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Fashion Can’t Wait to Beat a Hasty Retreat from a Disastrous Covid-Hit Quarter

The first quarter of fiscal 2020 was one most textile and apparel manufacturers would prefer to forget.

Most of these companies in the raw materials and finished goods end of the global supply chain started out the period in good shape, as economic conditions were not exactly vibrant but stable. Economic markers like consumer spending and gross domestic product at the beginning of the year were slowing down, with some experts saying the United States just might skirt by and avoid a recession, while others said the country and the world could fall into a short-lived period of negative growth.

Then China was hit by the coronavirus outbreak that shut down factories and sent some sourcing into crisis, soon followed by a global pandemic of COVID-19 that hit many countries hard and was particularly crippling to the U.S. health and economic system. Sweeping government shutdown and stay-at-home orders put the economy, consumer spending and retailers on life support.

The result was some of the worst sales and earnings results ever seen, leading to a slew of bankruptcies at the retail level and severe declines for manufacturers.

Fibers firms Lenzing and Unifi saw their quarterly revenues decline on soft demand and weak pricing, causing profits to tumble. In the case of Unifi, its net loss grew 264 percent to $41.1 million.

Slammed by the coronavirus-caused economic crisis, the first quarter of 2020 was one most textile and apparel firms would like to forget.

For basics apparel manufacturers like Gildan Activewear and Hanesbrands that own most of their own production, sales were down 26.4 percent for the former and 11.9 percent for the latter, but earnings nosedived more than 100 percent and profit margins suffered. For Hanesbrands, which like many companies pivoted a share of production to personal protective equipment, earnings fell 109.7 percent to a net loss of $7.87 million.

For jeans mavens Kontoor Brands and Levi Strauss, revenue declines were less dramatic–Levi’s actually pulled off a 5 percent gain–but earnings tumbled, again with the exception of Levi’s, which posted a 4 percent increase.

Wrangler and Lee parent Kontoor Brands saw earnings fall 118 percent to a net loss of $2.71 million, while earnings at VF declined a staggering 475.6 percent to a net loss of $483.8 million.

Specialized brands saw an equally unfortunate fate. Columbia Sportswear’s sales in the quarter were down 13 percent, but net income decelerated 99.7 percent to $200,000. Puma’s sales fell a slight 1.3 percent, but the sneaker-driven athletic company saw earnings decline 62 percent to $39.2 million.