Last week, multiple major companies in fashion saw legal challenges. Elsewhere, Authentic Brands Group is back to acquiring fashion companies, while J. Crew laid off 3% of its workforce. Don’t forget to subscribe to the Glossy Podcast for interviews with fashion industry leaders and Week in Review episodes, and the Glossy Beauty Podcast for interviews from the beauty industry. –Danny Parisi, sr. fashion reporter
Legal challenges in fashion over discrimination, wage theft
Several big companies in the U.S. faced legal challenges last week. A U.S. Labor Department investigation found dozens of garment factories in California were in violation of labor laws. Those violations include paying workers off the books and underpaying, at as little as $1.58 an hour. It’s the first large legal probe since the passage of the Garment Worker Protection Act in California last year. Several of the factories named in the report work with big names in fashion like Nordstrom and Dillard’s.
In a response to Bloomberg, Nordstrom said it expects all its manufacturing partners to follow the standards of its partner code of conduct, which includes following all relevant labor and wage laws.
Elsewhere, Walmart was sued last week by the U.S. Equal Employment Opportunity Commission over allegations of discriminating against disabled employees, including illegally firing an employee due to his epilepsy. This is the second such lawsuit from the EEOC against Walmart. The first came just a few days before and alleged that the company illegally fired a woman for missing work due to complications from Crohn’s Disease.
Authentic Brands Group is back on its acquisition track
Authentic Brands Group took a break from the flurry of acquisitions it made in 2020 and 2021, of brands like Forever 21 and Brooks Brothers. In 2022, it completed only a single acquisition, of Ted Baker. Last week, the company has made its first acquisition of 2023 with the purchase of Boardriders, a parent company that owns surf and skate apparel brands including Quiksilver, Billabong, Roxy, DC Shoes, RVCA, Element, VonZipper and Honolua.
Boardriders’ revenue is more than $3 billion a year and is expected to bring ABG’s total annual revenue up to more than $26 billion. The acquisition will also take the number of stores ABG operates around the world to over 11,000.
J.Crew became the latest in a long line of fashion brands cutting jobs. The company announced a 3% workforce reduction on Tuesday. Those jobs were primarily within J.Crew’s corporate teams, and layoffs didn’t affect store employees. A tougher economic environment, now and in the immediate future, has many brands thinking about their bottom lines. Layoffs have become a common occurrence this year as brands look for ways to cut costs ahead of the worse economic situation expected later this year.