Philex Mining sets virtual annual stockholders’ meeting on July 15

June 22, 2020 | 8:00 am

PHILEX MINING CORPORATION
Notice of 2020 Annual General Stockholders’ Meeting

TO OUR STOCKHOLDERS:

Please be informed that the Annual General Stockholders’ Meeting (“AGM” or the “Meeting”) of PHILEX MINING CORPORATION (the “Company”) will be held on Wednesday, 15 July 2020 at 4:00 p.m., and will be presided at TV 5 Media Center, Reliance St. Mandaluyong City. The meeting will be conducted virtually, and attendance at the meeting will be via remote communication only.

The order of business at the Meeting will be as follows:

Call to Order;
Proof of required notice of the meeting;
Certification of quorum;
Reading and approval of the Minutes of the 26 June 2019 annual stockholders’ meeting and action thereon;
Presentation of annual report and audited financial statements for the year ended 31 December 2019 and action thereon;
Ratification and approval of the acts of the Board of Directors and Executive Officers during the year 2019;
Appointment of independent auditors;
Election of directors, including independent directors;
Other matters;
Adjournment.

For purposes of the Meeting, only stockholders of record as of the close of business on 8 April 2020 are entitled to notice of, and to vote at, the Meeting.

The Definitive Information Statement for the Meeting is posted on the Company’s website. To access the Definitive Information Statement, with the attached Management Report, Audited Financial Statements for the period ended 31 December 2019 and Proxy Form, please go to (http://www.philexmining.com.ph/).

Attendance via remote communication. Stockholders who will attend the Meeting should email the Corporate Secretary at bcmigallos@philexmining.com.ph not later than 5 July 2020. Certificated shareholders must indicate in the email their Stockholder ID number and submit a scanned copy of a valid current government ID. Uncertificated shareholders (shareholders who hold their shares through a PCD Nominee account), should submit a certification from their broker attesting that the stockholder is the beneficial owner of shares of stock of the Company (the number of shares must be indicated) and a valid government ID.

Clarificatory questions regarding attendance via remote communication maybe sent via email to bcmigallos@philexmining.com.ph.

Stockholders can be represented and vote at the Meeting by submitting the said proxy by email to bcmigallos@philexmining.com.ph or by sending a physical copy to the Office of the Corporate Secretary at the Company’s principal office at 2/F LaunchPad, Reliance corner Sheridan Streets, Mandaluyong City, Metro Manila. The deadline for submission of proxies is 5 July 2020. Proxy validation will be on 8 July 2020 at 10:30 a.m. at the Company’s office address indicated above.

On-line voting. Secured on-line or electronic voting will be available for stockholders. Stockholders who have pre-registered attendance via remote communication may vote online by logging on to http://www.philexmining.com.ph/investor-relations/vote-online to cast their votes. On-line voting instruction are attached to the Notice as Annex “B”. On-line voting will close at 12:00 noon on 13 July 2020.

Open Forum. There will be an Open Forum during the Meeting. Stockholders who will attend via remote communication should send their questions via email to bcmigallos@philexmining.com.ph on or before 12:00 noon of 13 July 2020.

PXP Energy sets virtual annual stockholders’ meeting on July 15

June 22, 2020 | 8:00 am

PXP ENERGY CORPORATION
(formerly Philex Petroleum Corporation)

Notice of Annual General Stockholders’ Meeting

Please be informed that the Annual General Stockholders’ Meeting (“AGM” or “Meeting”) of PXP ENERGY CORPORATION (the “Company”) will be held on Wednesday, 15 July 2020 at 1:30 p.m., and will be presided at TV 5 Media Center, Reliance St., Mandaluyong City. The meeting will be conducted virtually, and attendance at the meeting will be via remote communication only.

The order of business at the Meeting will be as follows:

Call to Order;
Proof of required notice of the meeting;
Certification of quorum;
Reading and approval of the Minutes of the 21 May 2019 annual stockholders’ meeting and action thereon;
Presentation of annual report and audited financial statements for the year ended 31 December 2019 and action thereon;
Ratification and approval of the acts of the Board of Directors and Executive Officers during the year 2019;
Appointment of independent auditors;
Election of directors, including independent directors;
Other matters;
Adjoiurnment

For purposes of the Meeting, only stockholders of record as of the close of business on 12 March 2020 are entitled to notice of, and to vote at, the Meeting. The Definitive Information Statement with the attached Management Report, SEC Form 17-A with the Audited Financial Statements for the period ended 31 December 2019, and the Minutes of the Annual General Stockholders’ Meeting of the Company held on 21 May 2019 may be accessed at the Company’s website https://www.pxpenergy.com.ph/.

