Friday, April 25, 2008

Fashion Factory Fallout

Rising shortages...this week it's definitely all panic all the time....even from WWD.

Labor unrest over soaring food and energy prices could soon trigger a spike in global apparel sourcing costs, forcing companies to raise wages to stave off starvation and rioting.

U.S. importers that rely on countries such as Vietnam, Bangladesh and Pakistan for their product are trying to navigate in volatile and politically unstable environments. Their decisions are being played out as U.S. and international organizations scramble to provide emergency relief to millions of people who are struggling to feed themselves because food prices have surged an estimated 40 percent since mid-2007.

Meanwhile, in the Fashion industry, executive compensation keeps increasing. Here's just one example.

At J. Crew, CEO Mickey Drexler's compensation increased 22%, President of Retail, Tracy Gardner's compensation increased $1 million for a total of $2.6 million in base salary, stock options and an $875,000 bonus and EVP, Libby Wadle's total compensation increased by $420,000. Granted, J.Crew had a good year.

(I should add that this is the same Mickey Drexler who as the head of GAP took their revenues from $400 million to $14 million.)

But when I look at executive compensation all the way from the LVMH and PPR with their stables of luxe brands down to the single brand J. Crew, I can't help but wonder if the top 10% of Fashion Industry executives took just 5% less in compensation, would there be enough cash to give the average factory workers in Vietnam, Pakistan and Bangladesh and elsewhere enough or a raise to cover their increased cost of food.
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