Apparel Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 4,600 apparel manufacturers in the US transform fabrics into clothing and accessories. The companies described in this report are known as “cut-and-sew” apparel manufacturers, and produce items such as dresses, suits, shirts, and pants. “Cut-and-sew” manufacturers differ from apparel knitting mills, which produce knit products, such as hosiery, socks, and underwear. Apparel firms design and market apparel, but may outsource their entire manufacturing operations to firms outside the US.
Demand Driven by Trends
The apparel market is driven by constantly evolving fashion trends and fads, many of which can be short-lived.
Complications from Foreign Production
Apparel companies that rely on foreign firms for any part of production are more vulnerable to remote management problems, increases in transportation expenses, and trade-related issues.
Industry size & Structure
A typical apparel manufacturer employs about 12 workers and generates $1-2 million annually.
- The apparel manufacturing industry consists of about 4,600 companies that employ about 55,800 workers and generate $7.8 billion annually.
- The industry is fragmented - the 20 largest companies account for 22% of industry sales.
- Most large apparel companies, such as VF Corporation and Ralph Lauren, outsource the production of garments to low-cost manufacturers located abroad. American Apparel is one of the largest US clothing manufacturers that produce goods domestically, but has experienced financial difficulties.
Industry Forecast
Apparel Manufacturers Industry Growth
Recent Developments
Mar 17, 2023 - Clothing Stores See Sales Growth
- Sales for clothing and clothing accessory stores increased by 4.1% unadjusted year over year but declined 0.8% month over month seasonally adjusted in February 2023, according to data released by the National Retail Federation. Overall retail sales were up 5.4% in February 2023 over a year ago and down 0.4% from January 2023, according to the US Census Bureau. NRF’s retail sales calculation, which excludes car dealers, gas stations, and restaurants, showed an increase of 6.5% unadjusted year over year and 0.5% month over month in January 2023. According to NRF Chief Economist Jack Kleinhenz, “Sales growth has slowed in recent months, but consumers’ economic health still looks good. February is typically the slowest month of the year, so monthly fluctuations are expected. Sales are higher than last year and that’s due in large part to the strong labor market, which means more income and spending.”
- US manufacturing activity contracted in February 2023, falling below the baseline for growth for the fourth consecutive month, according to the Institute for Supply Management’s Manufacturing ISM Report on Business. The Manufacturing PMI registered 47.7 in February, a slight change from the 47.4 recorded in January. A reading above 50% indicates manufacturing expansion. In February, the ISM’s Purchasing Managers Index (PMI) fell to 47.4%, down from 48.4% in January. February’s New Orders Index remained in the contraction zone at 47%. The February Production Index decreased slightly to 47.3%. Of the manufacturing industries tracked by the ISM, four reported growth in February: Apparel, Leather & Allied Products; Transportation Equipment; Petroleum & Coal Products; and Electrical Equipment, Appliances & Components. Fourteen sectors reported contraction, including Computer & Electronic Products, Fabricated Metal Products, Nonmetallic Mineral Products, Plastics & Rubber Products, Primary Metals, Textile Mills, and Wood Products.
- The apparel industry is still struggling to address 2022’s inventory surplus and the anticipation of slower consumer spending, as sales weakened for some apparel companies in early February, according to the Wall Street Journal. Companies have responded by discounting many products, and retailers like department stores have canceled orders or been slower to reorder merchandise. According to the article, the tension reflects how some brands rely on wholesaling to support their businesses and reach a wide range of customers. For example, VF Corp., the owner of brands such as North Face and Vans, reported that its wholesale partners are being cautious with spring and summer orders because of concerns about the economy and higher inventory levels. The company’s inventory at the end of 2022 doubled from the previous year, which VF attributed to higher order cancellations, reduced consumer demand, and less accurate inventory buying. Capri Holdings, the owner of Versace and Michael Kors, said that sales to department stores and other third parties fell 20% in its last quarter year over year. Meanwhile, department stores are being more disciplined in their purchases, monitoring consumer demand in new ways, and doing a better job supporting their private-label brands.
- In December, at Morgan Stanley’s Consumer & Retail Conference, Nordstrom and Macy’s executives said they are seeing signs that consumers may be pulling back on their spending, according to Retail Dive. Nordstrom’s CEO said the department store was “seeing signs of strain on the consumer across all customer cohorts,” particularly for lower-income households. Macy’s CFO commented that inflation continues to pressure consumers’ ability to spend on discretionary spending. Industry insiders suggest some holiday shoppers may feel less urgency to spend because there is an extra Saturday before Christmas and Hanukkah falls later this year.
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