The Meeting will be via remote communication only. Stockholders who will attend the Meeting should email the Corporate Secretary at bcmigallos@pxpenergy.com.ph on or before 5 July 2020. Certificated shareholders must indicate their Stockholder ID number and submit a scanned copy of a valid current ID. Uncertificated shareholders (shareholders who hold their shares through a PCD Nominee account), should submit a certification from their broker attesting that the stockholder is the beneficial owner of shares of stock of the Company (the number of shares must be indicated) and a valid current ID. Clarificatory questions regarding attendance via remote communication may be sent via email to bcmigallos@pxpenergy.com.ph.

Once the Company successfully verifies the stockholder’s status, the Company will reply to each stockholder with (1) a link through which the Meeting may be accessed; and (2) with an online ballot or SECURITY CODE to be used for online voting. Questions relating to the Meeting materials may also be sent to bcmigallos@pxpenergy.com.ph on or before on or before 12:00 noon of 13 July 2020. Due to time considerations, questions that will not be addressed at the Meeting will be responded to via email.

Proxies. A proxy form that is compliant with the requirements of the Securities and Exchange Commission is attached to the Definitive Information Statement. Stockholders can be represented and vote at the Meeting by submitting the said proxy by email to bcmigallos@pxpenergy.com.ph or by sending a physical copy to the Office of the Corporate Secretary at the Company’s principal office at 2/F LaunchPad, Reliance corner Sheridan Streets, Mandaluyong City, Metro Manila. The deadline for submission of proxies is 5 July 2020. Proxy validation will be on 8 July 2020 at 10:30 a.m. at the Company’s office address indicated above.

On-line voting. Secured on-line or electronic voting will be available for stockholders. Stockholders who have pre-registered attendance via remote communication may vote on-line by logging on to https://www.pxpenergy.com.ph/agmvote2020/ to cast their votes. On-line voting instruction are attached to this Notice as Annex “B”. On-line voting will close at 12:00 noon on 13 July 2020.

Open Forum. Stockholders should send their questions via email to bcmigallos@pxpenergy.com.ph on or before 12:00 noon of 13 July 2020. Officers of the Company will endeavor to answer all questions during the Meeting.

Wirecard’s $2.1B did not enter PHL — BSP

June 22, 2020 | 12:34 am

THE $2.1 billion missing from German payment company Wirecard AG did not enter the country’s financial system, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said on Sunday.

“None of the missing $2.1 billion of German firm Wirecard entered the Philippine financial system,” Mr. Diokno said in a text message.

Wirecard’s share price nosedived last week after it was reported that about 1.9 billion euros ($2.1 billion) of its funds had gone missing. Chief Executive Markus Braun, who blamed the company’s problems on fraud, quit on Friday.

While Wirecard did not mention where the missing money allegedly went, BDO Unibank, Inc. (BDO) and Bank of the Philippine Islands (BPI) on Friday issued separate statements denying any business relationship with the German company.

Mr. Diokno said BDO and BPI did not suffer any losses, but the central bank is conducting its own investigation into the matter.

“The initial report is that no money entered the Philippines and that there is no loss to both banks,” he said. “The international financial scandal used the names of two of the country’s biggest banks — BDO and BPI in an attempt to cover the perpetrators’ track.”

BPI and BDO said they had informed Ernst and Young, which serves as external auditor for Wirecard, that bank documents pertaining to the presence of the funds were “spurious.”

BPI, however, told Reuters on Saturday it had suspended an assistant manager whose signature appeared on one of the fraudulent documents.

BDO also told the central bank that it appeared one of its marketing officers had fabricated a bank certificate.

Mr. Diokno reiterated the Philippine banking system was in a strong position going into the coronavirus pandemic and well-capitalized.

DOUBT LINGERS?
Economists said BSP’s latest statement will come as a relief to Philippine banks and investors, although some doubts may linger.

“With the latest clarifications from the BSP that none of Wirecard’s missing funds entered the Philippine financial system, this issue would have minimal impact in terms of international investor sentiment on the Philippines,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said.

While the issue is unlikely to affect market sentiment, Ateneo de Manila University economist Alvin P. Ang said it is “alarming that the Philippine banks are targeted.”

For his part, Colegio de San Juan de Letran Graduate School Dean Emmanuel J. Lopez said a “cloud of doubt lingers in the mind of the business community” despite statements from the local lenders that they do not have business relationships with Wirecard.

“The integrity of the financial system has once again been put to test. This sends a strong signal to the Legislature that safety measures must be in place to put the integrity of the financial system in place,” he said.

The Philippines is facing the possibility of being included in a “gray list” of economies with lax laws on anti-money laundering and counter-terrorism financing, if it fails to amend existing laws.

The Financial Action Task Force (FATF) had placed the Philippines under a 12-month observation period, originally scheduled to end in October but was extended to February 2021. During this time, the Philippines has to address the gaps identified in the Republic Act No. 9372 or the Human Security Act of 2007 and the Anti-Money Laundering Act of 2001 (AMLA).

