From the Sector

As part of a broader initiative to reduce environmental impacts and keep ahead of evolving global chemical regulations, Active Apparel Group (AAG), manufacturer of performance apparel for the leisure/lifestyle and active market, is embracing water-based OEKO-TEX 100 Class 1 Standard Printing Inks in their manufacturing process.

Common and inexpensive inks used in the global manufacture of apparel contain a wide range of toxic chemicals, including phthalates, petroleum-based co-solvents, PVC, and other volatile organic compounds. AAG’s initiative to use OEKO-TEX approved, water-based inks creates benefits for factory workers, people living local to these factories, consumers, and everyone downstream.

AAG offers a range of printing methods to address a variety of customer needs, including:  digital printing, screen printing, and heat transfers for on-garment logos and care instructions. OEKO-TEX certified water-based inks are used for all of its digital printing and for the majority of its screen printing. These non-toxic water-based inks offer a socially and environmentally better alternative to the more commonly used Plastisol inks.

Making a sizable environmental impact, the printing service of AAG’s business is significant. Digital printing averages 25,000 meters per month with screen printing averaging 60,000 garments per month.

The use of water-based inks requires a skilled production team and training of employees is ongoing. AAG currently employs 30 people at its printing operations in Ningbo, China.

Archroma has developed a new wet-fastness improver that helps brands and mills produce durable clothing, towels, linens and other textile products with long-lasting colors without compromising on quality or introducing hazardous chemicals.

ALBAFIX® ECO PLUS is a next-generation fixing agent that delivers a strong wet-fastness for all reactive dyes on cotton and other cellulosic fibers and polyester-cotton blends. It will not change the shade of the dyed fabric or negatively impact light-fastness. The product also avoids production challenges – such as foaming, acid hydrolysis and migration problems during drying – to promote efficiency and quality output.

ALBAFIX® ECO PLUS is suitable for jet applications, and for other dyeing and washing equipment with vigorous liquor circulation, and can also be applied by exhaustion, by padding or from the last bath of the soaping process after dyeing or printing.

Like ALBAFIX® ECO, the latest addition to the ALBAFIX® family has a positive influence on chlorine-fastness. When applied with double fixing, it achieves the same high performance on polyamide and PA/Elastane fabrics, as it does on cellulosic fibers. This makes it ideal for the production of swimwear, as well as sportswear and outdoor clothing.

ALBAFIX® ECO PLUS complies with global eco-standards and initiatives, including Global Organic Textile Standard (GOTS), bluesign® and the Zero Discharge of Hazardous Chemicals (ZDHC) Roadmap.

Growth, digitalisation and re-commerce – the forthcoming INNATEX (the international trade fair for sustainable textiles) is devoted to highly topical themes. From 20 to 22 January 2024 at the Messecenter Hofheim Rhein-Main near Frankfurt, over 200 exhibitors will be meeting up with retailers, experts and journalists. The motto for the winter trade fair is GROW, representing the call for sustainable, social and commercial growth that will not be possible without the green fashion movement.

Optimistic expectations despite the challenges
According to Alexander Hitzel, INNATEX Project Manager, and the organisers, MUVEO GmbH, various new trends are opening up that might, if exploited strategically, unlock new business areas. These range from ‘quiet luxury’, travel, internationalism and focused storytelling to services for specific target groups. On the Monday, members of the expert panel will be discussing re-commerce with the Hessen Retail Federation in the Community Lounge.

From storytelling to digital tools – the INNATEX themes
“Second-hand is in fashion,” says Julia Frings of IFH Köln. “Sales of used and recycled products have been on an upward trend for some years now and with the rising importance of sustainability, their relevance will continue to grow. There is great potential in this area for the trade to reach new target groups and expand the range on offer. To be successful, though, it is essential to have a concept tailored to the needs of consumers.”

Alongside Julia Frings of IFH Köln, other Federation panellists will include Steffen Riegel of Hessnatur. The first Lounge Talk at the start of INNATEX will deal with Strategies for Sensible Growth, borrowing from the motto for the fair. This topic will be followed by Fair Wages in the Global South, Storytelling as a Strategy, and Digital Trends.

Brand portfolio and partners of INNATEX
The collaboration with the Hessen Retail Federation, like that with Fashion Changers and Greenstyle Munich, has already proved its worth at previous fairs, as a way of adding variety to a well balanced fair programme. The new collaborative partners include AMD Academy of Fashion and Design (AMD) in Wiesbaden, the Fashion Campus 2030 Initiative and the Enterprise Europe Network (EEN, a network promoting internationalisation among smaller and medium-sized businesses).

