Refer to the recent article published on BusinessWeek.com titled Wal-Mart Shifts Apparel Buying to New York
Last week, Wal-Mart Stores made a decision to consolidate its apparel buying operations in New York instead of the Bentonville headquarters location. This meant major changes for the two big companies that sell their merchandise to Wal-Mart stores and have a large portion of their revenues come from the retailer. Those two companies being VF and Hanesbrands. I will be focusing on VF and the impact of Wal-Mart's decision because I am employed as an intern with VF Jeanswear that sells directly to Wal-Mart. When I came to work the day after Wal-Mart had made the decision to send their apparel buying to New York, all the top merchandisers were on the edge, nervous, and frustrated. When my boss told me of the news, she simply stated "Of all my years of working in this industry, I have never seen anything like this!"
Wal-Mart' plan with the recent decision was a part of the restructuring process and, to Wal-Mart leaders, it made sense to move apparel operations to the city that is all about apparel and fashion. Why would there be an apparel operation in the middle of Arkansas anyway? According to the article, the only apparel functions that will remain in Bentonville will be the in-season planning, replenishment, pricing, and modular development. The apparel functions of design and development, marketing, buying, preseason planning, and brand merchandising will all be moved to the New York location.
This relocation and restructuring strategy left 700 to 800 Wal-Mart corporate headquarters employees jobless. I would have never expected the big power house such as Wal-mart to make such a huge layoff at it's corporate office. Through working with Wal-Mart at my current job, there were no obvious signs of any changes, but I guess this is a way of telling that you never know what to expect. For the juniors department that I work in, we had just been offered more floor space in quite a few of the high volume Wal-mart stores, which is a big deal with the current economic standing. The current changes in the apparel functions of Wal-Mart have presented a challenge for the employees of VF in being more innovative in the apparel process and merchandising more effectively since managers will now be presenting their merchandise to a much more competitive and informative audience.
Wednesday, February 18, 2009
Wednesday, February 11, 2009
Blog Three: Financial issues in Italian Fashion Label
Article: Fashion's Growing Toll: Bankruptcy for Ittierre
As of Monday, February 9, 2009, the licensing and production unit of IT Holding SpA, which the parent of Gianfranco Ferre Malo, Exte, and many other Italian fashion brands, announced that it will be filing for bankruptcy protection after running out of cash. There is great fear that all the fashion brands of the organization will go down as well. IT Holding manages under license via Ittierre the Just Cavalli, VJC Versace, Versace Sport, and Galliano labels. Ittierre was placed into administration to allow the group to be restructured and continue its business operations and the divisions shares were suspended on the Milan Bourse following the announcement.
IT Holdings recent financial strands are a result of "the absence of the conditions necessary to continue operations in a regular course of business; in particular with regards to the availability of the necessary financial resources and continuity of its license agreements." The division of IT Holding that is having problems, Itteirre, is the most profitable part of the fashion group and viewed as the "jewel" of the organization's reputation. With the filing of bankruptcy for this division, there are only dark forecast as to what will happen to the remaining brands under IT Holdings. The company has basically been seen as invaluable and has large amounts of debt.
Versace has been trying to buy back VJC Versace and Versace Sport licenses on concerns over what might happen to Ittierre if IT Holding opens its capital to private equity but was unable to strike a deal. There is only hope that finances and restructuring will work out for the popular Italian fashion group. This article is clear indicator that the current economic situation is an international phenomena and not just limited to the United States. Not even high fashion is able to survive in the economic crisis.
As of Monday, February 9, 2009, the licensing and production unit of IT Holding SpA, which the parent of Gianfranco Ferre Malo, Exte, and many other Italian fashion brands, announced that it will be filing for bankruptcy protection after running out of cash. There is great fear that all the fashion brands of the organization will go down as well. IT Holding manages under license via Ittierre the Just Cavalli, VJC Versace, Versace Sport, and Galliano labels. Ittierre was placed into administration to allow the group to be restructured and continue its business operations and the divisions shares were suspended on the Milan Bourse following the announcement.
