From the Sector

The Global Organic Textile Standard (GOTS) officially started the Organisation for Economic Co-operation and Development (OECD) Alignment Assessment process for GOTS' version 7.0. This involvement illustrates GOTS' ongoing efforts to align with the international framework for responsible garment and footwear supply chain due diligence.

An Assessment for Greater Impact
The OECD Alignment Assessment is a three-stage process that includes a Standards Assessment, an Implementation Assessment as well as a Credibility Assessment. As GOTS enters the Standard Assessment phase, it effectively showcases its dedication to sustainable practices, in line with the OECD Due Diligence Guidance. This process, supported by the German Federal Ministry for Economic Cooperation and Development, began in July 2023 and is expected to complete in January 2024.

The Role of the Due Diligence Criteria
The GOTS Due Diligence Criteria provide a framework for companies to proactively address potential or existing risks to human rights and the environment. This initiative lies at the core of GOTS' role as a trendsetter, paving the way for responsible business practices that will shape the future. Ruslan Alyamkin, Responsible for Standard Development and Implementation (Social Responsibility) at GOTS, emphasised the transformative power of these criteria: "The Due Diligence Criteria are not just guidelines, they are a powerful tool for real change. They empower companies to make informed and ethical decisions, helping to shape a textile industry that respects human rights and cares for our planet".

Emerging Regulatory Requirements: Navigating Human Rights and Environmental Due Diligence Obligations
As global legislation increasingly emphasises respect for human rights in business operations, GOTS remains a support tool for companies navigating this evolving landscape. Legislation such as Germany's Supply Chain Act (LkSG), France's Vigilance Act, Norway's Transparency Act, the Dutch Child Labour Due Diligence Act, and the UK Modern Slavery Act underscores the crucial need for rigorous due diligence in assessing business impacts on human rights and the environment. Moreover, the European Commission adopted a proposal for a Directive on corporate sustainability due diligence (CSDDD), which signals the imminent consideration of mandatory human rights and environmental due diligence.

With the recent version of GOTS Version 7.0, textile companies gain access to a six-step due diligence process, enabling them to identify, assess, and mitigate adverse impacts throughout their supply chains. This positions GOTS as a tool in showcasing compliance with due diligence obligations outlined in the draft EU CSDDD as well as in national laws.

• Currency-neutral revenues flat versus the prior-year level
• Top-line development reflects improved sell-out trends and conservative sell-in strategy
• Gross margin up 0.6pp to 50.9%; strong improvement compared to Q1 reflecting better sell-through and less discounting
• Operating profit of € 176 million includes extraordinary expenses of around € 160 million related to one-off costs, donations and accruals for future donations
• Inventory position improves substantially versus Q1 level to € 5.5 billion; now up only 1% year-over-year

In the second quarter of 2023, currency-neutral revenues were flat versus the prior-year level. The top-line development continued to be impacted by the company’s conservative sell-in approach in order to reduce high inventory levels, particularly in North America and Greater China. At the same time, adidas second quarter revenues benefited from the first sale of some of its Yeezy inventory. The initial product drop in June generated revenues of around € 400 million in Q2, which is largely in line with the Yeezy sales generated in the prior year’s quarter.

Footwear revenues grew 1% during the quarter, reflecting strong growth in football, basketball, tennis and US sports. Apparel sales declined 3% in the second quarter. As the apparel market continues to be particularly overstocked, the company continued its conservative sell-in strategy to improve sell-through and margins in the medium term. Accessories grew 8% during the quarter driven by growth in football.  

Lifestyle revenues were down during the quarter despite extraordinary demand for the company’s Samba, Gazelle and Campus franchises. While adidas slowly started to scale its offering for these product families during the second quarter, the total volume still only represents a small portion of the company’s overall business. Sales in the adidas Performance categories continued to show positive momentum. This reflects strong demand for new product introductions such as the latest iterations of its Predator, X and Copa football boots, as well as jerseys for both the FIFA Women’s World Cup 2023 and the company’s unique portfolio of football teams ahead of the start of the European club season. In addition, the Adizero product family in running continued to gain a lot of attention around marathon races across the world, translating into higher demand. At the same time, the brand’s Barricade tennis franchise grew strongly, leveraging the excitement around major tournaments.

In euro terms, the company’s revenues declined 5% to € 5.343 billion in the second quarter (2022: € 5.596 billion).

