Nike CEO Mark Parker to step down, John Donahoe to take over

Nike Inc's longtime chief executive officer, Mark Parker, will step down next year and be replaced by John Donahoe, the CEO of cloud computing firm ServiceNow Inc, the footwear and apparel maker said on Tuesday.

Parker had said last year he would remain CEO and chairman of the footwear maker beyond 2020, with his remarks coming at a time the company was hit by a series of executive departures and probes on workplace complaints.

Separately, ServiceNow said it appointed Bill McDermott as its CEO. McDermott helmed software maker SAP from 2014 until recently.

ServiceNow shares fell about 16 percent on the development.

Donahoe, who has been on Nike's board since 2014, will take over Jan. 13, while Parker will become executive chairman and continue to lead Nike's board.

source: news.abs-cbn.com

Levi's surges in Wall Street return

NEW YORK - Iconic jeans company Levi's made a hot return to Wall Street on Thursday as it eyes international growth and more direct sales to consumers in the fast-changing retail environment.

Listing under the ticker symbol "LEVI," shares of Levi Strauss & Co. surged in opening trade before finishing at $22.41, up nearly 32 percent above its IPO price.

The NYSE relaxed its no-denim policy for the session, for which the opening bell was rung by jeans-clad executives from the San Francisco-based company.

Levi's, which went private in 1985, had raised $623 million in an initial public offering that priced above its initial target price. 

First founded in 1853 in San Francisco as a wholesale dry goods business, Levi's invented the blue jean 20 years later, a product that was initially worn by primarily by miners and cowboys before becoming ubiquitous in the 20th century.

The brand has since had its ups and downs in terms of its cultural relevance but has been seen as again rising under Chief Executive Charles Bergh, who joined Levi's in September 2011 after a lengthy stint at Procter & Gamble.

Most recently, Levi's won attention when musical superstar Beyonce wore Levi's cutoff shorts in an April 2017 performance at the Coachella music festival, a point highlighted in the company's securities filing, which noted the garment was deemed the "ultimate Coachella clothing item" by People magazine.

Pivoting after 'Athleisure'

Bergh told CNBC that the brand faced a "throw-down moment" in the 2014 period as surging demand for soft "athleisure" pants took market share, especially among women.

The company brought staff from denim mills into its technology development center in San Francisco to address the problem.

"We understood what women were telling us: wearing tights, that used to be a denim occasion," Bergh told the network. "They wanted soft, stretchy, comfortable material that made them look great and gave them confidence."

Engineers developed a more comfortable fabric and one that does not give women "baggy knees, which is their biggest disatisfier," and this produced strong sales, Bergh said.

The return to public markets comes as apparel brands face continual churn in the retail landscape in the Amazon era.

Just last month, 50-year-old US retailer Gap, which also sells jeans, announced it was splitting into 2 companies to emphasize its trendy "Old Navy" brand and deemphasize stores under its namesake company.

Like other major brands such as Nike and Ralph Lauren, Levi's has sought to make itself present at all major customer meeting points: Amazon and other online vendors; department stores such as Bloomingdale's; and direct selling, whether at its own retail stores or online.

Bergh told CNBC he planned to use some of the proceeds from the offering to enhance the company's e-commerce business, build out its brick-and-mortar presence and in general for "continued investment in building out our omnichannel footprint."

China prospect?

In a securities filing, Levi's also emphasized potential growth in China and other emerging markets.

Of Levi's $5.6 billion in 2018 revenues, more than half came from the Americas, while 29 percent came from Europe and just 16 percent from its "Asia" segment, which also includes the Middle East and Africa.

Levi's said in the filing that China represents 20 percent of the global apparel market but just 3 percent of its revenues, a potential growth market for which the company recent tapped a new management team.

However, the filing also highlighted "a global trade war" as a risk, citing tariffs imposed by US President Donald Trump on several partners, including China and the European Union, which imposed reciprocal tariffs, including on denim products.

The IPO had been seen as a key barometer of investor interest in new issues ahead of much bigger offerings expected in the coming period from Lyft, Uber and others.

"Had Levi's IPO been a dud, that would have only played into the hesitancy that investors and companies looking to go public had been feeling," said Briefing.com. 