The brand portfolio includes fashion for all generations, tastes and occasions. Labels exhibiting for the first time include businesses such as Fuza Wool from Denmark with its high quality traditional knitwear, and the hemp-based accessories of 8000Kicks from Portugal. The DESIGN DISCOVERIES comprise Anfisa Roumelidi, C/OVER and Consci.

Vietnam is the subject of increasing investment across an array of industries, with its textile sector going from strength to strength in a short space of time. To give key players from across the textile spectrum an opportunity to make their presence felt in this market, the Vietnam International Trade Fair for Apparel, Textiles and Textile Technologies (VIATT) will make its debut from 28 February – 1 March 2024. Taking place at the Saigon Exhibition and Convention Center (SECC), the new fair will cover three main product sectors, namely apparel fabrics, yarns and fibres, and garments; home textiles; as well as technical textiles and nonwovens, textile processing, and printing technology.

In line with the industry’s anticipation, the country was identified as the ideal location for ASEAN’s new comprehensive textile platform for several key reasons. Vietnam’s pro-business policies, strategic geographical location, abundant labour force, and favourable trade agreements have contributed to its rise as a global textile manufacturing hub. Agreements such as the Regional Comprehensive Economic Partnership (RCEP); the Indo-Pacific Economic Framework for Prosperity (IPEF); and 15 free trade agreements (FTAs) covering over 60 countries and regions, will further enable participants from across the value chain to conduct cross-border business after connecting at next year’s show. In addition, several key travel initiatives that serve international players have been implemented, including the country’s APEC Business Travel Card programme^[1], availability of e-visas to all nationalities, and visa-free travel for select countries^[2].  

Exhibitors from multiple textile sub-sectors converge in February
In Vietnam’s home textile segment, rising urbanisation, emerging young consumers, and higher disposable incomes are interrelated factors driving growth^[3]. Globally, three of the top trends include recycling; utilising green fibres; and the increasing use of technical fabrics for enhanced comfort and health. At the fair, confirmed home textiles exhibitors include Hanyang Eco Tex, Hohmann GmbH, Phuong Nam Feather, and SIGMA, set to showcase their most up-to-date products, covering bedding, upholstery fabrics, curtain, and sun protection.
 
Utilised for automobiles, civil aviation, construction, health care, and more, Vietnam's exports of technical textiles reached USD 676.6 million for the first nine months of 2022, up 17.1% compared to the same period in 2021^[4]. This in turn bodes well for the country’s import prospects of quality machinery and equipment. Hoping to cater to domestic demand at VIATT 2024, international suppliers in this category include Julai, SIGMA, and Skwentex.

Meanwhile, apparel-related products make up the lion’s share of the country’s textile exports – according to Vietnam Textile & Apparel Association (VITAS), in 2022 these numbered USD 29.1 billion. From Ho Chi Minh to Hanoi, numerous international fashion brands have a manufacturing presence, including Adidas, H&M, Lacoste, Lululemon, Nike, The North Face, Uniqlo, and many more. At next year’s fair, exhibitors such as Avery Dennison, Lenzing, Stylem Takisada-Osaka, and Texwinca, will aim to draw the attention of apparel brands and a wide range of other domestic and international buyers.

The Vietnam International Trade Fair for Apparel, Textiles and Textile Technologies (VIATT) is organised by Messe Frankfurt (HK) Ltd and the Vietnam Trade Promotion Agency (VIETRADE), covering the entire textile industry value chain.

^[1] ‘Everything You Need to Know About Traveling to Vietnam with an APEC Business Travel Card’, April 2023, Vietnam Briefing, https://www.vietnam-briefing.com/news/apec-business-travel-card-vietnam.html/ (Retrieved: November 2023)
^[2] ‘Vietnam Introduces E-Visa for All Nationalities from August 15, 2023’, August 2023, Vietnam Briefing, https://www.vietnam-briefing.com/news/vietnam-introduces-e-visa-for-all-nationalities-from-august-15-2023.html/ (Retrieved: November 2023)
^[3] ‘Vietnam Home Textile Market Size & Share Analysis’, 2023, Mordor Intelligence, https://shorturl.at/wQVWZ (Retrieved: November 2023)
^[4] ‘Vietnam's technical fabric exports continue to be positive’, October 2022, Web Portal of Supporting Industry of Vietnam, https://shorturl.at/lmnvX (Retrieved: November 2023)

TrusTrace, a SaaS (Software as a Service) company with a platform for supply chain traceability and compliance data management, announced that PIP Global Safety, a supplier of protective workwear equipment with over 30 brands globally, has selected the TrusTrace platform to support its traceability needs, including evidence collection to prove compliance for the UFLPA (Uyghur Forced Labor Prevention Act).

