Because the summer season involves a detailed, hot-button points like tariffs, manufacturing and pricing are persevering with to dominate conversations at style manufacturers.
After the chaos of the previous few months, some corporations are managing to discover a method ahead. Abercrombie & Fitch Co. not too long ago reported file internet gross sales of $1.2 billion for its second fiscal quarter. City Outfitters, Inc. reported a file $252.2 million in internet revenue for its first half of the yr. Hole Inc., too, is constant to reap the rewards of its bigger turnaround, reporting optimistic comparable gross sales for the sixth straight quarter.
Nonetheless, the style trade — like a lot of retail — stays on considerably shaky floor in the case of predicting demand and gross sales. Many attire and footwear manufacturers manufacture overseas, the place new, greater tariffs threaten to throw a wrench of their progress plans. World provide chain prices are on observe to rise as much as 7% above inflation by the fourth quarter, per Kearney. And attire and footwear are thought-about discretionary classes — which means that, for a lot of consumers, garments or footwear might take a backseat to necessities like meals and gasoline.
Timing is one other hurdle. Manufacturers are keeping off macroeconomic headwinds as they put together for the ultra-important vacation interval. PwC’s 2025 Vacation Outlook survey, which was carried out in June, discovered that 84% of customers stated they anticipated to chop again spending by the tip of December, particularly on clothes (36%) and big-ticket gadgets (32%). Greater than half (53%) stated value will increase would have an effect on their spending selections in the course of the holidays.
As Andrew Rees, the CEO of Crocs, stated final month, “The present setting within the second half is regarding, and we see that clearly mirrored in retail order books.”
Listed here are three foremost traits that style manufacturers and retailers highlighted in earnings studies and earnings calls over the previous few weeks.
Continued uncertainty from tariffs
Manufacturers are persevering with to really feel the fallout from tariffs, particularly with charges not too long ago having gone up for a number of international locations, together with India and Brazil. Now, some corporations say the hit to their companies may very well be worse than anticipated.
As an example, City Outfitters, Inc. — which owns City Outfitters, Anthropologie and Nuuly — acknowledged that “the panorama continues to vary” in the case of duties. The corporate, which largely manufactures in Asia, now expects successful of 75 foundation factors to its gross margin for the second half of the yr. Again in Could, COO Frank Conforti had predicted “probably a unfavourable 20-basis-point impression within the again half of the yr.”
Talking on the corporate’s second-quarter earnings name final week, Conforti stated City Outfitters, Inc. is making an attempt to mitigate harm from tariffs by negotiating higher phrases with distributors, diversifying suppliers, shifting transportation from the air to the ocean and “strategically adjusting pricing.” Nonetheless, he additionally warned in opposition to any knee-jerk reactions, saying, “We wish to defend our buyer expertise, and meaning defending our product.” He added, “We’re going to attempt to do the perfect that we will, ready for the mud to settle earlier than we begin to make in depth adjustments.”
Hole Inc., which reported its second-quarter earnings final week, estimated that tariffs might trigger a internet impression of as a lot as $175 million in its 2025 fiscal yr — up from final quarter’s estimate of $150 million. Hole Inc. says it’s taking steps to mitigate the results of tariffs, together with decreasing its reliance on sure areas for manufacturing and making adjustments round “focused pricing.”
Talking on an earnings name, Hole Inc. EVP and COO Katrina O’Connell stated, “We stay targeted on sustaining the momentum and market share positive aspects that our reinvigoration playbook is driving as we pursue these plans.” The corporate doesn’t count on “the annualization of tariffs in 2026 to trigger additional working revenue declines subsequent yr,” O’Connell famous.
Below Armour, which reported earnings in early August, expects to incur $100 million in extra prices in fiscal 2026, on account of tariffs. Though primarily based within the U.S., Below Armour manufactures the world over, in international locations together with China, Vietnam and Indonesia. Talking on the corporate’s first-quarter earnings name, CFO David Bergman stated Below Armour is implementing countermeasures to cope with the tariffs, together with sharing prices with companions and suppliers and revisiting costs.
