Apparel Manufacturers
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Quarterly Insight, 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
Coronavirus Update
May 9, 2022 - China’s Zero-COVID Policy Slows Factory Output, Exports
- Apparel manufacturers that rely on contract manufacturers and/or suppliers in China may be experiencing increased supply chain disruptions. China’s manufacturing output decreased to a 26-month low in April as its zero-tolerance approach to the pandemic slowed factory output. The Caixin China General Manufacturing purchasing managers’ index (PMI) dropped from 48.4 in March 2022 to 46 in April. A reading below 50 suggests output is contracting rather than expanding. In April, new orders and production fell to their lowest levels since the survey began in 2004, and exports declined at the steepest rate in nearly two years. Delivery times grew at the second-fastest rate in the index’s history amid travel restrictions and raw materials shortages.
- Hobbled global supply chains could reduce the profitability of North American apparel and footwear brands by $9 billion to $17 billion in 2022, according to a recent report by management consulting firm Kearney. While brands could benefit from pent-up demand, a swift uptick in spending could worsen existing supply chain snarls. Areas of focus for making supply chains more resilient include trimming the numbers of stock-keeping units (SKUs), optimizing ocean shipping, building additional redundancy into supply bases, increasing data sharing with suppliers, and forecasting demand using AI.
- In response to Russia’s invasion of Ukraine, several clothing brands have announced they would alter their business operations in Russia. Levi Strauss is temporarily suspending its operations in Russia. The owner of T.J. Maxx and Marshall’s, TJX, says it plans to divest its stake in a discount retailer in Russia that operates more than 400 stores. Nike is shuttering about 116 stores in Russia, and Adidas is also ceasing sales in the country.
- Consumers have continued to spend despite rising prices, but as inflation remains at a 40-year high, spending may experience a pullback. US consumer prices for apparel were up 6.8% in March 2022 compared to a year earlier. Consumers are increasingly opting for value apparel brands as they look to stretch their dollars, according to GlobalData. About 43% of consumers surveyed by NPD Group in February said they would delay less important purchases if prices keep rising.
- Amid rising inflation, Macy’s has announced that starting this spring it will dedicate more store space to its “Backstage” store-within-a-store concept where it will offer more bargain deals. The Backstage area will feature lower-priced goods including apparel, beauty products, housewares, and pre-packaged food. Industry-watchers noted the pivot due to Macy’s traditional market position as appealing to an affluent clientele. Macy’s Backstage is being rolled out to additional locations nationwide, including downtown stores in key locations such as New York City and Chicago.
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