It appears
that Macy’s made a decision for themselves as well as possibly inadvertently for
PVH. What has occurred between Donald Trump, Macy’s, and PVH during the past
week and a half is a prime example, how retailers can easily manipulate the
business of other companies. Let’s face the facts, if Macy’s pulled the brand,
PVH has little choice but to follow the lead.
Macy's said Wednesday July 1st,
2015 that the Trump menswear collection and the man behind the brand are no
longer a good fit for its stores. Trump's menswear collection, which includes
ties, shirts, suits and accessories, has been sold at Macy's since 2004. Based
on the recent news, it appears that the product will be phased out of the
stores.
Macy’s
stated, “In light of statements made by Donald Trump, which are inconsistent
with Macy’s values, we have decided to discontinue our business relationship
with Mr. Trump and will phase-out the Trump menswear collection, which has been
sold at Macy’s since 2004.”
According
to the Washington Post, Trump responded with his own statement, suggesting that
he was breaking up with them first anyway. It read in part: “I have decided to
terminate my relationship with Macy’s because of the pressure being put on them
by outside sources. While selling Trump ties and shirts at Macy’s is a small
business in terms of dollar volume, my principles are far more important and
therefore much more valuable. ” You can read the full Washington Post article at
Macy’s
Will End Business Relationship with Donald Trump.
Regarding
Phillips-Van Heusen, PVH told Forbes
on Tuesday July 7, 2015 that it is “in the process of winding down” a licensing
agreement to market the shirts and ties in the Donald J. Trump Signature
Collection. The agreement was originally set to run through 2018. PVH’s
license agreement for Trump’s signature menswear line dates back to 2004 (same
year as Macy’s relationship).
Macy’s held
the “exclusive retail rights” to sell the products. Although we are not
certain, we would imagine that Macy’s decision to stop selling the product would
have influenced PVH’s decision to wind-down the business. Let’s face it, it
would be rather difficult for PVH to get new retail partners up and running so
quickly without a negative toll on the overall business of the
brand.
Here are a
few potential issues that make us curious:
- Tarnished Brand: By taking a stance, did Macy’s tarnish the brand that was in their stores? Clearly their move has received a great deal of press that has not been positive for the brand that they supported for many years. Is it a financially sound business practice to contribute to negative press about product that your business actually “owns”?
- Loss of Sales: How does Macy’s plan on selling the product that is currently in their stores, transit, or distribution centers? As of today, I don’t see any Donald Trump product on their website. Are they currently still selling product in the store? Has anyone seen an estimate quoted by Macy’s that indicates how much Donald Trump product is currently owned by Macy’s? I am curious about unit totals and retail value. Would this potential lost sales revenue and possible depreciating inventory value effect the bottom line for Macy’s financials?
- How long will they continue to sell the product to their customers? Will Macy’s take a complete loss on the product and destroy the merchandise that they currently own or would they sell the product to other companies (apparel closeout companies, jobbers, etc.)? We assume that they are not planning on selling off the merchandise at the Macy’s off-price stores.
- Work in Progress: What happens to the product that is currently being produced at the factory? If the Donald Trump brand has been selling at retail, it is extremely likely that product is also in the production pipeline. How many production orders are being canceled with the factories? It is possible that trim suppliers will also be negatively affected. For example, the woven label suppliers that made the Trump brand labels may see a decline in sales.
- Is any of the Donald Trump product being manufactured in Mexico? I do not recall for certain, but I think that Donald Trump suits may have been made in Mexico in the past. Wouldn’t it be sad if Macy’s decision causes production orders to be canceled at Mexican clothing factories. Hopefully Macy’s decision will not harm the profitability of clothing factories around the globe.
Apparel
Search is not saying if we believe the decision of Macy’s to be right or wrong.
We are only saying that it does cause a chain reaction in the apparel industry.
In all honesty, I have zero clue in regard to how much merchandise was sold each
year with this brand. The volume woud dictate the actual effect if any on the
industry. If you have any specific details, you are welcome to add details in
the comment section below.
For those
of you interested, you can currently shop for Trump clothing at http://www.trump.com/Merchandise/Signature_Collection.asp