Stronger sell-out trends and conservative sell-in
As a result of the company’s initiatives to reduce high inventory levels, currency-neutral sales in wholesale declined 10% despite double-digit growth in Greater China and Latin America. At the same time, direct-to-consumer (DTC) revenues grew 16% versus the prior year. This development was driven by strong growth in both the company’s e-commerce business (+14%) as well as own retail stores (+19%), reflecting continued strong sell-out trends across most regions. The outperformance of the company’s DTC channel versus the wholesale business was also related to the first sale of the Yeezy inventory, which was done exclusively through adidas’ own e-commerce channel.

Double-digit growth in Greater China and Latin America
Currency-neutral sales in North America declined 16% during the quarter. The region is particularly affected by elevated inventory levels in the market and – in response to this – the company’s significantly reduced sell-in. Revenues in Greater China grew 16% in Q2, reflecting double-digit sell-out growth in both wholesale and own retail. Sales in EMEA were down slightly (-1%) despite double-digit DTC growth. While the company’s initiatives to reduce inventory levels and discounting weighed on the overall top-line development in the region, adidas recorded significantly improving full-price trends during the quarter. Revenues in Asia-Pacific increased 7% during the quarter, driven by strong double-digit growth in DTC. Latin America continued to increase at a double-digit rate (+30%), reflecting strong growth in both wholesale and DTC.

Gross margin improves to 50.9%
The company’s second quarter gross margin increased 0.6 percentage points to 50.9% (2022: 50.3%). This improvement was mainly driven by price increases the company has implemented as well as by an improved channel mix. At the same time, higher supply chain costs and unfavorable currency movements continued to strongly weigh on the gross margin development. While still adversely impacting the company’s gross margin in the quarter, discounting levels significantly improved compared to the first quarter of the year.  

Operating profit of € 176 million, resulting in an operating margin of 3.3%
Other operating expenses were up 3% to € 2.582 billion (2022: € 2.501 billion). As a percentage of sales, other operating expenses increased 3.6 percentage points to 48.3% (2022: 44.7%). Marketing and point-of-sale expenses decreased 7% to € 617 million (2022: € 663 million). As a percentage of sales, marketing and point-of-sale expenses slightly decreased by 0.3 percentage points to 11.5% (2022: 11.8%). Operating overhead expenses were up 7% to € 1.965 billion (2022: € 1.838 billion), reflecting higher logistics expenses. In addition, the company recorded one-off costs of around € 50 million related to the strategic review the company is currently conducting as well as donations and accruals for further donations in an amount of around € 110 million. As a percentage of sales, operating overhead expenses increased 3.9 percentage points to 36.8% (2022: 32.8%). The company’s operating profit amounted to € 176 million (2022: € 392 million) in the quarter. This amount includes the extraordinary expenses of in total around € 160 million reflecting the one-off costs related to the strategic review as well as the donations and accruals for further donations. The sale of the Yeezy product positively impacted adidas’ operating profit by an incremental amount of around € 150 million in Q2. The operating margin reached 3.3% in the quarter (2022: 7.0%).

Net income from continuing operations of € 96 million
After taxes, the company’s net income from continuing operations amounted to € 96 million (2022: € 360 million), while basic EPS from continuing operations decreased to € 0.48 (2022: € 1.88).

Outlook

adidas expects revenues to decline at a mid-single-digit rate
On July 24, adidas had adjusted its full year financial guidance to reflect the positive impact of the first sale of some of its Yeezy inventory and a slightly better-than-expected development of the adidas business in the first half of the year. At the same time, macroeconomic challenges and geopolitical tensions persist. Elevated recession risks in North America and Europe as well as uncertainty around the recovery in Greater China continue to exist. In addition, the company’s revenue development will continue to be impacted by the initiatives to significantly reduce high inventory levels. As a result, adidas now expects currency-neutral revenues to decline at a mid-single-digit rate in 2023 (previously: decline at a high-single-digit rate).

Underlying operating profit anticipated to be around the break-even level
The company’s underlying operating profit – excluding any one-offs related to Yeezy and the ongoing strategic review – is still anticipated to be around the break-even level. Including the positive impact from the first Yeezy drop of around € 150 million, the potential write-off of the remaining Yeezy inventory of now € 400 million (previously: € 500 million) and one-off costs related to the strategic review of up to € 200 million (unchanged), the company now expects to report an operating loss of € 450 million in 2023 (previously: loss of € 700 million).

