— This is the script of CNBC's news report for China's CCTV on June 15, 2020, Monday..
Most of the bankruptcies we've looked at have been for women's wear, but men's wear has also been hit by the epidemic. Tailored Brands, which holds some of the largest men's clothing Brands in the US is reported facing the risk of bankruptcy.
Such as Men's Wearhouse and Jos a. Bank.
Shares of this New York-listed company are down about 70% so far this year/
The company has recently said it may have to file for bankruptcy protection if the outbreak continues to depress sales. So far, the company has opened only half of its stores in North America. For the full year, Coresight Research expects the total number of store closures announced in the U.S. to be a record 20,000 to 25,000, with about 55% to 60% of those closures in U.S. malls.
The retail crisis is not confined to the US. In Europe, Inditex, the parent company of ZARA, the world's largest clothing retailer, has announced plans to close 1,000 to 1,200 stores by 2021.
In its latest results, the company reported a net loss of 409m for the February to April period, compared with a profit of 734m a year earlier.
The poor results have been followed by a slump in Inditex's share price, which is down more than 22% so far this year.
Amancio Ortega, once the world's richest man, has fallen to 11th place on the Bloomberg Billionaires Index. Its wealth has fallen by $17.2bn so far this year, tracking data shows.
Therefore, in the face of the industry crisis brought by the epidemic, retailers' response is to boost online sales. When the parent company of ZARA announced the store closure plan, it said that it would invest about $3 billion to promote the online operation of its chain brands, hoping to increase the proportion of online sales from 14% to 25% in 2019 by 2022.
In a way, the epidemic is a catalyst for the growth of online sales. However, the retail industry is hard to get back to normality by relying on online sales only. On the one hand, in the European and American markets, the proportion of online sales is not big enough. On the other hand, delivery costs increase significantly during outbreaks, At the same time, many retailers return more than 50 percent, combined with increased competition, has pushed up overall costs. In addition to the improvement of online channels, the industry focusses on the top priority or demand.
Bernstein, senior retail analyst
the key variable that we need to watch is demand. Um, in our analysis, we found that social distancing rules are not going to be the bottleneck to stores under social distancing rules. Even under the strictest social distancing rules, stores can still have enough traffic um, to maintain their normal level of sales if there is demand.
We have noted that many retailers have enjoyed a relatively strong rebound since the lockdown was lifted. What we need to see now is whether the recovery in consumer confidence and demand will accelerate, this is particularly important for the restoration of the entire industry. We will keep an eye on this issue.