Recent announcements of quarterly sales for U.S. retailers have left analysts reeling, manufacturers stunned and consumers cautious.
While it is still too early to assess whether this heralds a sustained economic slowdown, experts say, there is no doubt the U.S. economy stumbled a bit in Q2 — especially disappointing after a relatively solid first quarter.
As of this writing, retail disappointments have yet to trickle down to yarn spinners, many of whom have been struggling to meet increased demand as a result of diminished resources. “Mills are still running,” said one expert. “Many have a backlog they are trying to get out from under. After that, it will be just wait and see.”
“It’s hard for some spinners, especially smaller ones that aren’t entrenched in a niche market, to turn a profit,” said another industry expert. “They are facing increased prices for energy and raw materials, a reduced labor pool and supply chain issues. They have to raise prices to account for all of this, but they also have to be careful not to price themselves right out of business.”
The analyst continued: “At some point, we were expecting some relief from these issues as the year progressed, but now we are not certain when — or even if — things will return to normal. When you look at the supply chain, for example, even short tangles are hard to fix, much less the global dysfunctionality currently present.”
Yarn spinners and others within the fiber/textile/apparel complex are keeping their fingers crossed that recent sales reports do not take the shine off of what was a mostly positive “State of the Textile Industry” address by NCTO Chairman David Poston.
“We all faced a litany of challenges in 2021, but I am proud to stand here today and say that our industry’s resilience and innovative spirit pulled us through and put us on a path of growth,” Poston told NCTO members at that organization’s annual meeting in early May. “If 2020 was a year marked by an economic downturn and once-in-a-generation pandemic and health crisis, 2021 was defined by a rebound of remarkable proportions in our industry, nearly on par with the performance of pre-pandemic levels in 2019.” Year over year, textile industry shipments, exports and capital expenditures all increased in 2021.
However, in April, households cut back on a number of purchases, leading to flat sales from several retailers. Target was among the first to break the bad news, noting that, for the fiscal quarter ended April 30, the company posted adjusted earnings of $2.19 a share. Analysts expected Target to earn $3.07 a share, on revenue of $24.48 billion. Last year it earned $3.69 a share on sales of $24.2 billion. Other retailers followed with earnings reports below expectations. As a result, the Federal Reserve cut its second-quarter gross domestic product (GDP) growth estimate to a 1.1 percent annualized rate from the previous expectation of 1.6 percent. In the first quarter, the economy grew by 3.2 percent.
The drop in retail sales reflects a corresponding drop in consumer confidence. According to The Conference Board Consumer Confidence Index®, consumer confidence decreased slightly from March.
“Consumer confidence fell slightly in April, after a modest increase in March,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board.
“… purchasing intentions are down overall from recent levels as interest rates have begun rising. Meanwhile, concerns about inflation retreated from an all-time high in March but remained elevated. Looking ahead, inflation and the war in Ukraine will continue to pose downside risks to confidence and may further curb consumer spending this year.”
Ultimately, those close to industry say that finding a way to curb inflation and restore stability to Europe is likely to go a long way toward getting the global economy back on solid ground.
Unifi Recognizes Sustainability Champions
Unifi Inc., an innovator in recycled and synthetic yarns, announced on May 24 the recipients of its fifth annual REPREVE® Champions of Sustainability awards, which recognize brand, textile and retail partners that have demonstrated a true commitment to supporting a more sustainable world.
“We are thrilled to announce the 2022 Repreve Champions of Sustainability,” said Eddie Ingle, CEO of Unifi. “We applaud the demonstrated commitment to sustainability, which has allowed us to recycle more than 30 billion bottles to date.”
Unifi’s Repreve Champions of Sustainability awards will be presented to 39 brand and retail partners that have transformed 10 million or more recycled plastic bottles and 53 textile partners that have transformed 50 million or more recycled plastic bottles through the use of Repreve performance fibers.
Cone Denim® has launched its Mental Health Awareness Selvage Denim in support of Mental Health Awareness Month. This is the newest fabric within the Cone Community Collection, a series of fabrics designed to support various causes and organizations that align with the values of Cone Denim. Cone will donate a portion of sales related to the newest selvage to the Child Mind Institute, a nonprofit dedicated to transforming the lives of children and their families struggling with mental health and learning disorders.