Sri Lanka apparel exports down 1-pct in Oct
ECONOMYNEXT – Sri Lankan apparel exports fell 1 percent from a year earlier to 403 million dollars in October 2018 due to a slow US market, an industry body said.
Sri Lanka Apparel Exporters Association data showed the US market fell 6.5 percent for local apparel manufacturers from a year earlier to 188 dollars.
"It’s not a serious fall. There’s always been a slowdown in that month," Joint Apparel Association Forum Secretary General Tuli Cooray said.
The US market has been fluctuating for local apparel manufacturers over the past two years due to weakening of the L Brands Group, whose lingerie subsidiary Victoria’s Secret dominates US sales for Sri Lanka, industry experts have previously said.
L Brands is currently in trouble with declining consumer interest in Victoria’s Secret products, and thousands have taken to social media over the past month to boycott the flagship Victoria’s Secret Fashion Show, due to the brand’s refusal to include size diversify of women.
Chief Executive Jan Singer resigned last month, and was replaced by retail expert John Mehas.
L Brands last week announced the divestment of the La Senza lingerie subsidiary in January and will be closing its Henri Bidel accessories brand this month to collect some cash. However, the two subsidiaries combined had just a tenth of the sales of Victoria’s Secret.
Victoria’s Secret sales for October was flat from a year earlier, while growing 2 percent in November, according to financials filed.
L Brands posted a loss per share of 0.16 dollars for the 3rd quarter ended November 3, 2018, compared to 0.30 dollar earnings per share a year earlier, with closure of subsidiaries and impairment charges from Victoria’s Secret eating into the bottom line.
Competing brands such as Calvin Klein and American Eagle Outfitters (AEO) have capitalized on the reducing consumer demand for Victoria’s Secret products by offering trendier alternatives. AEO earnings for the third quarter grew 30 percent.
Many Sri Lankan manufacturers are now switching production volumes more towards Victoria’s Secret’s competitors.
Meanwhile, the European market for Sri Lankan apparel grew 3 percent from a year earlier to 167 dollars.
Cooray said that due to disturbances in the European market, exports are now growing slower compared to the previous year, when exports grew at double digits immediately after regaining the GSP Plus preferential trade benefit.
"There are problems in individual countries in the EU, and on top of that there’s Brexit, which are causing challenges in the market," Cooray said.
Despite regaining the 12 percent tariff benefit from GSP Plus, he said Sri Lanka has to manage the rise of e-commerce platforms, which do not place much importance in building long-term relationships with apparel manufacturers, he said.
The lack of local production capacity to pull in larger orders and rising local costs is also slowing down growth, Cooray said.
"The industry has been challenged in the past and overcome them and it is confident in meeting these challenges going forward," he said.
Apparel exports for the first 10 months of 2018 grew 4.4 percent from a year earlier to 4.1 billion dollars.
January through October, exports to the US grew 4.5 percent to 1.9 billion dollars, while exports to the EU grew 4.2 percent to 1.7 billion dollars. (Colombo/Dec17/2018)