Edun making a loss???

[andromeda]

Can anyone please shed some light on this -

BONO AND ALI BANKROLL LOSS-MAKING LABEL

Sunday November 11 2007

EDUN Apparel, the socially conscious clothing line, owned by Bono and his wife Ali Hewson, received huge loans from its shareholders last year, as it continued to lose money.

The pioneering business, which sells fair trade and fair employment clothes, was buoyed by a €2.75m loan from its wealthy backers.

The fashion company has now clocked up nearly €5.5m of loans from its owners, on top of bank borrowings of almost €2.5m. Last year a mortgage was registered with ACC Bank.

Edun, which recently launched a range of blank organic t-shirts from Uganda, had sales to a US affiliate of €1.9m last year, according to latest accounts. This is down from almost €3.3m a year earlier.



and this article

http://findarticles.com/p/articles/mi_qn4161/is_20070311/ai_n18710044

I though Edun was supposed to be a profitable organization. I believe that they haven't made a profit on this - ever.

Can anyone please explain why? I mean it seems like all they are doing is demonstrating that fair trade doesn't exist.

 

[rihannsu]

Can anyone please shed some light on this -

BONO AND ALI BANKROLL LOSS-MAKING LABEL

Sunday November 11 2007

EDUN Apparel, the socially conscious clothing line, owned by Bono and his wife Ali Hewson, received huge loans from its shareholders last year, as it continued to lose money.

The pioneering business, which sells fair trade and fair employment clothes, was buoyed by a €2.75m loan from its wealthy backers.

The fashion company has now clocked up nearly €5.5m of loans from its owners, on top of bank borrowings of almost €2.5m. Last year a mortgage was registered with ACC Bank.

Edun, which recently launched a range of blank organic t-shirts from Uganda, had sales to a US affiliate of €1.9m last year, according to latest accounts. This is down from almost €3.3m a year earlier.



and this article

http://findarticles.com/p/articles/mi_qn4161/is_20070311/ai_n18710044

I though Edun was supposed to be a profitable organization. I believe that they haven't made a profit on this - ever.

Can anyone please explain why? I mean it seems like all they are doing is demonstrating that fair trade doesn't exist.

Edun is a for profit business as opposed to being a non-profit charity, but they are still in start up phase. Many businesses starting up do not make actual profits for several years. It takes time to build your market as well as the fact that in Edun's case they are building an entire supply chain. They are assisting the farmers who are growing the cotton for their products as well as putting money into AIDS medications for their workforce. For instance in the case of the ONE t-shirts, $10.00 goes to the ALAFA fund which pays for AIDS treatment for the workers and their family members. They have I think a 30% AIDS infection rate in Lesotho where the factory is located. They are also training people and developing a skilled workforce which takes time to ramp up. The CEO of the company has been quoted as projecting that EDUN would begin to show profit sometime in 2008. 3 to 5 years is the average projection for a business to expect to begin making profit. EDUN is only two years in I think. The article is not clear whether it is reporting all sales or not as it say sales to A US affiliate were down. If that is only one affiliate then that drop may be meaningless in the overall company. Perhaps that particular affiliate did not order as much. Another reason for sales being lower is fluctuations in being able to meet demand. Again this is not unusual in a start up business.

Dana

 

[ntalwar]

Re: Re: Edun making a loss???

It takes time to build your market as well as the fact that in Edun's case they are building an entire supply chain.

The FAQ on the Edun website says:
"EDUN utilizes locally run factories in Africa, South America and India. EDUN does not build and does not own these factories."

So they contract out the manufacturing.

 

[BVS]

Clothing lines, starting out are hard to do, especially when you are trying to do it ethically...

 

[Sicy]

I'm really not surprised, considering the outrageous prices for the clothing.

 

[indra]

I wonder if the (RED) stuff is sucking customers away from Edun? I know Edun and the Gap's (RED) products are supposed to target different consumers, but I just wonder if many of the people who stretched to buy Edun products when they first came out bought (RED) clothing instead when that came out. Many people see them as accomplishing the same thing, so maybe they figure instead of paying $70+ for something to wear they would rather pay $30 or so.