"Fortunately, that was not the case: pent-up demand for higher-quality IPOs helped to draw a lot of interest."

source: news.abs-cbn.com

Why US is key to Uniqlo's global aspirations

NEW YORK - Many of the details of Uniqlo's aggressive US expansion still need to be worked out, but at least one thing is clear: the campaign will start on the coasts.


The Japanese apparel chain, known in its home market for its cheap chic clothing basics, has so far confined its US adventure to cities like Boston, San Francisco and Los Angeles.

But a broader US presence will be inevitable as the company blankets the country as part of its ambition to become the world's biggest specialty apparel retailer. Uniqlo will grow from fewer than 10 US stores last year, to about 40 by the end of 2014, to 200 by 2020.

"We will have a much larger footprint, which has to include the middle of the country," said Larry Meyer, chief executive of Uniqlo USA.

So far, Uniqlo's brand recognition is strong in the Northeast, where consumers know its flagship US stores in New York City, and in the West Coast, where a large Asian population already recognizes the company.

Uniqlo, a unit of Fast Retailing Co., is part of a wave of giants remaking global apparel. This group includes Spain's Grupo Inditex, parent of Zara; Sweden's Hennes & Mauritz (H&M); and US chain Gap, all of which have greater sales than Uniqlo. For now.

The United States, along with China and Southeast Asia, are the key growth markets identified by founder and chief executive Tadashi Yanai, ranked Japan's second-richest man by Forbes.

Top player in industry segment?

Yanai aims to increase global sales to five trillion yen (nearly $50 billion) by 2020, about a five-fold increase from 2013 sales and a sum that would make it the biggest player in this segment.

Yanai's philosophy "and my philosophy is, 'If you think small, you get no higher. So you might as well think big,'" said Meyer, a retail industry veteran who joined Uniqlo in January 2013.

Uniqlo is especially known for basics like t-shirts that may fetch $12 and undergarments that cost less than half of what they would garner at department stores.

The company also prides itself on innovations like "heattech," a thin fabric that keeps heat from escaping the body, and "performance wear," athletic gear donned by tennis star Novak Djokovic that is sweat and odor-resistant.

Morningstar analyst Jaime Katz said Uniqlo's challenges include attracting enough customers at especially pricey locations like Fifth Avenue in Manhattan. She also cites the difficulty of breaking into a new market where companies like Gap and H&M are already established.

But Katz sees an appeal in Uniqlo.

"It's more a color schematic than anything else," Katz said. "It's the same thing offered in 100 different colors."

"Everybody needs the basics, everybody needs consistent product, and that's what they tend to offer."

Meyer said its US stores are "on the road to profitability" while the company is in expansion mode.

The company's items will be manufactured at the same China sites and moved through the company's global supply chain. The designs will be identical to those in Japan, although Uniqlo plans sizing specifications for the US market.

"There's more than just size in size," Meyer said. "It's a question of how wide are the shoulders, how wide is the rear."

"Clothing sizing is shockingly complex."

source: www.abs-cbnnews.com

Why cotton is no longer king of US apparel industry

NEW YORK - Cotton is no longer king of the U.S. apparel industry as lower prices fail to revive consumer demand and once-mocked man-made fibers take a permanent place in American wardrobes.

U.S. imports of synthetic clothing may overtake cotton garments for the first time in decades this year, while U.S. mills increasingly use artificial blends amid an unexpected revival of the threadbare domestic textile industry.

After a decades-long battle with its man-made foe, cotton will in the long term likely hold a smaller share of the growing clothing sector as lower-priced synthetics appeal to designers and consumers' love of natural fibers fades.

Market forces propelled the shift as cotton prices spiked to historic highs three years ago. Equally significant has been a change in technology, marketing, and consumer sentiment around synthetics. Gone is the shiny polyester leisure suit.

"Polyester yarn has evolved immensely. I believe fashion-savvy consumers in general are completely comfortable with it and wearing it," said designer Yoana Baraschi, whose clothes are sold at retailers including Neiman Marcus and Saks Fifth Avenue.

The change in sentiment is reverberating along the supply chain.

Last October Georgia's governor announced that the No. 1 U.S. miller, Parkdale Inc, which alone accounts for more than half of U.S. cotton demand, would spend $85 million to convert a plant -- which for years made 100 percent cotton yarn for iconic Hanes Brand T-shirts -- to blend synthetic fiber.

