Slowing demand and fading consumer confidence have created havoc in the global fashion industry. Days after American Apparel filed for bankruptcy for the second time in 13 months, popular clothing brand GAP said it expected to shut about 65 company-operated stores this year due to sluggish sales.
High-end designer houses are also losing out on reduced foot falls in malls. German fashion house Hugo Boss recently announced plans to eliminate two brands and slowdown expansion while it has come to light that Kate Spade put itself up for sale. The woes of traditional apparel and luxury brands have been exacerbated in recent years as online retailers grow in popularity, especially among millennials, forcing these big names to rethink growth plans and device new strategies to cut costs and bump up sales.
Many, including Abercrombie & Fitch and Michael Kors, have posted disappointing earnings in the third quarter, leading to a drop in share prices. The challenge for these brands has mostly come from fast-fashion chains such as H&M, Forever 21 and Zara which have grabbed a large chunk of market share by offering trendier clothes at lower prices.
Clothing companies have been hit particularly hard with brands such as Aeropostale, Quiksilver and Pacific Sunwear of California filing for bankruptcy in the past two years. American company Banana Republic recently announced it is closing all eight stores in the United Kingdom, and moving its operations online to its regional website.