The proposed Anti-Terror Act, which amends the Human Security Act, is currently awaiting President Rodrigo R. Duterte’s signature.

Proposed amendments to AMLA, which are also relevant to the FATF assessment, have yet to advance beyond the committee level at both the House of Representatives and the Senate. — Luz Wendy T. Noble with Reuters

Credit raters to keep close eye on PHL recovery

June 22, 2020 | 12:33 am

Passengers stand on social distancing markers as they queue to enter a train station in Manila, June 1. — *REUTERS*

By Luz Wendy T. Noble, Reporter

THE country’s pace of recovery after the crisis will be a key consideration in sovereign rating assessment, according to credit raters.

“Against this backdrop, our sovereign ratings will be not solely be determined by the immediate impact on credit metrics this year, but also the extent to which a country’s fundamentals can be restored towards their pre-coronavirus shock levels over the medium-term,” Christian de Guzman, senior vice-president of sovereign risk group at Moody’s Investors Service, said in an e-mail.

In May, Moody’s affirmed the country’s “Baa2” rating, a notch above minimum investment grade, and kept a stable outlook.

The debt watcher projects the country’s gross domestic product (GDP) to contract by 2% this year, before bouncing back to a 6.4% growth in 2021.

As the fallout from the pandemic widens, the government estimates GDP to shrink by 2-3.4% this year, after 6% growth in 2019.

Sagarika Chandra, associate director for sovereign ratings — APAC (Asia Pacific) at Fitch Ratings, said their “stable” outlook for the Philippines assumes a decline in fiscal deficit from 2021 onwards when the crisis subsides and the economy recovers.

A “stable” outlook signals that a country’s credit rating is likely to be maintained within the next six months to two years. Fitch has downgraded the Philippine outlook to “stable” in May from the “positive” outlook it gave in February, after factoring in the economic impact of the pandemic. On the other hand, it has affirmed its “BBB” credit rating.

Fitch estimates the country’s economic output to contract by 4% this year, and to grow by 7.4% in 2021.

“However, failure to successfully consolidate the deficit and bring down debt levels once the pandemic recedes could be negative for the credit rating,” Ms. Chandra said in an e-mail to BusinessWorld.

The national government’s budget balance stood at a deficit of P273.9 billion as of April, a reversal from the P86.9-billion surplus a year ago and wider than the P59.5-billion deficit in March, data from the Bureau of the Treasury showed.

Amid the crisis, the government projects the budget to reach 8.4% of GDP this year. In 2019, the country’s fiscal deficit was at P660.2 billion or 3.55% of GDP.

Meanwhile, the government expects debt-to-GDP to rise to 49.8% this year from the revised end-2019 level of 39.6%.

Ms. Chandra said Fitch expects “BBB” sovereigns to see a general government debt-to-GDP ratio median of 52.6% this year from 42.9% in 2019. She expects the Philippines will see a ratio lower than its peers despite a projected increase in fiscal deficit.

“This reflects the fact that the Philippines entered the coronavirus crisis with relatively more fiscal space to address the economic downturn than many of its ‘BBB’ peers,” she said.

Ms. Chandra added their credit assessment also puts an emphasis on debt trajectory over the medium term rather than fiscal deficit level in a single year.

Moody’s Mr. De Guzman said they are banking on the country’s track record in the past years.

“Given the Philippine government’s track record over the past decade with regards to fiscal management, we expect that the cyclical shock posed by the coronavirus does not represent a permanent departure from the trend improvement in fiscal sustainability,” he said.

Aside from fiscal deficit and debt metrics, Fitch’s Ms. Chandra said their credit assessment will also look into vital metrics that include dollar reserves, tax reforms, and some structural indicators.

Central bank data showed gross international reserves reached an all-time high of $90.942 billion as of end-April, providing ample cover for eight months of imports of goods.

Meanwhile, the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE), which provides for the immediate reduction of corporate income tax to 25% from the current 30%, is still pending at the Senate. Congress resumes session in late July.

Ms. Chandra noted the Philippines’ “general government revenues are still weaker than the peer median.” The country’s structural indicators also lag behind peers, including per capita income, governance standards and human development, she said.

The Japan Credit Rating Agency recently upgraded the country’s credit rating to “A-” with a “stable” outlook, saying it expects the pandemic’s impact on the economy will only be temporary.

Meanwhile, S&P Global Ratings affirmed its “BBB+” rating as well as its “stable” outlook for the Philippines in late May.

Reopening the economy: Economists identify sectors to be prioritized

June 22, 2020 | 12:32 am

Extra dining tables are placed to maintain social distancing in restaurants in Mandaluyong City, June 16. — *REUTERS*

By Marissa Mae M. Ramos, Researcher

AS QUARANTINE restrictions ease around the country, a group of economists identified key industries that should be prioritized in reopening and securing assistance, based on their impact on the rest of the economy.

