U.S. denim imports went into a deeper slide in May, as the decline in shipments expanded from the previous month and was steeper than the overall falloff in apparel coming into the country so far this year.
For the year to date through May, U.S. imports of denim apparel–97 percent of which is jeans–fell 35.12 percent to a value of $887.74 million, according to the U.S. Commerce Department’s Office of Textiles & Apparel (OTEXA). This compares to a 27.76 percent decline in overall apparel imported by brands and retailers in the same five-month period. The decline also surpassed the 23.73 percent decrease for the first four months of the year.
The demise in demand resulting from the economic downturn of the coronavirus pandemic has led to companies working off inventory that was already in the pipeline and the adoption of a more casual wardrobe for the many people working from home.
Some retailers are choosing the pack-and-hold inventory strategy, as they cut back or cancelled imports orders. Gap Inc. told analysts last month that it had plans to “pack and hold” its summer, transitional and fall merchandise that suffered amid store closures until the 2021 selling season. This includes merchandise that was never delivered to Gap’s namesake brand, as well as Banana Republic and Old Navy.
PVH, meanwhile, is collaborating with vendors to manage production and stock. “Given this operating environment, we have also been addressing our inventory levels to reflect the current demand picture, and are working closely with our suppliers in the event of any meaningful shipping disruptions or delays,” Manny Chirico, chairman and CEO of PVH Corp., said in a conference call with analysts.
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Mike Larson, chief operating officer and chief financial officer, said PVH is also tightly managing inventories by reducing and canceling commitments, redeploying basic inventory items to subsequent seasons and consolidating future seasonal collections, as well as negotiating extended payment terms with its suppliers.
“We will carry, pack and hold, and put into our spring assortments for next year,” Larson said. “And that number is going to be…around $250 million. So, in effect, I don’t think you will see the inventory truly reflect the [supply and demand] math until sometime in the first half of next year.”
OTEXA reported that top supplier Mexico saw the most severe decline among the Top 10 suppliers, with a year-to-date decrease of 53.75 percent to $153.79 million, while Cambodia posted the biggest gain, with an increase of 58.38 percent to $54.31 million in the period.
Cambodia seems to be picking up lower-priced business from its neighboring key suppliers in Asia. The No. 2 producer for U.S. companies, Bangladesh, posted a 12.05 percent decrease to $161.09 million, while imports from China nosedived 70.63 percent to $84.46 million in the period. Vietnam was the only other supplier of the region on the positive side, with a gain of 6.47 percent to $111.87 million.
Among the rest of the top Asian suppliers, declines of 11.85 percent to $84.06 million were seen from Pakistan, 11.32 percent to $18.48 million from Sri Lanka and 44.04 percent to $16.39 million from Indonesia. Rounding out the Top 10, jeans imports from Egypt declined 33.09 percent to $41.58 million in the period, and shipments from Nicaragua fell 32.14 percent to $30.08 million.