PIP Global Safety will now leverage verified, real-time data on the TrusTrace platform to provide deeper visibility into the cotton used within the Company’s PPE and workwear products. The partnership will also improve the efficiency of chain of custody data collection for UFLPA compliance – a U.S. regulation that is compelling companies to assess risks in their supply chain and implement processes to ensure that suppliers are not using forced labor.

PIP Global Safety previously managed their supply chain traceability manually; now, TrusTrace will automate the process, changing how data is collected, digitized and shared. “After an extensive vetting process, we selected TrusTrace as our traceability platform because of their ability to provide us with detailed, product-level data that enables us to thoroughly and accurately map our supply chains,” said Nathan McCormick, Senior VP of Operations & Integrated Supply Chain at PIP Global Safety. “While a lot of laws and regulations around due diligence have not yet come into force, we are taking a proactive approach to ensure that we’re ahead of the curve to support our customers’ needs while proactively monitoring for risk of forced labor in our supply chain.”

In addition to supporting regulatory compliance, TrusTrace supports PIP Global Safety’s long-standing sustainability and social responsibility initiatives. PIP Global Safety has pledged to continually identify opportunities to minimize their environmental footprint while still maximizing protection against occupational hazards. This commitment extends to multiple aspects of the business, including Manufacturing Processes, Sustainability-Driven Programs, Recycled Products, Social Sustainability and Future Initiatives.

Responsible innovation plays a leading role at GenovaJeans, the initiative dedicated to new-generation jeans GenovaJeans, the initiative held in Genoa from 5 to 8 October and dedicated to the new generation of jeans, set the premises for the creation of a community dedicated to this iconic, revolutionary and innovative garment.

30 prominent industry leaders, divided into three categories (heritage, new creatives and production chain) created a inspiring experience in historic venues in the heart of the city. Presented in-group exhibitions, they forged a circular journey from the design to the creation of jeans, from the ingredient to the final outfit, and vice versa.

Heritage brands, exploring the history, evolution and best practices of this iconic garment, were hosted inside the Biblioteca Universitaria and included Blue Blanket Division, Blue Of A Kind, Diesel, IMIJT35020 By Canova, Incotex Blue Division, Mud Jeans, Pepe Jeans, Roy Roger's, Stefano Chiassai and Tela Genova.

The new creatives, a new generation of designers who have adopted innovative eco-design strategies to create smart jeans, were present inside Edificio Metelino in the Darsena area and included Andrea Grossi, Gilberto Calzolari, Gimmijeans, Jeanne Friot, Marcello Pipitone with Albiate 1830, Ksenia Schnaider, Patine, Regenesi, The Blue Suit with ROICA™ by Asahi Kasei and Zerobarracento.

The production chain, composed of companies in the supply and value chain, representing the major stages in the production process, were made up of Albiate 1830 - Albini Group, Cadica, Candiani Denim, Circulose®, Officina39, Pure Denim with Bemberg™ By Asahi Kasei, Soko, Tencel™, Tonello, YKK Italia and were housed inside the Ex Oratorio di San Tommaso.

The responsible innovation, ethics and transparency adopted by each company taking part in the circular journey of GenovaJeans were explained through a QR code powered by C.L.A.S.S. (Creativity Lifestyle And Sustainable Synergy) that provided information on the garments, their composition, production phases and company values.

Digital fashion outlet Otrium announces the launch of a dedicated garment refurbishment and repair programme for damaged returns following a successful pilot scheme. The initiative is being run in partnership with Bleckmann, experts in supply chain management for fashion and lifestyle brands. Working with Bleckmann’s team of circular fashion experts from The Renewal Workshop, Otrium is taking the next step in its strategic journey to help reduce the number of that might ultimately end up in landfills or destroyed.
 
Most of the returns that Otrium currently receives can be easily restored and put back on sale. However, in rare cases, returned items are damaged. “Preventing waste is an important part of Otrium’s DNA, and thanks to our partnership with Bleckmann and their Renewal Workshop team, we can now repair the majority of damaged returns and put them back into circulation,” said Kevin Carolan, Director of Logistics at Otrium. “We are happy that we can use our position in the fashion supply chain to create lasting change and accelerate towards our mission of reducing the volume of garments that go to landfill.”

Since 2020, Otrium is exploring refurbishment and repairs with their third-party logistics provider Bleckmann. In April 2023, both partners started a three-month pilot at Bleckmann’s facility in Almelo, the Netherlands, to expand the programme with a broader range of repairs and optimised processes through data use. During the pilot, the Renewal Workshop team at Bleckmann refurbished more than 1,000 returned garments, shoes and accessories for Otrium each month.

