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US teen retailer
‘Papaya' files for
bankruptcy
Gerry Weber's retail
head quits
Teen apparel retailer, Papaya Clothing, owned by Cornerstone
Apparel Inc., has become the latest teen fashion retailer to
file for bankruptcy protection in the US. It has now joined the
list of the other 11 mall-based chain stores such as American
Apparel, Wet Seal, Sports Authority and PacSun that went
bankrupt in the first half of 2017.
The company, which expanded rapidly and opened around
50 of its 80 stores in the last six years, found itself with
inadequate funds to address all its financial obligations. “The
expansion efforts took a heavy financial toll on the retail
business operations of Papaya as it racked up construction
and operating costs,” said Tae Yi, President and Chief
Financial Officer of the company.
In addition, the dwindling store sales, as an outcome of a
general industry-wide switch in consumer buying preferences
from ‘in-store’ to ‘online shopping’ and the increased
competition from the e-commerce sector, forced the fashion
company to file for bankruptcy.
It is pertinent to mention here that Papaya fetched more than
US $ 134 million in sales last year and is eager to operate as
a retail company instead of using bankruptcy (protection)
to become a wholesale apparel company or an intellectual
property licensor, the media reports claim. It has already
closed 22 of its operational stores and further seeks support
from the court to exit tenancies for 8 more stores. The
shuttering of stores will also lead to job loss for around 1,300
employees, who are currently employed at Papaya.
Norbert Steinke, Chief Retail Officer
of Gerry Weber and Hallhuber, has
resigned from his post with immediate
effect. The 56-year-old opted to resign
due to personal reasons. He had also
been a Management Board Member
since October 2015 after Gerry Weber
acquired the Hallhuber business a
year earlier.
His retail responsibilities will now be
shared by the remaining two board
members – Group CEO Ralf Weber
and CFO Dr. David Frink, on an
interim basis.
It may be noted that the fashion
brand’s retail business declined
in terms of its sales revenues
for the first half of fiscal year
ending April 30, 2017. The retail
segment generated Euros 192.3
million in revenues and the
wholesale segment recorded
revenues of Euros 142.6 million
in the first half.
Zalando, BESTSELLER ink JV
Zalando and BESTSELLER UNITED
have entered into a joint venture
for FashionTrade.com, which is at
the forefront of digitizing fashion
wholesale using digital innovation
and optimization to improve everyday
working processes that maximize
customer profits. The company provides
a global B2B fashion marketplace where
brands and retailers can connect, trade
and grow their businesses through
empowered buying and smarter selling.
The company was founded in 2015 by
BESTSELLER UNITED on the back of
learnings gained from BESTSELLER.
Zalando enters into the joint venture
with a capital increase at FashionTrade,
providing the company with funds to
accelerate its growth, and the future
ownership will be equally shared
between BESTSELLER UNITED and
Zalando.
46 Apparel Online Bangladesh | AUGUST 2017 | www.apparelresources.com
“Digitizing the wholesale
experience and connecting brands
and retailers in a simple online
solution holds a great potential for
the future of B2B fashion. That’s
why we are pleased to welcome
Zalando and their expertise into
this partnership which we expect
will bring beneficial insights
to brands and retailer