In an unpublished paper titled “Prioritizing Sectors of the Philippine Economy,” economists Cid L. Terosa and Peter L. U from the University of Asia and the Pacific used the statistics agency’s 2012 input-output tables to rank industries based on their respective “multipliers” to the economy.

According to the economists, most of the top-ranked industries are related to consumer spending and production of services. These include food manufacture, accommodation and food services, public administration, and construction.

“All sectors have been hurt by the pandemic, some more and others less. This paper proposes using output multipliers adjusted for demand and employment impact from the input-output table to gauge what industries have relatively more economic impact and merit prioritizing in terms of earlier reopening, or possible assistance,” the economists said.

In this context, a “multiplier” refers to the degree that a sector’s additional output affects the output of other sectors in the economy. Released in 2017, the 2012 Input-Output tables are the latest data available that show interrelationships of production between sectors.

“The idea behind it is simply that every industry uses as inputs the products or outputs of some other industries in the economy. Each industry must produce enough of its output to meet the requirements of other industries’ need for it as inputs to their own respective production activity (or intermediate demand), and that of households and government for final consumption, businesses for investment spending, and demand from outside the country (exports),” the economists said.

One approach in identifying the more important sectors in an economy is to look at “output” multipliers. “[I]f the demand for the product of a sector were to increase (and be satisfied), by how much would the output of all sectors in the economy increase?…All things equal, we would instinctively prioritize a sector with a greater output multiplier over another,” they added.

As output multipliers are limited to the production side and thus may not represent what is demanded in the economy, the authors further adjusted these to account for each of the sector’s share to total domestic consumption as well as their “labor intensiveness.” They called these the demand-employment (D-E) adjusted global multipliers.

TOP-RANKED SECTORS
Based on the economists’ findings, the following ranked high on the list: food manufactures; accommodation and food service activities; public administration and defense, compulsory social security; construction; wholesale and retail trade; and maintenance and repair of motor vehicles.

“Not surprisingly, [the] Food Manufactures sector ranks the highest. This coincides with and reinforces the IATF’s (Inter-Agency Task Force) inclusion of food among the initial list of essential businesses,” the economists said.

On the other hand, they said most of the agricultural sectors, which presumably provide raw materials for food manufacturing, are ranked low. “This is because the agricultural sectors are typically at the start of their respective supply chains. Thus, they would not stimulate much backward linkage activity,” they said.

While the findings suggest giving priority to high-ranking sectors, Messrs. Terosa and U cautioned these figures were “predicated on the assumption that all sectors in the economy are operating under normal conditions.” They cited several of the high-ranking industries are now challenged by physical distancing measures.

For instance, the backbone wholesale and retail trade sector was stifled by the closure of malls and other retail establishments. With the easing of lockdowns, hotels and restaurants are only allowed to operate at limited capacity.

“Even if hotels were allowed to open up again, it would likely not see a lot of foreign travelers as air travel worldwide remains mostly grounded. It would have to rely solely on domestic tourism,” they said.

The economists also cited the high ranking of the construction industry. “Former NEDA (National Economic and Development Authority) Secretary Ernesto M. Pernia had reportedly voiced his disagreement in locking down even construction in priority government infrastructure projects. [The rankings] would support the move to allow construction activity to reopen in the GCQ (general community quarantine),” they said.

Other high-ranking sectors include other service activities; transport equipment; education; arts, entertainment, and recreation; banking institutions; and, computer, electronic and optical products.

CAVEAT
Aside from the dated nature of the 2012 Input-Output tables, the economists noted further caveats in reading into the multiplier rankings.

“It is tempting to interpret [the rankings] as a formula for sequential reopening of sectors in the economy but one must be careful. A sector in the top 10… might not be able to be productive because a lower ranked sector has not been allowed to operate or is severely constrained. Policy makers would have to make a judgment whether the lower ranked industry might also have to be allowed to operate to allow the higher ranked to make its impact,” Messrs. Terosa and U said in an e-mail response to BusinessWorld.

“Similar to the adage ‘No man is an island,’ so also is no industry an island; for all industries are interrelated with each other in an economy. Admittedly, some are more interrelated than others and those that are more interrelated usually end up having more impact on an economy,” they added.

Nevertheless, the economists hoped policy makers can use the multiplier’s rankings as “an initial guide” in prioritizing sectors to prepare for the so-called new normal.

The entire Luzon island was locked down in mid-March, with work, classes, and public transportation suspended to contain the pandemic. The strict quarantine was extended twice for the island and thrice for Metro Manila where reported cases of infections were mostly concentrated.

The lockdown in Metro Manila was eased to a general lockdown on June 1, which was extended until June 30.

Which sectors of the Philippine economy merit prioritizing in reopening or giving assistance?

