The Covid 19 pandemic also shaped the fashion industry in 2021: developments that had already emerged in the previous year intensified – with often massive consequences. But the health crisis was by no means the only issue.
Today we look at some key events in the months of July through December. You can read the review of the first half of the year here.
July: New momentum after easing
After most of the corona protective measures were lifted in the course of spring, there was hope in the clothing trade. In view of the ongoing vaccination campaigns in Western Europe and the USA, an end to the pandemic-related problems seemed in sight. The British government even proclaimed “Freedom Day” on July 19 and, in addition to all restrictions, also abolished the mask requirement.
The recovery after the reopening of the stores spurred the current business figures of the major clothing suppliers: The Zara parent company Inditex increased its sales in the first quarter, which was closed at the end of April, by 50 percent and thus exceeded the corresponding level of the pre-crisis year 2019, thanks to the strong The group was also able to achieve a profit of millions again after the effects of the first wave of pandemics in the same period of the previous year caused losses.
At the Swedish textile group Hennes & Mauritz, the Spaniards’ big rival, revenues increased by 62 percent in the second quarter, and profits jumped by almost two thirds.
The sporting goods giant Nike also continued to pick up speed: In Europe and North America, it was able to more than double its sales in the fourth quarter, which ended at the end of May, and consolidated sales rose by a whopping 96 percent. The bottom line was again a high surplus: After losses in the same quarter of the previous year, Nike reported a net profit of almost 1.3 billion euros.
August: Esprit is back in the black – but the turbulence continues
The clothing company Esprit, which has been in crisis for years, drew attention in August: The company announced that it was able to achieve a small surplus in the first half of the current financial year. This was the first time in four years that it returned to profitability. This was preceded by massive austerity measures and changes in personnel.
But the group did not calm down despite the success report: In October, CEO Mark Daley, who was only appointed at the end of 2020, announced his withdrawal, and a few weeks later Yung Ting Wan, who was responsible for product development, did not even say goodbye a year.
The company is now being led by William Eui Won Pak for the time being. Chairwoman Christin Su Yi Chiu’s husband, who had no experience in the textile industry, was appointed Chief Operating Officer (COO) in September and became interim CEO after Daley’s departure. There are also hardly any clothing experts in the company’s management team.
September: Time for fresh sneakers – On goes public
The stock exchange remained an attractive destination for emerging and established companies. In September, the Swiss sneaker specialist On was ready. The company, founded in 2010, celebrated a successful IPO on the New York Stock Exchange. The issue price of the shares was already above expectations; on the first day of trading, their value jumped by almost fifty percent.
On had presented the investors with an attractive overall package: The Swiss have high-quality, sustainable products and innovative, digital sales channels such as a subscription service for running shoes – as well as the necessary glamor factor: tennis star Roger Federer is a long-term partner and co-owner of the company. Business was correspondingly successful: At the stock exchange launch, On presented itself as “one of the fastest growing sports shoe companies in the world”.
In November, the US company Allbirds celebrated its stock market debut, which recently achieved strong growth with environmentally friendly sneakers. Like On, Allbirds is committed to combining the sustained high demand for sneakers with sustainability promises – and thus to offer an alternative to established industry giants such as Nike or Adidas, who are repeatedly confronted with allegations of supposedly questionable business and production practices.
In addition to the newcomers, conventional trainer suppliers also found favor with investors in the course of the year: shortly before the turn of the year, according to a study by FashionUnited, sneaker specialists had already raised more than a billion euros in fresh capital in various ways.
October: The luxury industry is recovering – and has to break new ground
After setbacks caused by the pandemic, the global luxury goods industry is back on track for the time being: In October, the French world market leader LVMH reported that its nine-month sales had increased by 46 percent year-on-year to 44.2 billion euros – and thus also the corresponding level of the pre-crisis year 2019 could clearly surpass. In Asia and North America in particular, demand for luxury goods increased strongly again, while the recovery in Europe was slower.
