Fashion industry suffocates on goods: "Overcapacities, the heather wobbles"

Friday 11th December 2020

The fashion industry is choking on goods
"Overcapacities that the heather wobbles"

With Esprit, Gerry Weber, Tom Tailor, there have already been many bankruptcies due to the restrictions in the Corona crisis. Marc Freyberg is the managing director of the medium-sized fashion company Brax from Herford. He's been with us for three decades and is one of the few in the industry who talks about Tacheles.

The German fashion industry is particularly suffering in this Corona year, but many problems are not only related to the pandemic, they are also homemade. "The market has had difficulties for a long time," says Marc Freyberg, managing director of the Brax fashion brand, in the "Zero Hour" podcast. Corona only exposed or accelerated the weaknesses.

"One thing is clear: this market suffers from overcapacity until the heather wobbles," says Freyberg. There is "an overload" in the market, with more and more new partners and players, online and stationary. "There are endless brands. And Germany in particular is like a hotspot. It is often said in retail and the fashion industry: Whoever survives in Germany can make it anywhere in the world. Or at least in Europe."

Behind Brax is Leineweber GmbH & Co KG, a traditional company from Herford in East Westphalia, founded in 1888, 1100 employees. Brax made 320 million euros in annual sales in 2019, a record year. "We couldn't get into crisis," says Freyberg. "We were used to success."

For the current year Brax expects a decrease to 250 million euros. Among other things, a strong online business, with which around 14 percent of total sales are achieved, is cushioning the decline in retail. "Our company will survive this", Freyberg is confident.

The turnover in clothing has plummeted this year, according to the textile trade association BTE by an average of 30 percent in the first half of the year. According to the Federal Statistical Office, retail sales of textiles, clothing, shoes and leather goods at the end of September were almost 24 percent below the previous year. The drops are often worse, says Freyberg: "The frequency drops are significantly higher than 30 percent for our customers."

The renewed lockdown was a second blow for the industry. "October in particular was a really good month. The world was all right again, the industry had worked up a bit, and the sales of the previous year were just starting to come back," reports the Brax managing director.

Marc Freyberg, who has been with Brax for three decades, sees the family business as well equipped. Liquidity is assured, and in the course of the year, with "a lot of foresight, production was much less". The existing goods in the warehouse will be sold in 2021.

For the time after Christmas, however, Freyberg expects excess capacity again. "If the lockdown continues miserably and the frequencies stay that way, by the end of the season, at the end of February or mid-March, we will have stocks that are significantly higher than what a normal operational area can handle." For 2021 as a whole, however, he sees "the glass more or less half full".

Listen to the new episode of "Zero Hour":

• Why Brax also had to lay off employees during this crisis.
• What Marc Freyberg thinks about the multi-million dollar order from the state of North Rhine-Westphalia for the shirt manufacturer Van Laack.
• Why the market shakeout could also be good.

You can find all episodes directly Audio Now, Apple or Spotify or via Google.