IT Holdings recent financial strands are a result of "the absence of the conditions necessary to continue operations in a regular course of business; in particular with regards to the availability of the necessary financial resources and continuity of its license agreements." The division of IT Holding that is having problems, Itteirre, is the most profitable part of the fashion group and viewed as the "jewel" of the organization's reputation. With the filing of bankruptcy for this division, there are only dark forecast as to what will happen to the remaining brands under IT Holdings. The company has basically been seen as invaluable and has large amounts of debt.
Versace has been trying to buy back VJC Versace and Versace Sport licenses on concerns over what might happen to Ittierre if IT Holding opens its capital to private equity but was unable to strike a deal. There is only hope that finances and restructuring will work out for the popular Italian fashion group. This article is clear indicator that the current economic situation is an international phenomena and not just limited to the United States. Not even high fashion is able to survive in the economic crisis.
Wednesday, February 4, 2009
Blog Two: American Eagle Reinvents its Way of Production
To read the article of discussion, please visit http://online.wsj.com/article/SB123362245399041753.html?mod=todays_us_marketplace.
American Eagle (AE) is a well known company for producing and selling trendy jeans and t-shirts at a relatively low price. The company is currently in the process of reengineering it's way of producing clothing to lower costs in this current economic struggle. This "reinvention" involves changes from "where the garment is made, to how it's shipped, to how it looks."
American Eagle is not the only teen chain retailer thinking of new ways to survive. Abercrombie and Fitch Co., has marked down their holiday items but do not want their high-end image harmed with cutting prices.
At the conclusion of AE's fiscal year, ending November 1, the profits and the sales of the company both fell. AE hopes to cut costs in manufacturing by moving production out of Southeast Asia and into India and cutting cost by 4%. The challenge with moving manufacturing to India is that the countries' infrastructure is very limited and the quality of their production is not as high as that of manufacturers in Asia.
I think that the changes the AE are making will help significantly with the company's cost but the company does run the risk of having lower quality garments in it's stores. The company has also considered reducing the price of all it's garments in addition to lower manufacturing cost , but this could cause the company to be seen as another "cheap" store, which is not the image that AE currently does not hold and should not strive for. AE as to continue to set itself apart from the Old Navy stores and other stores that are known for selling relatively cheap clothing. I feel that AE will be successful in its strive to change the company internally and boost it's sales by creating a fresher and more hip image for its' customers.
Post by Christina Degreaffenreidt
American Eagle (AE) is a well known company for producing and selling trendy jeans and t-shirts at a relatively low price. The company is currently in the process of reengineering it's way of producing clothing to lower costs in this current economic struggle. This "reinvention" involves changes from "where the garment is made, to how it's shipped, to how it looks."
American Eagle is not the only teen chain retailer thinking of new ways to survive. Abercrombie and Fitch Co., has marked down their holiday items but do not want their high-end image harmed with cutting prices.
At the conclusion of AE's fiscal year, ending November 1, the profits and the sales of the company both fell. AE hopes to cut costs in manufacturing by moving production out of Southeast Asia and into India and cutting cost by 4%. The challenge with moving manufacturing to India is that the countries' infrastructure is very limited and the quality of their production is not as high as that of manufacturers in Asia.
I think that the changes the AE are making will help significantly with the company's cost but the company does run the risk of having lower quality garments in it's stores. The company has also considered reducing the price of all it's garments in addition to lower manufacturing cost , but this could cause the company to be seen as another "cheap" store, which is not the image that AE currently does not hold and should not strive for. AE as to continue to set itself apart from the Old Navy stores and other stores that are known for selling relatively cheap clothing. I feel that AE will be successful in its strive to change the company internally and boost it's sales by creating a fresher and more hip image for its' customers.
Post by Christina Degreaffenreidt
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