As the fashion market is evolving at a head-spinning pace, we are working tirelessly to keep you informed about the latest global developments in this ever-changing industry. Today’s focus is on the role of private equity firms in the increase of Chapter 11 bankruptcy finlins in the US, Hong Kong's retail recovery and Karl Lagerfeld's interview in space.


In Q1 2017, the productivity of US workers declined 0.6%… …while labor costs climbed at a rate of 3% . This development reverses the positive trend of the preceding quarter. In Q4 2016 productivity had increased 1.8%, while labor cost was up a modest 1.3%. According to some analysts, the anemic gain in productivity is currently the biggest economic challenge facing the US . Even though the job market remained solid in Q1, the US economy grew at the slowest pace in three years. Part of the reason are low wages, whereby businesses relied rather on new hires than investments in more efficient technologies.

Private equity firms might carry some responsibility for the current US retail crisis. There are many reasons for the current crisis in the US retail market, not just the rise in eCommerce and an overstored US retail landscape. One major factor have been the alterations that were made to the bankruptcy code in 2005. These changed made it the code more creditor friendly and left retailers with much less time to reorganize - a maximum of 210 days if a 90 day extension is granted. According to industry insiders, this had a devastating effect on the retailers’ ability to reorganize and let to more frequent liquidations. During the financial crisis in 2008, landlords offered their retail tenants lower rents and better lease terms, which probably kept a few too many weak locations open longer than they should have. And last but not least, half of all retailers, which filed for Chapter 11 in the past 18 months, are or have been owned by private equity companies. Some of those investors have continuously leveraged these retailers to provide liquidity for their own dividends without fixing the fundamental problems. Now these problems are catching up to them…

In Hong Kong, retail recovery is on the horizon. After 24 months of declining retail sales the Hong Kong retail sector saw a 3.1% growth in March 2017. The uptick coincides with rising tourist numbers, which climbed by 8.8% and was further supported by robust local consumption. Part of the increase in tourism is China’s worsening relations with South Korea, which brought more visitors from mainland China to Hong Kong.

France dodges Frexit, Euro rallies. With 39-year-old Emmanuel Macron, French voters have elected the youngest president in the country’s history. Faced with a myriad of problems from economic stagnation and immigration issues to continuous terrorism threats - the pro-European, independent former economy minister promises to shake up the French political system. Under his mission statement “En Marche” (“Forward”) he proposes free market systems and pro-business reforms including lower taxes and a loosening of France’s 35-hour-week. Macron, who has been officially endorsed by Bernard Arnault, Chairman and CEO of LVMH Moet Hennessy Louis Vuitton, proclaims his love for Europe but wants to create a new, stronger France. But his job will not be easy. Even if he manages to move parliament in his direction, it remains to be seen if Macron's program can live up to the hype . Investors welcome his election. In early Asia-Pacific trading, the Euro rallied to a $1.1023 , six-month high against the dollar.


Bebe Stores dodges bankruptcy... The embattled Californian fashion retailer has reached an agreement with its landlords including Simon Property Group and General Growth Properties to close all stores , thus avoiding a bankruptcy filing . In the future, the Brisbane-based company plans to continue as an online retailer. As part of the reorganization, the Bebe brand will be redeveloped. Bebe Stores used to be one of the top clothing retailers in the US and made founder Manny Mashouf a billionaire in 2006. On March 22, Bebe Stores operated 134 retail stores, 34 outlet stores and in the United States, Puerto Rico and Canada. In addition, the company also distributes and sells Bebe branded product in approximately 75 doors through its licensees in more than 21 countries.

...but B&B Bachrach is not so lucky. As part of its restructuring under Chapter 11 bankruptcy protection , the Los Angeles-based menswear retailer will close 13 unprofitable stores. That leaves the company with 11 locations and its online store . In its heyday the company operated about 80 stores in the US, mostly in the Midwest. Bachrach has been founded in 1877 and has just recently started with made-to-measure menswear under Bachrach: Tailored MTM.


Vince struggles to survive. To bring businness back on track, Vince CEO Brendan Hoffman has been working hard to update and balance the contemporary brand's assortment, but delays in shipments, canceled orders and returns of merchandise continue to bloat inventory. In its wholesale division, Vince relies heavily on the embattled US department stores, where markdowns are rampant. According to US ratings agency Moody's, the department store sector will see sales decline by another 1% this year.


Karl Lagerfeld interviews French astronaut in space. Karl Lagerfeld's recent show for the Chanel fall collection has been inspired by French astronaut Thomas Pesquet, who regulary reports from the International Space Station, where he ahs been stationed since November 2016. Last week, the designer had a chance to interviewPesquet for the French radio station, Radio France. While Lagerfeld is intrigued by the idea of having his own zero gravity room, Pesquet feels honored by the attention of the fashion czar and was relieved, that Lagerfeld did not take any inspiration from astronauts' outfits. Pesquet might soon change his attitude regarding spacewear, though: Currently, NASA is exploring a new, sexy material made of 3D printed metall tiles which reflect light on one side and absorb it on the other. Developed to protect objects in space from damage it might soon find additional uses.

Kardashian kids' line features chokers for small kids. While companies like Primark and Fred Meyer a running massive recall initiatives for children's apparel with choking hazards, Reality TV star Kim Kardashian and husband, Rapper Kanye West, offer chokers specifically designed for children and babies . On the couple's website , the controversial accessories are offered for $22.


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