“With hundreds of high-end labels on the platform, we needed an efficient solution tailored to the needs of a wide range of products – from shoes and coats to bags,” explained Marlot Kiveron, Head of Sustainability at Otrium. “The Renewal Workshop team worked closely with us to develop a streamlined and scalable process that could grow in line with our ambitions, delivering like-new repairs at the speed of e-commerce. Their combination of purpose, professionalism, agility and expertise makes them the ideal partner for this kind of project.”
 
Bleckmann’s integrated data capabilities were also crucial to the success of the partnership. “Data collection and analysis can be vital in demonstrating the commercial viability of sustainability initiatives,” said Tamara Zwart, Director of Renewal at Bleckmann. “Using our advanced stock tracking systems, we determined that 70% of the renewed Otrium stock had been sold within seven weeks. We’re all delighted with the results!”
Furthermore, carbon-tracking software Vaayu calculated that on average, a refurbished return sold on Otrium avoids 2.760kg of carbon emissions and 69g of waste proofing that this programme can have a positive impact on both: the planet and the business.

Having established the business case, the team decided to expand the initiative beyond the pilot phase. “This project is a milestone in our sustainability journey,” concluded Marlot. “It’s a key part of our ongoing commitment to finding more ways to reduce our environmental impact while helping to ensure that more clothes get worn. By the end of 2023, we aim to repair at least 25,000 damaged garments. Together with Bleckmann and their renewal experts, we’re well on our way to proving that this circular business model can be a valuable part of our future growth.”

• 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.

BDG [By Urban Outfitters] and ISKO have come together to develop a 10-piece collection made up of workwear-inspired denim pieces with finishing designs by British Artist, Dwayne Coleman.

Partnering with ISKO, Urban Outfitters has developed more sustainable denim pieces for this collaboration, utilizing recycled cotton yarns made from cutting waste. All pieces are washed using innovative technology to reduce the chemical, water, and energy footprint so that each item has a low environmental impact score. The development of these washes were done with the help of the experts at ISKO’s Creative Room London. The collection even features an innovative style that uses no virgin cotton, and yet the authenticity and durability remains the same.

The collaboration incorporates the principles of circular design, including minimal wash processing, recycled cotton content, minimal metal trims and removable shank buttons. The styles are designed to last, and after many wears they will be readily recyclable for their next life. Urban Outfitters are also members of Better Cotton whose mission is to help cotton communities survive and thrive, while protecting and restoring the environment as part of the brand's wider sustainability initiatives.

The collection designs pay homage to workwear trends to deliver an all-encompassing gender free denim capsule. The finishing touch across the range comes from established British Artist, Dwayne Coleman, who has created an artwork made with upcycled denim and paint techniques which has become the inspiration for denim surface treatment. Elements of his mark-making have been applied to the design of the collection, including wildflower embroideries, patching and hanging threads.

A total of 20 European fashion and design schools took part in the 2nd “Fashioning Sustainability” competition organized by Freudenberg Performance Materials together with Macpi and Bemberg™ by Asahi Kasei, two co-branding partners in the textile industry.

Freudenberg invited talented young designers to create and submit their ideas for sustainable clothing. The initiative aims to show that sustainability is a key factor in the fashion industry.

Two of the most innovative outfits from each school were selected for the final round and presented to an international jury at the “Bagni Misteriosi” event location in Milan in May. Fashion design experts and opinion leaders as well as journalists were invited to select the most sustainable designs in the categories of “Technology” and “Design”.

The winners
First place in the “Technology” category went to Judith Marquant while the second to Jagoda Sokolowska, both students of the fashion school Esmod in Paris. Ilaria De Martino, from the fashion institute Modartech, Italy, and Xiaodan Liao from Polimoda, Italy, were awarded first and second place in the “Design” category. The first-place winners received €2,000, while the second places won €1,000.

All participants benefited from the platform to network with leading players in the garment industry and learn more about concrete steps for embracing sustainability. Creating true sustainability in the fashion industry means reducing the material flow of clothing, addressing both sustainable production and consumption.

Members of the Jury:
Cristiano Zanetti, Sales Director Italy, Freudenberg Performance Materials
Maurizio Cazzin, Male Modeller, Maison Giorgio Armani
Riccardo Bullio, Apparel Industrial Division Director, Dolce & Gabbana
Caterina Cuoghi, Industrial Director, Area NYC
Simone Bigi, Style and Product Office Manager FAY line, Gruppo TOD’S
Roberto Cibin, Model and Pattern Development Manager, Caruso
Bruno Landi, Sales Director, Vitale Barberis Canonico
Luisella Allegretti, Pattern Designer Boss MW Business Specialist, Hugo Boss
Eugenio Balordi, Product Manager, Maison Margiela
Ettore Pellegrini, Sales and Marketing Manager, Asahi Kasei Fibers Italia