 

[Headache in a Suitcase]

amazingly enough there isn't a huge market for a 50 dollar t-shirt

 

[gman]

I think it was obvious it was doomed from the start. The clothes buying public want value for money, not a conscience massage. I think they are flogging a dead horse!

 

[redhotswami]

i want a conscience massage

 

[Lemon Grrrrrl]

I'm too fat to wear Edun clothing, unless I want the T-shirt, but I already have zillions of those and don't really need another one (especially a $50 one). I keep waiting for them to make bedding stuff - imagine sleeping on Bono's poetry???

 

[Bono's Doll]

The prices are not for us average peeps (nor the sizing.)

 

[Jeannieco]

Unico^^ me too!

 

[last unicorn]

They are in the start up phase, and the media was/is bashing (Red) as well and calling it a flop. Some want to see these projects go down so badly.

I say if you really want to spend your money on socially conscious stuff, you do it. I always buy fair trade coffee, although it's more expensive than normal coffee. The idea and philosophy behind Edun just has to be spread a lot more so that people are actually made aware of what they are spending their money on.

Also, it's not the first and only ethical clothing line, it's a trend already, and all of these clothes are not cheap. It's okay if I know what I'm buying and where the money is going.

 

[EdgeIsTooSexy]

I actually heard they had to close up in Saks but those were just rumors.


^^ same here, I never get starbucks

 

[Earnie Shavers]

If Edun are trying to follow the traditional high end fashion path to success, it's a pretty risky route to take. All those massive fashion labels start off at the high end and earn/market a reputation there - and lose a fortune in the process. Then they open up secondary affordable sub labels (eg Armani and Exchange, or Ralph Lauren and Polo) as well as license out the brand all over the place on cheaper products with incredibly high margins (perfumes, sunglasses etc) and that's where they start to really roll in it. Armani, Hugo Boss, D&G blah blah blah, do not make their money on the ultra expensive collections individualy designed and made at a very high quality in Italy or wherever. At all. They make it on selling the image earned by those ranges down the line to cheaper sub-labels, made on the same Vietnam lines as the jeans you get from the Gap or wherever. If Edun want to follow the same route, it will take years and a lot of heavy losses to get there. If they don't, they'll never make a dollar. I don't really know the pricing or quality or even style of their stuff though. Just sounds from comments in here that that is where they're positioning themselves.

 

[Lila64]

I'm really not surprised, considering the outrageous prices for the clothing.

^What she said. I was at Nordstrom's last month (when Ali was here), and asked an Edun rep about the pricing, and she said it would continue to be a 'high end' line. So basically it rules me out of buying anything. And if the high end customer can afford to purchase the product, more power to them. But if they don't purchase/support the line, then what?

 

[rihannsu]

The main reason they are starting at the "high-end" level is that they are looking to influence the industry as a whole. They are branching out by setting up Edun LIVE which is a more mass market approach but they were only able to do that once they got the supply chain sorted out and could reasonably expect to deliver on large orders.

Someone commented that they don't own the factories and that is true but because they are trying to create a completely Africa sourced line they have been closely involved with helping their supply chain all along the way from farmers to spinners to weavers to garment factories. Ali talks about this somewhat in some of the Edun videos. All of this takes time to develop.

My point in the previous post is that it is too soon to be calling Edun a flop because losses are expected in the first few years of operation in business set up on this scale. The CEO stated that they did not expect to begin seeing profits until at least 2008. Many factors can contribute to changing that. You don't judge the business strictly by profit but by how they are doing in relation to their business plan. If the plan did not forsee profits until at least 2008 then they are not off the rails. This article was not well researched at all or it was intended to paint a bad picture.

 

[Headache in a Suitcase]

They are in the start up phase, and the media was/is bashing (Red) as well and calling it a flop. Some want to see these projects go down so badly.

I say if you really want to spend your money on socially conscious stuff, you do it. I always buy fair trade coffee, although it's more expensive than normal coffee. The idea and philosophy behind Edun just has to be spread a lot more so that people are actually made aware of what they are spending their money on.

that's all fine and dandy. obviously most people would prefer to buy stuff that, ya know, isn't made by 8 year olds for 5 cents a day. but likewise, it isn't feasable for most people to pay 30+ bucks for a t-shirt.

