What is common between Eddie Bauer, Gap, Talbots and Ann Taylor? They are marquee retailers of the US, which are shutting stores and thereby sending shivers down the spine of Tirupur exporters.
Take a look at the sample list of store closures in the US: Eddie Bauer has closed 27 shops in the first quarter and plans to close a few more by the end of 2008. Fashion Bug, Catherines Plus Sizes will close about 150 under-performing stores this year. The Talbots group has announced that it will close Talbots Kids and Talbots Mens Concepts by September 2008. In all, Talbots will close 78 mens and children's stores. Walt Disney said it has also obtained the right to close about 98 Disney Stores in the US. Gap Inc, whose brands include Old Navy and Banana Republic, has announced plans to close 85 stores as it continues to struggle to attract customers. Ann Taylor will close 117 stores between 2008 and 2010. What all this implies are lower orders, lower business followed by retrenchment. And with the financial turmoil spreading to Europe, orders from that continent are slowing down too.
“Tirupur has over three lakh people dependent on garment exports. With fresh orders difficult to come by, businesses will find it difficult to stay afloat. The Tirupur Exporters’ Association expects a 5% drop in exports this year. It would be safe to assume there would be job losses of anything between 10,000 and 15,000 in the coming months, though none of the big manufacturers has resorted to this,” an exporter said.
However, Celebrity Fashions, which works for US retailer Eddie Baur, said there is no slowdown in orders. “It is business as usual, but we have to be cautious.” Edelweiss Research has said that US imports of apparel from India this year (till August) has fallen by 4.8%. Yarn imports have also dropped by 7% for the same period. Till August ’08, India’s textile exports to the US declined 1.6% year-on-year to $3.5 billion and market share increased marginally to 5.7%. “The slowdown in the US will affect the purchasing power of consumers, affecting discretionary spending that includes spending on clothes.” Domestic suppliers may see lower orders and also lower margins due to lower prices being offered by US firms.
According to estimates, textile and garment exports are likely to touch $24.6 billion in ’08-09, which is short by a wide margin against the government targeted figures of $31.17 billion in this fiscal.