At its biggest competitor, the Gucci parent company Kering, sales grew in the first three quarters by a total of almost 35 percent and were thus nine percent above the comparison value of 2019. Numerous other luxury brands also recorded strong increases.
In a joint study, the industry experts from management consultancy McKinsey and the industry service “The Business of Fashion” (BoF) forecast the continuation of the latest upward trends in the coming year, but warned the industry to break new ground. In view of the ongoing restrictions in global travel, international luxury brands should focus more on their domestic markets and strengthen their presence in the virtual world: In future, it is important to exploit “the potential of non-fungible tokens (NFTs), video games and digital fashion”, declared the study authors: inside. Many well-known providers have already taken the first steps in this direction in the current year and secured their place in the Metaverse through collaborations or acquisitions of correspondingly specialized start-ups.
November: Delivery bottlenecks become the “greatest challenge” for the global textile industry
While many fashion companies were experiencing a recovery from the immediate effects of the Covid-19 pandemic, a new problem came to the fore – and that too has to do with the health crisis: Plant closings for weeks after an increase in corona cases in Vietnam resulted in production downtimes at the numerous companies that have the majority of their articles manufactured in the Asian country. In addition, there were delivery difficulties due to the congestion in many international ports. And it became increasingly clear that the disruptions that had persisted since the summer would not only remain a short-term problem: In the aforementioned study by McKinsey and BoF, the supply bottlenecks were already mentioned by industry insiders as the greatest challenge for 2022.
The consequences of the ongoing delivery problems could already be seen in current business figures in November: They slowed Adidas’ growth in the third quarter and prompted the sporting goods company to formulate its annual forecasts more cautiously.
Due to the globalized manufacturing processes, the problems burdened numerous well-known companies: The US group VF Corporation, to which brands such as Vans, The North Face and Timberland belong, clearly missed its growth expectations in the second quarter, and the shoe company Wolverine World Wide also disappointed and lowered its Annual goals. In view of the global uncertainties, a rethink began in the industry: According to a recent McKinsey study, over 70 percent of fashion companies are considering producing less in Asia in the future and instead having more production in nearby countries.
December: (Almost) everything at the beginning – Omikron throws the fashion industry back
At the beginning of November, the novel omicron variant of the coronavirus was discovered for the first time in South Africa – and because, according to the available findings, it is more contagious and more resistant to vaccinations than the previously prevalent pathogens, protective measures were immediately tightened in numerous countries. In Germany, the new federal government led by Chancellor Olaf Scholz ruled out a new lockdown for the time being, but the alternative restrictions also put a considerable strain on the Christmas business. In the context of the 2G regulation, only those vaccinated and genesis were given access to shops that did not cover everyday needs.
This also affected the fashion retailers, who were among the biggest losers in the important weeks leading up to Christmas. “The Christmas business got off to a good start in November, but 2G caused sales and frequencies to collapse. In many trading companies there is disillusionment and existential fear, ”said Stefan Genth, General Manager of the German Trade Association (HDE), summarizing the situation in the industry on the Monday after the holidays. “For the second time in a row, the Christmas season was a disaster for retailers.”
But not only the dealers were disillusioned at the turn of the year. The rapid spread of the Omikron variant ensured that the situation in all areas of the fashion industry looked as gloomy as it was twelve months ago. Again, in view of the stricter regulations, the fashion fairs planned for January were canceled. The Frankfurt Fashion Week is still waiting for its physical debut, which was announced a year and a half ago: The Premium, Seek, Neonyt and the new Val: ue format will not celebrate their premieres in the Main metropolis until next summer at the earliest. For the original January date, the organizers only announced a “corona-compliant” core program with “showcases, events and conferences” in Frankfurt.
The traditional trade fairs in Munich were also affected: both the Ispo sporting goods fair and the Munich Fabric Start sourcing platform canceled their winter dates.