On August 2, the company launched a second drop of Yeezy inventory. Throughout the month of August, adidas is making a range of existing products available through both its own e-commerce channel as well as the digital platforms of selected wholesale partners. If successful, this second drop would further improve the company’s results. However, as the results of this drop are yet unknown, it is not accounted for in the company’s current top- and bottom-line outlook for 2023.

Freudenberg Performance Materials (Freudenberg) is launching its latest innovation Evolon® Ultra Smooth to serve the specific packaging needs of technical industries.

Evolon® Ultra Smooth fabrics are low-linting, strong and hard-wearing. The new materials are designed for industrial parts and components which require low-friction, sliding behavior during the part packing and handling procedures. Furthermore, they are durably hydrophobic and available in different weights. The reusable textile containers made of Evolon® Ultra Smooth can be used in various industries to pack and transport even very heavy and sensitive parts without damage.

The Evolon® Ultra Smooth materials have a point-sealed patterned white surface which is very different from the standard Evolon® packaging textiles and which makes them easily identifiable.  

Evolon® Ultra Smooth materials protect the surfaces of industrial and automotive parts by avoiding micro-scratches or lint contamination. By using Evolon® Ultra Smooth reusable packaging to transport parts with highly-sensitive surfaces, customers reduce the number of damaged parts and the reject rate. The innovation is available worldwide. As Evolon® Ultra Smooth is 100% made in Europe, European customers benefit from even greater flexibility in the supply chain and quick go-to-market.

‘Best of Bangladesh’ -- the first ever sole ‘Made in Bangladesh’ show in Europe -- aims to open the doors for Europe to experience what the Bangladeshi industries has to offer.

As Bangladesh celebrates five decades of strong ties with Europe, in order to further strengthen the ties and deepen collaborations with the partners across Europe, Bangladesh Apparel Exchange, supported by the Bangladesh Embassy in the Netherlands, is organizing the event in Amsterdam, Netherlands on September 4th and 5th, 2023.

The ‘Best of Bangladesh’ aims to serve as a dynamic platform to showcase the progress and potential across diverse sectors of Bangladesh economy, especially manufacturing.

A total of 40 Bangladeshi companies each of which is the country’s best from apparel, textile, leather, Agro, jute, handicrafts, pharmaceutical, light engineering, digital industry, FMCG and bicycle will showcase their sustainable and innovative products in the Best of Bangladesh.  

Bangladesh economy ranks as the world’s 37th largest now and it’s rapidly-expanding. The ‘Best of Bangladesh’ is being organized to accelerate interests and burgeoning engagements between the entrepreneurs and private sector entities on both European and Bangladeshi sides. The event has been structured to serve as a platform to showcase the multifaceted progress made and potential across diverse sectors of Bangladesh’s economy.

There will be an inaugural and 7 interactive panel sessions at the Best of Bangladesh on the topics ‘Bangladesh – Perspectives From An Emerging Economy’, ‘Bangladesh - Your Sustainable Sourcing Destination’, ‘Empowering the Future: Advancing Safety & Well-being for Garments Workforce in Bangladesh’, ‘Bangladesh Agro-Food: A Next Opportunity for Collaboration’, ‘Impact Investing - The Next Frontier’, ‘Sustainable Synergy: Circular Economy, Climate Action & Bangladesh’s Future’, and ‘Digitization and Digital Economy in Bangladesh’.

From 2 to 4 September 2023, twenty Chinese fashion brands will present themselves for the first time on an international platform under the umbrella of CHIC, China International Fashion Fair. On 900 sqm CHIC presents the FASHION CHINA pavilion at Who's Next with a selection of Chinese womenswear, menswear, sportswear, and hats.

Womenswear is represented by Ellassay, Laurèl (founded in Munich, Germany), JNBY, LUO ZHENG, RAXXY (women and men), KEYONE (hats for women, men, kids, no gender), Thread & Story, MAY D.WANG Cashmere & Silk, Yvonne CHOI, SE JIE, VAN SUNSUN, SELAH, EXTENDED, ARYA CASH, JORE BAUDRY, CANMADE and HEMPEL International.
Menswear is represented by KB Hong by K-BOXING and JOEONE. Exclusive sportswear will be shown by FENGGY.

FASHION CHINA is planned as a prelude to the presentation on further international platforms and is to complete CHIC's offer as a service point for Chinese fashion brands in the future.

Around 500 exhibitors with international participation from Europe and Asia are expected at the next CHIC in Shanghai from 28 to 30 August. CHIC - China International Fashion Fair is organised by China National Garment Association in cooperation with China World Trade Center Co. Ltd.