June 22, 2020 | 12:32 am

P2.5B collected so far from tax amnesty — BIR

June 22, 2020 | 12:31 am

By Beatrice M. Laforga, Reporter

THE ongoing tax amnesty program has yielded more than P2.5 billion in collections so far, according to the Bureau of Internal Revenue (BIR), which expects more taxpayers to avail themselves of the program after the cut-off date was extended to end-2020.

In a text message, BIR Deputy Commissioner for Operations Arnel S.D. Guballa told BusinessWorld the agency has collected as of May P2.5 billion from the tax amnesty program for delinquent accounts, which started in April 2019.

Taxpayers can avail themselves of the tax amnesty on delinquency until Dec. 31, 2020, according to Revenue Regulations (RR) No. 15-2020 dated June 19.

BIR Commissioner Caesar R. Dulay issued the order to amend the previous directive under RR-4-2019 and further extend the cut-off date for availing of the tax amnesty on delinquency to Dec. 31, from June 22.

The deadline has been extended four times from the original schedule of April 23, 2020.

“The deadline is extended to accommodate more delinquent taxpayers and at the same time, (collect) additional revenues for the government and (for the) taxpayers (that have) pending tax cases be settled,” Mr. Guballa said in a text message last week.

Maria Lourdes P. Lim, tax managing partner of Isla Lipana & Co., PwC Philippines said the extension of the cut-off period will be beneficial for both taxpayers to settle their cases as well as the government to raise revenues “with reduced enforcement cost.”

“(However), considering the pandemic and income tax filing season, this may not be a priority given limited resources,” Ms. Lim said in a text message on Sunday.

The RR 15-2020 also set a three-working-day period for offices of the BIR to issue Certificate of Delinquencies or Tax Liabilities from the day of request, one of the documents needed to avail for the program.

“Previously, it took at least one week to secure the COD. This somehow will streamline the process,” Ms. Lim added.

BIR also has an ongoing estate tax amnesty that gives individuals a two-year window starting May 2019.

Republic Act No. 11213, signed into law in February 2019, provides tax amnesty programs for individuals to settle their outstanding obligations and close their delinquency assessment cases in past years up to 2017 for delinquent accounts, as well as the unsettled estates due to nonpayment of estate taxes.

The two tax amnesty programs are among the revenue-generating measures under the government’s comprehensive tax reform program.

The Department of Finance (DoF) earlier estimated the tax amnesty for delinquent accounts could yield the government up to P21 billion in collections and another P6 billion from estate tax amnesty.

DoF data showed there were 18 tax amnesty programs implemented between 1972 and 2008, with the last one yielding P4.913 billion in collections.

Designers fashion a go-slow future for catwalks and collections

June 22, 2020 | 12:07 am

MILAN/NEW YORK — From Armani to Gucci, top fashion houses are redesigning their calendars to slow down the frantic pace of catwalk shows and new collections, as the coronavirus pandemic forces a rethink of the way the industry works.

Luxury labels are scaling back the number of collections they show at fashion weeks across the year in London, Paris, Milan and New York or at other events in exotic locations.

After more than two months of lockdown, with shops shut across the globe and manufacturing sites idled, the $310 billion luxury goods sector is on course for a 2020 sales drop of up to 35%, consultancy Bain estimated.

Brands are grappling with piles of unsold stock and the prospect of widespread discounts that risk denting their aura of exclusivity as well as profits.

US designer Michael Kors was the latest to call for a post-virus slow down in the fashion calendar last Monday, as he pulled out of New York’s shows in September.

He said he would only make two collections a year — one for spring/summer and one for fall/winter, skipping so-called resort and pre-fall collections that many high-end labels have recently begun producing to refresh stores in the winter and over summer.

These collections showcase holiday wear for foreign travel that jetsetters may have to forgo this year.

These have added to the number of designers’ creations, capsules and collaborations that critics say are out of sync with consumers’ needs, particularly in a global recession. A cruise or resort collection is typically shown in May and delivered to stores in November.

Robert Burke, founder of luxury retail consultancy Robert Burke Associates, said the move towards fewer collections fits with a consumer shift away from disposable fashion.

“Buying things that you know you’ll only have for a short time period or go out of fashion immediately doesn’t seem attractive right now.”

SLOW FASHION
The debate about fashion industry excesses pre-dates the crisis, but has been given a sense of urgency by the pandemic, which is pressuring brands to cut costs and shed inventory without losing too much money.

Kors said deliveries of its products would from now on be scheduled to arrive in store incrementally over the spring/summer and fall/winter seasons, more closely reflecting “how customers actually live and shop.

“It is imperative that we give the consumer time to absorb the fall deliveries, which will just be arriving in September, and not confuse them with an overabundance of additional ideas, new seasons, products, and images.”

