By Anne-Marie Caulfield | 3 April 2017 | 02:16:37When it comes to the world’s top-selling fashion, Egypt is no stranger to the glamour.
But the country is struggling with the impact of a deadly economic crisis, which has seen the country’s biggest clothing company, Lululemon, slash jobs and prices in recent months.
The world’s second-largest garment company, Gap Inc, is one of the world’ biggest retailers, having sold more than £1.2bn of clothing in 2016, according to the company’s latest annual report.
The plunge in business has come as the Egyptian economy has been hit by severe drought and other factors that have contributed to a dramatic fall in spending on apparel and footwear, the world”s biggest retailer told analysts last month.
“It”s clear that a lot of people have been affected by the drought and the fact that there is a lack of money to spend,” said Yasser Ali, Gap”s chief executive.
Gap”s latest results for the year ended 31 March showed a 6.6 per cent fall in sales from a year earlier.
Gap had forecast a 4.2 per cent decline.
Gap employs around 2.3 million people worldwide.
“Gap has taken a big hit in recent years,” said Khaled Zahra, an analyst at Fares Group, a Dubai-based consultancy.
“They have lost a lot more than we thought they would.”
The Egyptian economy is also suffering from the loss of millions of jobs, as the government has slashed spending and imposed austerity measures in a bid to curb the country”s debt load and rein in inflation.
The country has struggled to shed its long-standing reputation as the world\’s most corrupt country.
The country was ranked the world”s second-biggest prison state for the fourth year running in 2016 by Transparency International, and has been rocked by a series of graft scandals, including one involving the arrest of former President Mohammed Morsi in 2014.
Egypt has also been hit with a string of deadly car bombings, including a bombing that killed at least 28 people at a Cairo shopping mall last year.
In a sign of the dire economic situation in Egypt, Gap has recently started selling its clothing online, rather than through its flagship store in Cairo, as many of its overseas stores had done for years.”
The rise in demand for clothing has been fuelled by a boom in young Egyptians, who are turning to the online market. “
We have been very conscious of the fact we had to be here in Egypt because we are the largest employer.”
The rise in demand for clothing has been fuelled by a boom in young Egyptians, who are turning to the online market.
“The boom in the fashion industry has created a lot for us,” Ali told analysts at the company\’s annual meeting.
“Young people are spending more money in the online fashion market than in the retail market, so we see a lot in the new generation of consumers.”
Lululema has been selling its apparel online since 2015.
It has seen its revenue increase by more than 10 per cent this year to £1bn ($1.4bn).
It also said it has a plan to double sales to $2bn in 2019 from $1.3bn in 2016.
The company said its global sales were forecast to reach $1bn in 2020.
In December, Gap launched its first fashion store in the US, and Ali said it had plans to expand its retail presence in the country.
Gap said it is looking to launch five more stores in the United States, China, Mexico, Brazil and Germany in the coming years.
But the impact on the Egyptian fashion industry is felt in a country that is widely perceived as one of Europe”s most fashionable countries, with a booming tourism industry.
The Egyptian tourism industry is worth more than $5bn a year, according the International Chamber of Commerce and Industry.
It is estimated that about 70 per cent of Egyptians visit other countries to spend holidays, and the country has been a major destination for the European Union and the United Nations.
“The [lack of] tourism, which is part of the overall economic situation, is the big reason why the clothing industry is suffering,” said Nasser Azzam, head of the Middle East and Africa region at consultancy Deloitte.
“Lululesma is an important part of this sector, but there is no doubt that the clothes industry is facing some problems.”
The global fashion industry, which includes fashion brands including H&M, L’Oreal and Gap, accounts for about 40 per cent the Egyptian retail industry, according TOBIAS.
Egypt is home to some of the largest fashion companies in the world, including L’Oréal and Gap.
The global retail sector employs more than 1.2 million people.