Freudenberg Performance Materials (Freudenberg) will be presenting new applications for its European environmentally-friendly Evolon® microfiber technology for Fall/Winter 24/25 fashion and leather goods collections at Lineapelle, from September 19-21. These include solutions for artificial leather applications suitable for the shoe, furniture and automotive industries.

Evolon® sustainable microfiber coating substrates
Evolon® microfiber fabrics are ideal coating substrates for artificial leather applications in the shoe, furniture and car industries. They are particularly suitable as a carrier material for PU and PVC coatings. Evolon® microfiber materials have non-fraying edges, which makes converting easier and quicker. They contain 80% recycled PET from Freudenberg’s in-house bottle recycling plant. Furthermore, they are manufactured with no solvent and no chemical binder in the company’s Evolon® plant located in Colmar, France. The plant is accredited according to OEKO-TEX STeP sustainability manufacturing certification and the DETOX TO ZERO criteria. European manufacturing offers logistic benefits to European customers through shorter supply chain and transport routes.

Reinforcement material for leather goods
Manufacturers of leather goods also benefit from Evolon® microfiber when they use it as a reinforcement material for original leather. It is drapable and soft and provides optimal shaping support for leather. In addition, Evolon® materials offer important sustainability advantages for the manufacturing of luxury leather bags, such as being 100% made in Europe, eco-friendly and socially-responsible production, and the use of recycled raw materials.

The Premium Group, an European event and trade fair organiser for fashion and lifestyle, is entering a new chapter: founder Anita Tillmann is handing over to her business partner Jörg Arntz and the experienced management team. After almost 21 years of successful management, serial entrepreneur Anita Tillmann will retire from operating business at the end of this year. She will remain with the Premium Group as a strategic advisor.

Jörg Arntz, the long-standing managing director of Premium Group, will continue to lead the company as managing director, with the strategic support of Anita Tillmann. Operational implementation and content development will continue with the proven PREMIUM and SEEK teams in line with the formats. "I am delighted to have had Anita by my side over the past 10 years. The goal remains to strengthen the Premium Group's position as a forward-thinking and established platform in the national and international markets. We challenge traditional KPIs, develop sustainable business models hand-in-hand with the industry and share this know-how with our communities. We will continue to drive innovation and growth in close exchange with the industry. The demand for an organised industry meeting in Berlin is still very high. We are firmly convinced that the relevance of personal exchange will become even more important in the future and with it modern platforms like PREMIUM and SEEK."

Finishing machinery specialist Monforts has secured a number of major orders from textile manufacturers in Central and South America recently, and was pleased to welcome a high number of visitors from the region to its stand at ITMA 2023 in Milan from June 8-14.

Among new orders are those for three Montex stenters delivered to the AustralTex Group in Argentina and a further Montex range to denim manufacturer CIT in Brazil. Guatemala’s Global Textiles placed an order for its second Montex stenter, while Mexico’s Zentrix ordered its third and Avante, also in Mexico, has opted for its sixth.

Elsewhere, orders have also been placed for the delivery of three new Montex stenters to one of Pakistan’s major corporations, as well as a new Thermex dyeing range to nonwovens manaufacturer Orsa in Italy. Further orders – both for new machines and retrofit modules – are now anticipated following ITMA 2023, which attracted over 111,000 visitors to Milan.

“Visitor footfall at ITMA 2023 was well beyond the company’s expectations, and we were especially pleased at the constant number of visitors from South American companies, as well as from Asia and Europe,” said Monforts Marketing Manager Nicole Croonenbroek. “We were able to provide them with detailed information about our portfolio of machines and technologies digitally and fielded an unprecedented number of serious enquiries, many of which promise to turn into new business.”

Monforts Montex stenters for processes such as drying, stretching, heat-setting and coating, she added, are already the industry standard for the fabric finishing industry, providing a number of advantages in terms of production throughput and especially in energy efficiency and resource savings. Other key technologies in the Monforts portfolio include relaxation dryers, Thermex dyeing ranges and Monfortex compressive shrinking ranges.

Montex®Coat
“We were also very pleased with the interest in the Montex®Coat, the latest addition to our range of technologies, which we displayed in Milan,” Croonenbroek said.