Armani, in an open letter to fashion trade publication WWD, said luxury labels should stop mimicking hectic fast fashion delivery schedules.

“It makes no sense for one of my jackets or suits to live in the shop for three weeks before becoming obsolete, replaced by new goods that are not too different,” he wrote.

Alessandro Michele, who turned Gucci into a cash cow for French owner Kering, has also said he would cut the label’s yearly shows to two from five.

And in its end-May earnings presentation, Ralph Lauren said it had rebalanced its assortments towards “core,” less seasonal products, which have faster lead times and less mark down risk.

CFO Jane Nielsen said the summer collection would stay in stores through August “to maximize full-price selling.”

The brand will also set aside some finished products for upcoming seasonal collections, even if that means keeping clothes in inventory longer than usual.

Brands like Gucci and LVMH’s Dior have used more frequent collections and expensive events in exotic places to lure a rich, but also voracious, clientele, particularly in China.

With luxury spend hit by the crisis, some industry insiders say it no longer makes sense to have such huge marketing expenses — a fashion show can cost well over $1 million.

The move towards showing and producing less also reflects a power shift between brands and big US department stores, which long dictated the timing of product releases to keep their stands looking fresh.

Multiple deliveries allowed the stores’ sales associates to call their clientele regularly, saying “Come in, we’ve got some new products,” Ron Frasch, former president of Saks Fifth Avenue, told Reuters.

That puts winter coats in shops in the middle of the summer and gives department stores leeway to discount as they see fit — something that Frasch said was a “bloodbath” for most brands.

With the pandemic accelerating the demise of Neiman Marcus and other top US retailers, that model is now increasingly being called into question, he said.

Yet some brands are resisting the call for a leaner fashion schedule. Chanel, which in a show of strength increased prices in May, said it would stick to six collections a year. — Reuters

Local car-making fiscal support unchanged despite sales slump

June 22, 2020 | 12:07 am

THE government has no immediate plans to revise a fiscal support program for automotive companies investing in local production after industry sales slumped due to the pandemic.

Toyota Motor Philippines Corp. and Mitsubishi Motors Philippines Corp. are participating in the Comprehensive Automotive Resurgence Strategy (CARS) program, which offers fiscal support to car companies that locally produce 200,000 units of high-volume car models for six years.

Trade Undersecretary Ceferino S. Rodolfo in a recent online press briefing said that he does not think the participating companies will be able to reach the required volume of vehicles.

“So ‘yung kanilang variable incentive, di nila makukuha siguro ‘yun (So I don’t think they will be able to get their variable incentives),” he said.

Automotive companies like Toyota stopped production in March to comply with lockdown restrictions, restarting some operations only in mid-May.

Industry sales started to recover in May after sales plummeted 99.5% to 133 units in April from 25,799 in the same month last year. The industry sold 4,788 units in May, which is still 85% lower than the 30,998 in May 2019.

Mr. Rodolfo said there were no talks about revising the CARS program targets.

“So far, walang ganung usapan, even nung nakikita namin nahirapan ‘yung iba dahil for whatever reason na sinasabi nila. (So far, there are no talks [of revising targets] even though we saw some of them are having a hard time for whatever reason they’re saying).”

Possible revisions would be time extensions on producing the volume target, but the target will remain the same.

“Sa ngayon wala pa, siguro darating din ‘yan but now wala pa (For now there won’t be revisions. Maybe it will come, but for now not yet).”

In the meantime, Mr. Rodolfo said they were looking at repositioning bicycle manufacturing exporters for the domestic market.

“‘Yung domestic market natin, kung lalakas ‘yung demand, pwede tayo kumbaga market repositioning more towards the domestic. (If demand spikes, we could reposition to the domestic market).” — Jenina P. Ibañez

US fashion redesigns itself under lockdown

June 22, 2020 | 12:06 am

By Katia Dmitrieva and Kim Bhasin, Bloomberg

FASHION executives have spent the lockdown figuring out how to sell their products online. They’re learning lessons that may shape the retail trade even as America’s shopping malls reopen.

That’s just one of the abrupt changes forced on an industry highly attuned to shifting trends. Here’s another: If customers are more likely to be buying clothes from home, they’re more likely to wear them there too. In the absence of dress-up events, there’s a surge in demand for comfort.

From food to furniture, businesses are mapping out what they expect to be the new patterns of demand — and repositioning their companies accordingly. Fashion has faced some of the worst upheaval of all.

In the pandemic’s early stages, Americans all but stopped buying clothes. Sales plunged almost 90%, four times the drop in overall commerce. The demand shock threatened to bankrupt big-name retailers, and import-reliant companies had to grapple with supply disruptions too.

Here’s how four corners of the stricken industry are making it work.

