Arcadia has announced 500 redundancies from the 2,500 staff in its London headquarters.

Uniqlo’s face masks had shoppers lining up outside shops in Tokyo. The new product sold out immediately and its online store was quickly overwhelmed by demand.

Under Armour reported a loss of $183 million for the three months ending in June, with sales down 41%. This was roughly in line with its top rival, Nike. The retailer fears that sales will continue to fall by 25% for the rest of 2020.

Shares in Burberry, despite the brand’s claims of ‘iconic continuative products’, have taken a backward step since chief executive, Marco Gobbetti, took on his role three years ago. Total shares plunged by 48% in the quarter to the end of June.

Government announcements

From 24 July, the Government made wearing face coverings mandatory in enclosed public spaces.

After a spike in the number of Covid-19 cases in the city of Leicester, the Government introduced localised lockdown restrictions in the city from 30 June. These restrictions started to ease from 24 July.

The Government confirmed that the revaluation of business rates would be delayed until April 2023 (extending the original target of 2021). The revaluation of property will be based on values as at 1 April 2021.

The Chancellor, Rishi Sunak, is said to be considering an online sales tax of 2% as well as a charge for online deliveries. This could raise £2 billion in a wider effort to save the high street. Retailers have warned the proposals could lead to higher prices for consumers and place more stress on an over-taxed sector.

Other news

Nike has been fighting a non-Covid-19 battle with FC Barcelona over its new 2020/21 fans’ shirts which lose colour on contact with sweat and after being washed in a washing machine. FC Barcelona is rumoured to be seeking compensation of €15-20 million.

Boohoo has undergone inspections as it tackles allegations that its factories have been functioning illegally, causing the fast-fashion retailer to lose 23% of its market value. Seven separate agencies visited its premises and found that, despite the accusations, Boohoo had not committed any offences under the Modern Slavery Act. Regardless of these findings, Boohoo has planned to set up a ‘model factory’ employing 250 workers.

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