The Montex®Coat can serve a very diverse number of markets and enables full PVC coatings, pigment dyeing or minimal application surface and low penetration treatments, as well as solvent coatings. Knife coating, roller coating or screen printing can also all be accommodated with this system. It provides the ultimate in flexibility and the ability to switch quickly from one fabric run to the next, without compromising on the economical use of energy or raw materials.

Many refinements have been made to the Montex®Coat in the past few years, resulting in higher coating accuracy and the resulting quality of the treated fabrics. A number of advanced new improvements were introduced in Milan, including automatic edge limiters for immediately adapting to new coating widths and a new and simplified hand-held control device. These save considerable time in setting up the machine and ensuring consistent production.

The Montex®Coat unit displayed in Milan was sold to Vietnamese company Thai Tuan during the show.

The EPTA – European Pultrusion Technology Association organizes in cooperation with the ACMA – American Composites Manufacturers Association - the 17th World Pultrusion Conference on 29th February – 1st March 2024 in Hamburg, Germany. The conference is one of the leading pultrusion events in the world. The event takes place just before the JEC World 2024 in Paris (5th – 7th March 2024).

The presentations are to document innovations in the following subject areas of
pultruded reinforced plastics:

• Market development in Europe, USA, Asia
• Innovative applications
• New Markets: Ideas for potential new applications with pultruded shapes or
• systems
• Sustainability: Technical possibilities, recycling, etc.
• Raw materials
  ○ Development of fibres
  ○ Development of resins
• Construction / Testing / Calculation
• Processes

The presentation language will be English. Deadline for paper submission (title, short abstract, speaker name and address) until 15th September 2023 to info@pultruders.com.

Increasing energy and resource efficiency in the construction sector will be key to the EU’s ambition of achieving climate neutrality by 2050. By enabling the manufacture of strong, durable and lightweight products, composite materials can help the construction sector improve its environmental sustainability, as well as reduce total lifecycle costs. The latest EPTA industry briefing, Pultruded composites contribute to a more sustainable future for construction, discusses how pultruded composites answer the need for materials offering high performance, faster installation, corrosion resistance and low maintenance.

The report is available to download from the EPTA website.

The future of construction
As one of the largest global users of energy and raw materials, the construction industry is under immense pressure to improve its sustainability. At the same time, it must respond to demands for improved performance and reduced total cost of ownership. New materials will be needed to minimise the use of natural resources, enable a reduction of carbon footprint and facilitate circular economy practices. Choosing the optimum materials required for durability throughout the lifecycle will be increasingly important. A shift to off-site production is also forecast, where factory-controlled environments and automated processes can improve quality control, lower waste, and reduce work on site.

Lightweight pultruded parts can be pre-assembled into modules or complete structures in the factory for faster installation on site. Lightweight profiles lower energy use during transportation and installation, and a longer service life combined with minimal maintenance can deliver a reduced through-life carbon footprint. Pultruded parts such as profiles, gratings, beams, tubes and planks are increasingly found in a range of building, construction and infrastructure applications. Examples include bridge decks, fencing, stairs and handrails, train platforms, cladding, utility poles, modular building concepts, and window frames.

One application offering large growth potential for composites is bridges. Composite bridges are being designed to provide a service life of 100 years and unlike steel bridges do not require regular repainting to protect them from corrosion. Over recent years, pultruded glass fibre composite has become a highly popular choice for pedestrian and cycle bridges. Pre-fabricated ‘easy fit’ bridge decking planks, pre-assembled bridge modules and complete bridge ‘kits’ are now available. Corrosion-resistant composite bridges are ideal for use near water or on the coast, and in remote locations where regular maintenance operations would be difficult. A composite bridge can deliver the same performance as a steel structure with a weight saving of up to 50% or more. This enables more streamlined bridge designs which require less substantial supporting structures and foundations, greatly reducing consumption of materials and energy. Lightweight also results in easier logistics and simplified installation. Pultruded are more easily transported to the construction site, with lower fuel consumption, and easier to move on site, often reducing labour requirements and the capacity of lifting equipment.

A lifecycle approach
As the construction industry looks to the future, the environmental and economic benefits of composite materials linked to easier logistics and installation, durability and low maintenance are becoming increasingly valued. More projects are demonstrating the benefits of composite materials and standards covering the design, fabrication and installation of pultruded profiles are making it easier for the construction industry to use them. With ongoing development and collaboration, pultrusion has the potential to contribute to a more sustainable future for construction and many other industries. EPTA will continue to promote the advancement of pultrusion technology and its applications and foster sustainable practices within the industry.