WHOLESALER: ‘WEEK BY WEEK’
Richer Poorer, which sells “elevated basics” like tailored T-shirts and sweatpants, had just rebranded itself in January when the shocks started to arrive. The coronavirus knocked out two factories in China. Retail customers began to cancel orders. And then its headquarter city of San Juan Capistrano in California imposed a work-from-home regime.

“That was our first round of ‘Oh, this is actually going to have big impacts for us,’” says co-founder Iva Pawling. “Not just for this season immediately, but through spring 2021.”

In a normal March and April, most of what Pawling does — from designs and fittings to factory orders — would be geared to the season starting 12 months later. This year, “it’s just been trying to survive week by week.”

The company had planned a gradual pivot toward selling direct to consumers online. Instead it happened in a rush. Last year, wholesale accounted for 70% of revenue. This year, 90% has come from e-commerce.

Sales held up because pandemic-era demand was a good match for Pawling’s offerings. “I have friends that run brands that don’t sell the most comfortable clothing on earth, and they’re not experiencing the same thing.”

She quickly sold out of some items, and had to figure out how to speed up shipments from suppliers in Peru or Indonesia. She’s in talks with a US factory that could deliver quicker — though it’ll also cost more. And with trade shows canceled, she’s working on creative ways to showcase her collections online instead. Between March and July, “the entire business operations will completely have changed.”

DESIGNER: ‘THAT’S FOREVER’
Cynthia Rowley’s cheery, playful aesthetic has been a staple of New York fashion for decades. Her boutiques closed during the pandemic, and department-store client Neiman Marcus Group filed for bankruptcy. But for a few years now, Rowley has been moving away from such venues anyway, toward her own e-commerce operation.

That’s gathered pace in the pandemic — and so has the shift toward informal attire. There’ll be fewer dresses for weddings or evening events. “It has to be things that are appropriate to the new normal,” she says. “That’s forever. People will have a more relaxed approach to what they wear.”

Rowley says that will naturally lower prices. Also, “when you start talking about more accessible and more casual fabrics, that’s when really good design has to come into play.”

One thing that won’t change is “that feeling that you get when you look at something that makes you really excited to put on,” she says. “That’s never going away.”

RETAIL: ‘SECULAR SHIFT’
Clothing stores all over the world are reopening, but Tapestry Inc. — which operates more than 1,500 of them — foresees a “secular shift” toward online shopping, according to Chief Executive Officer Jide Zeitlin. He’ll likely pare back the company’s network of Coach, Kate Spade, and Stuart Weitzman outlets, with a higher threshold for renewing leases as they expire.

Tapestry’s stores canceled $500 million of orders for handbags, jackets and dresses, saving cash to weather both the shutdown and what’s likely to be a slow recovery. “This downturn is going to be more protracted than a quarter or two,” Zeitlin says.

Meanwhile, online luxury retailer Farfetch has seen sales skyrocket — by 90% last quarter. Further changes may be on the way for the industry, says Chief Executive Jose Neves. “We’ll see headwinds and tailwinds and side-winds.”

The decimation of global tourism during the pandemic will hit luxury labels hard, Neves says. Visitors from China, for example, were a reliable source of sales in hubs like New York, London and Paris.

Neves says fashion is rooted in the wider culture, and will survive. His brick-and-mortar rivals may need a bit of reinventing — but “this was true before COVID.”

MARKETING: ‘DISCOVERY MAGIC’
Searching for a way to sum up consumption patterns in the pandemic, Jake Cohen invokes the “hierarchy of needs” theory of psychologist Abraham Maslow. “As soon as people were sent home, the first thing they did was buy three weeks of food,” he says. “That’s the bottom rung.” Later on, “people are going to spend on things to reintroduce themselves into society” — like clothes.

Cohen is head of product marketing at Klaviyo, a Boston-based e-commerce marketing company. He says there’s been a surge of interest in recent months, with the clothing business accounting for about 30% of his clients.

Traditionally, “the golden discovery magic was being in the department store,” he says. “If you’re a brand that got picked up by Bloomingdale’s or Barneys or wherever, people walk through going for Chanel, but they see you, and all of a sudden you’re a thing. People aren’t in stores now, so how do they go find that new brand?”

Fashion is coming up with answers online, from customer quizzes to influencers on social media. Instagram is full of ads for face masks that match up with shirts or skirts. A swimsuit brand has its own blog and travel guide: “no one’s traveling right now,” but they’re hoping to, so they might click the link. “Good storytelling, good branding and good content is going to attract people.”

Asians lead post-pandemic consumer trends — Kantar

June 22, 2020 | 12:06 am

By Denise A. Valdez, Reporter

ASIAN consumers are expected to lead the change in consumer behavior in the post-pandemic world, and businesses are advised to adapt to at least five key shifts as they happen, global data analytics firm Kantar said.

Vicky V. Abad, chief client officer at Kantar Philippines, said companies in Asia need to acknowledge new consumer insights more promptly as these trends will unfold faster in Asia than in other parts of the globe.