 

[andromeda]

The main reason they are starting at the "high-end" level is that they are looking to influence the industry as a whole. They are branching out by setting up Edun LIVE which is a more mass market approach but they were only able to do that once they got the supply chain sorted out and could reasonably expect to deliver on large orders.

Someone commented that they don't own the factories and that is true but because they are trying to create a completely Africa sourced line they have been closely involved with helping their supply chain all along the way from farmers to spinners to weavers to garment factories. Ali talks about this somewhat in some of the Edun videos. All of this takes time to develop.

My point in the previous post is that it is too soon to be calling Edun a flop because losses are expected in the first few years of operation in business set up on this scale. The CEO stated that they did not expect to begin seeing profits until at least 2008. Many factors can contribute to changing that. You don't judge the business strictly by profit but by how they are doing in relation to their business plan. If the plan did not forsee profits until at least 2008 then they are not off the rails. This article was not well researched at all or it was intended to paint a bad picture.

According to the articles, profits are much lower than last year. If profits are expected to be low in the start-up phase, should they at least be a little higher than the first stat-up year?

 

[rihannsu]

According to the articles, profits are much lower than last year. If profits are expected to be low in the start-up phase, should they at least be a little higher than the first stat-up year?

No, the article talked about sales through one US affiliate being down. I don't know all the in's and out's of Edun's business but that could be explained any number of ways that have nothing to do with the business doing poorly. They weren't talking about profit because the whole thrust of the article is that there is no profit and Bono and Ali are bankrolling it. But what I am saying is that the loans from Bono and Ali to keep the business going are not in any way surprising or unexpected. Most businesses starting up on this scale start with huge loans and don't expect to turn profitable for anywhere from 3-5 years. There is nothing alarming or noteworthy about Bono and Ali loaning the business operating funds as it is probably all part of the business plan. As I said several times before, the CEO stated at one of the Edun launch events that profits were not expected until at least 2008. This article is an alarmist piece of crap and doesn't have enough info to make any kind of judgement on Edun's financial position.

Dana

 

[Slipstream]

I think they need a new designer, his designs are crap. And who wants to pay for overpriced crap? Not me.

There is heaps of really cool clothing out there that you can buy for the same price or less than Edun. If it's the socially conscious reason people are buying Edun then fine, but it seems the only people that can afford it are the rich. The rest of us, which are the most of us, are going to stick to a product that is cheaper and might I add, more available to purchase.

 

[last unicorn]

Yep, cheap throwaway stuff based on exploitation and child labour. There sure is enough of that.

 

[Jamila]

They are in the start up phase, and the media was/is bashing (Red) as well and calling it a flop. Some want to see these projects go down so badly.

I say if you really want to spend your money on socially conscious stuff, you do it. I always buy fair trade coffee, although it's more expensive than normal coffee. The idea and philosophy behind Edun just has to be spread a lot more so that people are actually made aware of what they are spending their money on.

Also, it's not the first and only ethical clothing line, it's a trend already, and all of these clothes are not cheap. It's okay if I know what I'm buying and where the money is going.

I would like to thank last unicorn, Dana and all those who are providing clear thought on EDUN's financial situation and on its business model with African communities.


You have provided this thread with as much solid reasoning and explanation about what EDUN is trying to do as anyone could provide.


It is greatly appreciated.



EDUN LIVE now has a venture set up with Zazzle (www.zazzle.com) where you can make a customized t-shirt, replete with your own picture and saying, on an EDUN LIVE tee for only $22.95!


For a customized tee - especially one on a fairly traded t-shirt - the price is really reasonable.



Another way that you can help support EDUN.

 

[andromeda]

Yep, cheap throwaway stuff based on exploitation and child labour. There sure is enough of that.

Ok so yes there is cheap child labour. However countries like Thailand and Malaysia have had huge economic booms by manufacturing and exporting cheaps clothes (and other goods) to the west.

So it's not the most desirable thing to happen to children, but look at the way it is boosting the economy of some of these countries. And one of the best ways to end poverty in any country is to have a strong economy.

 

[Headache in a Suitcase]

9.99 gets me 3 t-shirts and a stuggling actor

 

[redhotswami]

i like the Africa is Sexy tshirt