When cotton prices shot to more than $2 per lb in 2011, their highest level since the U.S. Civil War, mills scrambled to find alternatives, hoping they could curb costs without alienating consumers. As it turned out, American and other buyers are no longer quite so fussy about their fibers.

"When cotton got to $2 a lb, we found there was a lot of clothing being made out of cotton where buyers didn't have a preference," Anderson Warlick, vice chairman and chief executive officer of Parkdale, told Reuters.

Parkdale, based in Gastonia, North Carolina, has seen a huge uptick in polyester demand across its product lines in recent years that is unlikely to be reversed, he said.

The switch to man-made fibers has accelerated in recent years as demand for cotton stagnates even though prices have fallen back to less than $1. The reason: synthetics in China, the world's top textile market, are still cheaper.

In China, polyester prices traded at about 68 cents a lb, less than half the price of cotton, during the week ending March 6, according to the National Cotton Council of America.

For the first time in 20 years, imports of clothing made chiefly of synthetic fibers, such as polyester and viscose, almost rivaled those of cotton clothing in 2013, according to data from the U.S. International Trade Administration.

U.S. buyers imported 12.29 billion square-meter equivalents worth of cotton apparel last year compared to 12.04 billion sme of apparel made of man-made fibers. The trend is clear: synthetic imports have risen by more than 20 percent over the past three years; cotton imports have fallen by 14 percent.

Designers like Baraschi, who has been working with more synthetic fabrics, say man-made fibers offer flexibility.

"Stretch is key, it has become a part of the way we dress as well as the way we move in clothes and of what we expect from what we wear in our daily existence. Man-made fabrics are now very breathable and pleasant to wear also," Baraschi said.

HUGE UPTICK

To be sure, cotton is still cherished for its premium quality. After years of shirking cotton in favor of high-performance synthetic materials, sports clothing company Under Armour Inc., for example, has developed a cotton line.

Cotton Inc.-- a marketing group launched to promote cotton over synthetic fibers -- has boosted its efforts to capture younger buyers' attention, enlisting actress and singer Hayden Panettiere in its most recent advertising campaign.

The now tiny U.S. textile industry is enjoying an unlikely revival thanks to lower-cost and reliable energy and shifting trade flows, with a wave of investment by foreign and domestic firms across the textile heartland from Virginia to Tennessee. Four foreign companies have announced plans to break ground in the last six months.

But some say the U.S. textile industry's renaissance does not necessarily bode well for cotton.

"Cotton's losing market share. Period," said John Bakane, chief executive officer of Frontier Spinning Mills.

The Sanford, North Carolina-based yarn producer, Parkdale's biggest domestic competitor, is boosting the amount of synthetic fibers in its yarns.

Cotton's supporters say a decline in the price of the natural fiber could boost its appeal. Rising U.S. output and an end to Beijing's strategic stockpiling program which has bolstered prices for the past three years, will likely increase global supplies and push down world prices.

Even so, that is unlikely to stem the tide.

U.K.-based textile consultancy and research firm PCI Fibres has forecast fiber mill cotton consumption in the United States and Canada to drop to 776,000 tonnes by 2020 from 802,000 tonnes in 2015 and above 2 million tonnes in 2000.

Synthetics have several advantages over their natural rival: without the threat of weather or disease, quality and supplies are more consistent, prices are more stable and technology has cut costs and increased efficiency.

"With polyester pricing where it is, there's no reason to go back. I don't see that switching," Parkdale's Warlick said.

CHANGING CONSUMER TASTE

Cotton's wild price fluctuations helped fuel the switch, but there has also been a big change in technology and consumer tastes.

High-end clothing brand Peter Millar launched its first clothing line of man-made fibers in its stores in upscale locations from the Hamptons to Palm Beach in 2012 in response to growing customer demand.

"What we noticed was that the technology of synthetics had really improved. There are benefits to performance fabrics," said Michael Bowers, vice president of design and merchandising for the North Carolina-based clothing maker.

Synthetic fibers fend off wrinkles and wick away moisture better than cotton, making them appealing to travelers and athletes, he said.

He declined to specify numbers but said the man-made fiber collection has grown "dramatically" since its launch, taking significant market share within the company's growing golfing apparel segment.

"There is room for both cotton and synthetic materials in a gentleman's wardrobe," Bowers said.

source: www.abs-cbnnews.com