A retailer apocalypse has forced shut international brands with almost 1700 stores closing in 2020. Forever 21, Zara, Guess, Victoria’s Secret pull out all stops on retail stores. Majority of brands file for insolvency
Harley Davidson may indeed have pulled out of the Indian Market.
A luxury brand that is hugely popular and aspirational announced that it would be bidding farewell to the Indian Market owing to weak sales.
The above is unfortunately true for numerous international brands, the COVID – 19 pandemics has forced them to pull out all stops and shut down their stores in many global regions and markets.
The preventive lockdown measures have hit the fashion apparel, cosmetics industry hard. With stores closed during the lockdown, involving 48 countries worldwide, the sales plummeted, profits dwindled, and businesses struggled to keep afloat.
These highly popular brands face mass closures of their retail stores, and some have been forced to file for bankruptcy.
While some retailers were already grappling with the popularity of online shopping e-commerce, which required these brands to reinvent and change strategy to adapt to this trend, the once still following the traditional business model are undergoing the worse consequences.
The Coronavirus pandemic dealt the final blow in the already existing struggles, and even the well – developed e-commerce businesses are in serious trouble.
Let’s take a peek at some of the brands you may not find around in your shopping ventures or even online shopping.
Victoria’s Secret – a go-to brand for many women, the brand was already facing a decline in sales even before the pandemic and after it filed for bankruptcy and announced closures of up to 250 stores. According to Forbes, its net sales fell 46% in the first quarter of 2020.
Zara – another brand that is hugely popular in India, announced this June that it would close up to 1200 stores worldwide. The company now plans to focus on online shopping.
Forever 21 – declared it expected to close 350 stores globally and filed for Chapter 11 bankruptcy protection in September.
Aldo – a brand that most women swear by and have a presence in almost 100 countries, is looking to restructure and build on its legacy in retail fashion in other jurisdictions, in a statement issued by the brand.
Esprit – announced that it would be shutting all stores in Asia outside China – Malaysia, Hong Kong, Singapore, Taiwan, Macau – owing to a slump in sales.
Burberry – in the quarter ending June 27, the retail sales fell 48.4 percent to 257 million pounds. Comparable store sales were down 45 percent.
Guess Inc – revenue during the quarter ending May 2 fell to a record $260 million, a fall from $536 million during the same time last year.
Levi Strauss & Co – The company is on the verge of cutting its workforce by 15 %, which totals roughly 700 positions globally. The cuts are thought to result in an annualized savings of $100 million for the company.
Additionally, in the quarter ending on May 24, the company saw net losses equal to $363.5 million while revenues fell 62 percent to $497.5 million.
Marc Jacobs – roughly 60 employees were laid off, including recent high-profile hire Olympia Le-Tan at the beginning of June.
H&M – another popular brand in India, is looking to downsize as part of the restructuring process and focus on adding services online.
Nike Inc – during the three months ending May 31, lost $790 million in sales.
Revlon Inc – with an appraised COVID-19 hit of $54 million. Net losses widened from $75.1 million to $213.9 million, and the sales fell to 18.1 percent to $453 million.
Salvatore Ferragamo – the luxury fashion brand announced a decline of 46.6 percent in sales, 377 million euros in the first half of the year. This compared to 705 million euros earned during the same period last year. Sales in the second quarter fell by 60.1 percent.
JCPenney – filed for bankruptcy in May 2020 and missed debt payments, and has nearly $4 billion in debt. It plans to close 242 stores between this and the next fiscal year.
Gap – closed 40 stores globally and plans to close 230 stores over the coming two years.
Pizza Hut: This family-style pizza chain is hugely popular and operates in many countries via franchisees. The chain’s largest franchise NPC International in July 2020, with more than 1200 locations, filed for chapter 11 protection and planned to shut shop up to 300 shops.
Gold’s Gym – sought for bankruptcy in May 2020; it closed 30 locations permanently.
Abercrombie & Fitch Co – reported net losses climbing to $244.2 million in three months ending May 2 as compared to $19.2 million in the prior year. Net sales fell 34 percent to $485.4 million in the last quarter from $734 million in the previous year.
What, Why, and How?
The Covid -19 led to shutdown, near-zero travel, and people staying indoors to avoid contracting the virus, which meant no business and hence triggered a wave of companies filing for bankruptcy.
Major companies have struggled to support their operations as temporary store closures and many consumers losing their jobs caused a marked decline in revenue.
With a vast number of companies and brands finding it challenging to stay afloat, most of these brands’ only viable option was to pull out, shut shop, or limit the number of stores in regions where profitability was an issue.
Several have seen a significant decline in revenues, many anticipating a 70 percent decline in sales and unsure if the business can survive the onslaught any further.
Hence, the options for these brands are limited.
Reducing the workforce, limiting the number of stores, filing for chapter 11, and bankruptcy seem the only solutions available.
The Covid -19 breakout has had the most impact on these brands, largely considered “aspirational” brands, and the retail sector saw maximum casualties.
These businesses will be missed; it would indeed be difficult to see the above brands, as popular as they are worldwide, not to be around anymore, with several having built and earned their ‘brand names,’ popularity, and serious fan following over the years – through hard work and vision.