Apparel Quarterly Update - Spring 2020

COVID-19 has dramatically impacted global economies, with containment efforts resulting in abrupt closures of businesses, a surge in unemployment and market volatility. In an effort to slow the spread, much of the U.S. economy has essentially remained shut down since mid-March, and the pejorative effects of suddenly “unplugging” business operations nationwide have been surfacing across various economic and industry performance indicators.

Retail spending in the U.S. declined by 21.6% in April, chalking up the largest monthly fall on record.¹ Over 36 million Americans filed for unemployment in the last 2 months, wiping out all the job gains since the Great Recession.² Q1 2020 corporate earnings have suffered, with many companies suspending earnings guidance for the remainder of the year. And, while leading economists would agree that the U.S. is in a recession, how deep and protracted the contraction will be is anyone’s best guess.

While it’s too early to precisely quantify the pandemic’s toll across the apparel and retail landscape, COVID-19 has undoubtedly derailed the industry’s trajectory, which was already facing various headwinds such as changing tastes, channel shifts and increased competition. Some of the leading retailers have begun bankruptcy filings, and brands large and small are playing “defense” to weather the storm. However, many apparel companies have acted quickly to “right-size” their business operations and go-to-market strategy and are now focused on how to get back up and running again. Time will certainly tell when the economy recovers, and we believe that when it does, the apparel and retail sectors will likely regain strong footing in a new and improved post COVID-19 paradigm.

Our quarterly apparel report aims to identify trends and provide insights across the apparel sector, focusing on key themes, issues and opportunities. In this issue’s sector spotlight, we highlight COVID-19’s impact on the apparel supply chain, inventory management and how leading brands have been supporting the global effort to fight the pandemic. We hope you continue to find this report and its future editions to be a useful source of information, and as always, please do not hesitate to reach out to us if we can be helpful in any way.


Sources
¹ "America's retail sales completely collapsed in April." CNN. May 15, 2020.
² "‘Rolling Shock’ as Job Losses Mount Even With Reopenings." New York Times. May 14, 2020.