The tip of de minimis
One other tariff-related subject — the tip of the de minimis loophole — additionally popped up in earnings calls. The longtime coverage had allowed many U.S. manufacturers to keep away from paying import tariffs on packages valued at lower than $800. The de minimis exemption ended for imports from China and Hong Kong in Could, however ended for all international locations on August 29, underneath an government order from U.S. President Donald Trump.
A number of small attire and footwear manufacturers voiced considerations concerning the change to Fashionable Retail, saying the tip of de minimis meant they wanted to desert suppliers or push off orders. However, publicly, bigger style corporations have been fast to shrug off the tip of de minimis, saying it might give them a leg up on their competitors.
In its earnings name final month, ThredUp stated the coverage swap might really profit the corporate, which makes income from promoting secondhand merchandise. “Although the total impression continues to be unsure, we imagine the closure of the de minimis exemption is more likely to price greater costs for ultra-fast style items and to scale back manufacturing volumes, each of which might proceed to be positives for ThredUp,” CEO James Reinhart stated.
City Outfitters, Inc. additionally reiterated that its enterprise can be tremendous. On the corporate’s earnings name, Conforti, the COO, stated the tip of de minimis had an “immaterial impression” on the corporate. “We have now only a very small quantity of gross sales that … we obtain that profit on,” he famous.
The corporate’s chairman and co-founder Dick Hayne chimed in, “So far as the URBN model is worried, [the end of de minimis] can solely assist.” He continued, “Among the of us who had been huge into this — Shein and a few others — are clearly having somewhat bit [of a] tougher time dealing with a few of the new laws. So, to the diploma that they’re delivery much less, it ought to assist us.”
Abercrombie & Fitch Co., for its half, had already been decreasing its reliance on China and made gentle of the change to de minimis, too. Talking on an earnings name final week, SVP and CFO Robert Ball stated the corporate had “minimal publicity” to the de minimis exemption. He added, “Globally, we stay properly diversified throughout 16 international locations, and the group is constant to guage provide chain footprint adjustments, vendor negotiations and working expense efficiencies that can largely take form in fiscal 2026.”
Vacation hopes
With Black Friday lower than three months away, style manufacturers are additionally beginning to lay out their plans for getting forward of the vacations.
For a lot of, these efforts contain splashy campaigns, like Hole’s latest work with international pop group Katseye. City Outfitters, Inc.’s CFO Melanie Marein-Efron spoke of “outsized advertising and marketing investments” and a “pre-holiday push” to extend buyer acquisition going into the ultra-important fourth quarter. On Tuesday, Anthropologie, one among URBN’s largest manufacturers, introduced it was teaming up with actress Camila Mendes, its first huge marketing campaign underneath a brand new chief advertising and marketing officer.
Abercrombie & Fitch Co.’s Ball additionally talked about that, in the course of the third quarter, the corporate would improve advertising and marketing investments yr over yr by greater than 100 foundation factors to assist key partnerships. This month, it introduced that Abercrombie & Fitch can be the NFL’s official style associate.
Different corporations are specializing in product improvement to propel consumers by their doorways this winter. Allbirds talked about it’ll debut a brand new Kiwi assortment in November, consisting of a slipper, a clog and a low boot. The kinds are “made for a way individuals actually stay in the course of the holidays: not dressed up, however heat, straightforward and welcoming,” stated CEO Joe Vernachio.
Vernachio additionally stated that, this autumn, Allbirds will introduce “a broader vary of latest kinds and supplies than ever earlier than.”
“In whole, we count on to launch 19 new kinds this season, a significant step ahead from a yr in the past,” he stated. “We’ve usually stated that, to win on this market, you want a relentless circulation of compelling product, and we’re delivering on that.”
Whereas there are nonetheless unknowns across the holidays, some CEOs are shifting ahead with rosy outlooks. Richard Dickson, the CEO of Hole Inc., stated, “What offers me confidence going into the vacation, for Hole, is … we’re delivering persistently.” He added, “We proceed to do what we are saying we’re going to do.”
