Wednesday, August 8, 2007/
Wholesale clothing is facing a tough period ahead, not helped by a retail rag trade that has taken matter into its own hands. By JASON BAKER of IBISWorld.
By Jason Baker
The wholesaling clothing industry is looking forward to very sluggish growth over the coming five years, thanks mainly to competition from retailers doing it for themselves.
IBISWorld predicts growth on average of 0.2% annually until 2011-12. Softer employment growth and lower inflation compared to the late 1990s, as well as a relatively weak Australian dollar in 2009-10 and increased imports will be culprits.
But the greatest constraint to growth for wholesalers will be the fact that the large retailers, manufacturers and designers, will continue to be substantial importers of clothing and steal market share from the wholesalers.
The increase in direct sourcing by retailers such as Target has meant lean times over the past five years despite boom times for their clients, the retailers.
The vast majority of outlets in this industry are privately owned. The industry also has a few publicly listed participants, which include Gazal, Pacific Brands and Austin Group Limited.
Pacific Brands is the biggest competitor, with market share of just under 10%. Its brands include: Bonds, Holeproof, Jockey, Rio, Hestia, Formfit, Razza Matazz, Playtex, Kolotex, Kayser, Voodoo, Berlei, LoveKylie, Red Robin, Hang Ten, Everlast, King Gee, Slazenger, Stubbies, Lightning Bolt and Dunlop.
For the half-year ended 31 December 2006, Pacific’s net sales increased by 4.1% to $868.6 million compared to the previous corresponding period. Earnings before interest and tax (EBIT) increased by 6.2% to $93.5 million.
The Pacific Brands group Underwear & Hosiery performed strongly over the period. The company entered into an agreement to acquire Yakka, the largest supplier and marketer of industrial and corporate workwear in Australia and New Zealand. The purchase cements the position enjoyed by Pacific Brands as the largest branded textiles and footwear group in Australasia.
Voyager Distributing, with 2.5% market share, is the next biggest competitor. It is a wholesaler of ladies’ clothing and clothing fabrics, trading under names such as Club Prive, Jump for Solo, New Wave, Prime Time by EG and Solo.
The major wholesalers of sporting clothing (and footwear) in Australia are the local subsidiaries of the international manufacturers – Nike, Adidas and Puma. During most of the 1990s the major sporting brands enjoyed wide youth acceptance. However, over the past few years they appear to have lost cachetv with the youth demographic and as a consequence sales growth has not been as strong. It is believed that about 40% of revenue is derived from apparel sales.
IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au