th03

Thailand: Fashion brands feeling the pinch as earnings plummet

Most fashion categories are suffering this year as the pandemic continues to ravage the economy.

Major fashion companies such as Minor Group, the marketer of Esprit, Bossini, Charles & Keith and Anello brands; ICC International Plc, the marketer of Arrow and Guy Laroche; and Greyhound Co, the marketer of Greyhound and Smileyhound by Greyhound lifestyle fashion brands, reported their revenues fell by an average of 20%-40%.

Sales of fashion products via wholesale outlets have plunged by more than 70%.

Dhitibhum Wongkiatkachorn, marketing and business development director at Greyhound Co, said the fashion market is expected to remain weak in the second quarter of this year because of continued Covid-19 infections.

“Greyhound’s business recovered quite well in the first quarter but the fresh outbreak in April interrupted sales,” said Mr Dhitibhum. “The performance remains weak in May because of unabated infections. Moreover, customer traffic at malls has decreased, resulting in our sales dropping 30-40% year-on-year between April-May.”

He said online sales are also suffering compared to the first outbreak last year because of weakened consumer confidence.

The firm believes the tepid market sentiment will continue until the third quarter this year. As a result, Greyhound is postponing the launch of new sporting product lines for its two fashion brands, Greyhound and Smileyhound, as well as a new fashion brand until the fourth quarter this year. However, the firm has expedited the launch of its sales campaign for its summer collection by two to three months, running from May to June 30 this year.

“We believe if the situation improves because of widespread vaccinations, our regular customers with high spending power will be ready to shop,” he said. “We think demand for fashion products exists but we need to create a marketing strategy where customers feel there is enough value to buy.”

Mr Dhitibhum said the company has not closed any fashion shops and retains plans to open two new shops at leading department stores this year.

Shuttered shops at Platinum Fashion Mall in Bangkok. The fashion industry has been hampered by weaker consumer spending and a slowdown in tourism due to the Covid-19 pandemic.

Minor Group faces a similar scenario as the company, through its SET-listed arm Minor International Plc (MINT), reported to the Stock Exchange of Thailand that MINT’s retail trading business in the first three months this year dropped by 31% to 473 million baht, mainly due to weak consumer spending in the fashion business, the temporary closures of some stores and the slowdown of the tourism sector amid Covid-19.

At the end of the first quarter of this year, MINT reported the number of its shops dropped to 428, down from 473 in the same quarter last year, primarily from the closing of the OVS and Etam brands. Of the total 428 retail trading outlets, 77% are operated under fashion brands, including Anello, Bossini, Charles & Keith, Esprit and Radley, while 23% are operated under lifestyle brands including Joseph Joseph, Zwilling J.A. Henckels, Bodum and Scomadi.

According to Chaiyapat Paitoon, MINT’s chief strategy officer, spending that is not necessary could be suspended from 2020-2022 as the group focuses on the hotel and food businesses.

Thammarat Chokwatana, executive vice-president of SET-listed ICC International, the marketing arm for fashion and cosmetics under Saha Group, said his company’s sales dropped by 20%-30% in the first quarter this year and that performance is still weak because 80% of its sales rely on retail stores and fashion is the priority item to be cut.

“Earlier, we expected the situation of the fashion industry would improve by the middle of this year but it is not yet as good as hoped. If vaccinations are distributed nationwide, the market will likely recover,” Mr Thammarat said.

The company plans to focus on promoting potential brands and explore new channels to drive sales, he said.

Meanwhile, SET-listed Mc Group, the marketer of Mc Jeans, is beating the trend. The firm reported its sales revenue in January and March rose by 4.3% to 776 million baht.

“Our sales in the first three months this year are slightly below our target but we are still satisfied,” said Piya Oranriksuphak, chief financial officer at Mc Group, attributing the rise primarily to multichannel including online, corners in department stores, its own free-standing shops and mobile trucks.

The firm has 633 points of sale for Mc Jeans, down from 640 outlets in 2020. Of the total, 337 are its own free-standing shops, 290 at department stores, and six mobile trucks. It plans to open new shops at petrol stations this year.

Source: https://www.bangkokpost.com/business/2122343/fashion-brands-feeling-the-pinch-as-earnings-plummet