“While we are monitoring the same for the global markets, we believe that in Asia, the shift in attitudes is going to be more accelerated… Because Asia is a part of the globe which is primed for pandemic,” she said in a media briefing last week.

Ms. Abad said the region’s past experiences with epidemics, such as the severe acute respiratory syndrome (SARS) and influenza A virus subtype H1N1 outbreaks, make Asians “ahead of others” and “almost very comfortable” in dealing with the coronavirus disease 2019 (COVID-19) outbreak.

She added the community-based mindset of the region makes for a societal cohesion at the heart of Asia’s culture, allowing Asians to be quicker to adapt when something hits them as a group.

Kantar has identified five key behavioral shifts that will emerge and last through the post-pandemic world: heightened focus on protection, well-being, connections, flow and experiences.

Protection refers to seeking stability and crisis-proof opportunities. This means favoring reduced human contact and contactless processes as people remain wary of contracting COVID-19. And if hygiene used to be in the periphery, Kantar said it would now be central and viewed as a life saving tactic.

With this mindset, companies and brands must consider offering physical shields, protective spaces, crisis investment and digital defenses.

The previous trend of maintaining outdoor lifestyles may also slow down post-pandemic, as consumers start to favor wellness offers that can be done within the home.

This insight allows for the rise of proactive ingredients in food, digital fitness and wellness zones. The slower pace of life with people mostly in their homes will also allow for new wellness pastimes and hobbies to thrive.

The way people interact and build connections will also change, shifting from seeking meaningful face-to-face interactions to rebuilding digital platforms for intimate connections.

Kantar introduces the idea of a “Generation COVID” in which people are drawn closer together because they are united by the global pandemic. But while digital intimacy may grow, people may also have minimized networks as they grow more conscious with who they interact with physically.

Maintaining a steady flow of life will also be an aspiration after the pandemic, as the disruption brought by the lockdowns will trigger a want for self-sufficiency and reliability.

This poses an opportunity for subscription models to arise. People will also be more conscious of accommodating under-privileged and needy groups, while prioritizing essential products and services.

Lastly, people will maintain a desire for “novel experiences that provide unadulterated fun,” but will remember to have it in stable and controlled boundaries.

This means any opportunity that would strike the balance in giving multi-sensory experiences while ensuring safety will gain traction. Entertainment that can be consumed and exercised at home may also be a new trend, giving opportunity for analog experiences to revive.

“The COVID-19 pandemic is a turning point in our history — not only for the healthcare system but also for business models that are changing the way they run their operations to adapt to the new normal,” Ms. Abad said.

“Obviously there will be mistakes here and there, because it couldn’t be a polished response immediately. But people really have to adjust in terms of being available online, if it had to be that way. These are your quick response, but there will also have to be an organized response moving forward,” she added.

Help a local business, cheer up Dad

June 22, 2020 | 12:05 am

OKAY, so you’re late, only beginning to shop for a Father’s Day present the day after. Don’t worry, we’ve got you covered. With a purchase from these brands, not only will you be helping a local business (and maybe a few charities), you’ll also be able to give your father a nice unique present — and because of the prices, you can even go and match him, just like he always wanted.

ButingKicks

Here’s a proposition: locally made sneakers. Marikina-made brand ButingKicks. While the brand also offers masculine dress shoes, a flagship line is its collection of leather and knit sneakers, named after the deities of Greek myth. The knit sneakers even have a wing-tip pattern on them, seen in the Athena line, so they can look dressy, even with jeans. Other designs combine wingtips with outdoor soles, giving a casual, masculine look. Until the end of the month, ButingKicks has a free shipping promo. Find them on Facebook @ButinghKicks.

Bayani

Another Marikina-made shoe brand, Bayani, is making a statement by highlighting its local makers. The handmade pairs are named after heroes of the Philippine Revolution (a pair of tasseled loafers are dubbed The Jacinto). You have a choice of wingtips, topsiders, oxfords, mules, and, yes, even sneakers. They’re holding a sale, so be sure to catch them (June being Independence month for the Philippines, too). Find them on Facebook @bayanishoesph.

Eye Know Right Shadies

They’ve got flair, and they’re there. Social enterprise Eye Know Right kind of follows the lines of classic Ray-Ban models the Wayfarer, the Clubmaster, the Round Metal. They’re named The Boss, The Bully — and the Burgis. They come with Alpha-UV and Blue Light protection, so they display both form and function. Furthermore, despite a tough-boy brand image, this bad boy has a heart of gold: a previous project raised funds from every purchase to send a child to school, while a present project donates to Project Pearls with an aim to end hunger caused by the COVID-19 lockdown. So far, it has raised P320,555. Visit the website at eyeknowright.com.ph. — Joseph L. Garcia

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