Apparel Producers Prep for Shrinking Sales as Consumers Cut Back

Clothing brands are reportedly cutting back on orders in anticipation of weakening sales.

As Bloomberg News reported Friday (June 16), factory owners say they’ve seen significant declines in retailers’ holiday orders, with at least one company that works with major brands expecting a plunge in demand.

“You can really see the anxiety in the apparel market,” Sheng Lu, an associate professor of apparel studies at the University of Delaware, told Bloomberg.

The report notes that while some of the decline comes from retailers trying to reduce excess inventory, a drop in imports and orders illustrates merchant anxiety that spending is beginning to dip after a few robust years.

Wei Wang, who runs a California knitwear factory that makes sweaters for brands like Ralph Lauren, told the news outlet he can tell the apparel industry is in a tough time just by the sound of his knitting machines.

“Usually, it’s a lot louder,” he said. “We should be picking up for the fall and holiday sweater season production.” However, orders have fallen 30% to 40% year over year.

“All of our customers are placing smaller orders or delaying orders because everybody’s being more conservative,” Wei added.

As PYMNTS wrote last week, this has been a tough quarter for nearly all merchants and retailers, but particularly for businesses whose sales depend on nonessential items.

For example, Target’s much-anticipated quarterly earnings bore out much of investors’ anxieties, with a 3.4% drop in comparable digital sales attributed to a consumer pullback of purchasing discretionary goods.

Macy’s meanwhile, had its own share of revenue difficulties, as the department store chain’s brick-and-mortar sales fell 6% year over year, with digital sales off 8% for the same period. This led to Macy’s revising its yearly sales and profit forecasts downward, pointing to a deceleration in demand caused by inflation as the primary factor.

“While startling, these earnings results may not be a total surprise,” PYMNTS wrote last week, pointing to data from our May “Consumer Inflation Sentiment” report.

That study found that the top two categories consumers are cutting back on are clothing and accessories and health and beauty, both revenue streams for Macy’s and Target.

And as noted here recently, other economic reports show that there may be some pressure in the wings: initial unemployment claims recently rose unexpectedly, while subprime borrowers’ delinquencies have climbed as the credit lifeline has grown tighter.