Turning the tables

 

As the dust settles over Under the table’s deed of company arrangement by which it will continue to trade, some ongoing issues have emerged.

One is that the sales carnage of higher priced and designer merchandise over the last six months has hit the regular discounters harder than the rest.

The simple reason is that every store has turned itself into a temporary discounter, thus running a steamroller over the permanent discounters beneath them. A massive pre-Christmas sale in the Ralph Lauren stores, for example, sold regular merchandise at 50 per cent off, clashing with Target and Under the Table’s (UTT) regular price levels. It won’t be long before we see people being paid to take the stuff away.

The new UTT CEO, Peter Preston, has a huge task ahead of him. He’s moved apparel buying to Melbourne and that’s probably a good thing because the Sydney buying team didn’t deserve to be fed. Certainly times have been tough for discounters like UTT but what stands out is its revolting stock. Peter needs new blood.

And (this didn’t come from me), he should try to find a team like that at Wombat (part of the Pretty Girl Group) because they’ve got the magic touch right now.

In the meantime, many of the UTT unsecured creditors are faced with the dilemma of whether to go on supplying or not. Their anger over getting only five cents in the dollar tells them to pull the chain. But what about the stock they are holding, much of it already ticketed for UTT ?

Since UTT will have to pay cash for its purchases for a while, most of the unsecured creditors are muttering that they’ll supply in the short term but come March or April and the story might be different.

For the ghouls (I’m one), the major unsecured creditors are: Bassoni International $577,217; Beaches Fashions $222,346; Blue Sky International $217,097; Condura $121,050; Deputy Commissioner of Taxation (this is not a fashion label) $1,000,999; Footworks $162,162; Jimmi Dexta $$161 416; Longbeach Apparel $618 806; Merrie Lingerie $202,0781; New Black $1,218,260: P.S.S. Clothing $987,825; payroll tax all states total $299,664; Sass Design Group $$135,218; Sevcoy $1,448,637; Sportlook $1,508,652; Sportsknit $103,985; Trackerjack Australasia $165,968. The least worried creditor is probably Neverfail water with $13.25, which one day will get back an estimated 66 cents.

China dangles the sweet and sour carrot.

The big question that will face importers this year is not ‘how cheap can I get it from China?’ but ‘can I get it from China at all?’
Chinese New Year, which began on February 2, will be a watershed for Chinese clothing production.

Traditionally, factory workers travel to their family homes, sometimes thousands of miles away, and reluctantly return to the factories after two or three weeks’ holiday. But this year, a great number of them are not expected to return because there are better opportunities outside clothing, or their factory may not be making clothing anymore.
China’s population is about 1.3 billion people with, staggeringly, only four million engaged in making apparel.

Yet that tiny percentage of the population has built itself into the world’s most important clothing manufacturer. If these people were an endangered species, the conservationists would be rushing about trying to rescue them. But as it stands, the unfeeling world’s clothing buyers will go on pushing for lower prices and quicker deliveries.

The result will come out against them. As the US makes its comeback as a mammoth purchaser, to say nothing of growing European and internal Chinese uptake, demand will outstrip supply leading inevitably to price rises.

Added to that is the sickening rise in the cotton price, estimated to have gone up 62 per cent since August of last year. This casts the humble cotton t-shirt in the more regal role of barometer.

One t-shirt importer I know is currently landing a basic garment at an increase of 40 per cent over the same time last year. He now expects monthly increases but notes that our rising dollar has cushioned the effect. If our dollar drops the nasty stuff will hit the fan.

Other fibres which may be substituted for cotton have also gone up in sympathy, although not as much. Nevertheless, we have reached the ludicrous situation where cotton is as dear as wool and fast closing on silk in fine fabrics like voile.

The high price of cotton is not permanent, however. Its price graph over time shows meteoric rises and then meteoric falls. This time the price was forced up by crop failures and market speculators, both of which will disappear eventually.
Where does China’s decline in overall clothing production and increase in price leave Australia?

Back standing in front of that fan. Although consumers don’t know it, clothing is the most underpriced product group on the market and because of that it has become socially undervalued. That will all begin to change this year. More on China when we meet again.