GlobalData analysts examine the data to give Just Style an exclusive overview of how the top ten global apparel companies have fared during the Covid pandemic.

When the first Covid outbreak instigated lockdowns of ‘non-essential’ stores across the globe, including clothing and department stores, some apparel companies were quick to adapt to the ‘new normal’. Most already had a thriving online presence or had upped their direct-to-consumer sales models. But for those that relied solely on bricks and mortar, lockdowns led to a complete halt in business. 

How did apparel companies ride out the pandemic?  

Consumers returning to shops and offices in 2021 was a positive for many apparel companies in terms of sales. It was especially good news for those that had held out until their stores could reopen to resume business, such as Primark which doesn’t have an e-commerce site but is owned by Associated British Foods so it has an alternative revenue stream that can keep its apparel business going.

Some smaller companies such as the owner of the retailer New York & Co, however, could not survive lockdown closures and ultimately had to file for bankruptcy.

Even before the pandemic, the rise of e-commerce and direct-to-consumer models had resulted in a struggling high street, with large department stores such as Debenhams being particularly vulnerable.  

On the plus side, online retailers did well throughout the pandemic, and sports and casual wear in particular boomed with consumers favouring comfort while working from home and wanting to take up fitness activities. In fact, the sportswear market is expected to grow 25% between 2021-2025 as consumers continue to adapt to a lifestyle change linked to Covid. 

Although the sales of suits and partywear improved when formal occasions such as weddings were back on the cards, it wasn’t enough to save formal menswear brand TM Lewin, or more recently C&A Europe subsidiary, Canda International. 

And the pandemic is not over yet. Just as many western countries have ‘reopened’, new strains of the virus in China have led to new lockdowns, with more delays at docks and headaches for the wider apparel supply chain. 

As we mark over two years since the Covid pandemic started, Just Style quizzes the analysts at its parent company GlobalData to investigate how the top ten apparel retail companies fared overall during the rollercoaster ride of lockdowns and reopenings throughout the world.

The top ten apparel retail companies were chosen based on having the highest clothing and footwear sales in value terms in 2020, according to GlobalData’s Apparel Intelligence Center.

1. Nike, Inc

US sporting goods giant Nike Inc shelved its plans to invest in its Arizona-based footwear-making facility in July 2020, siting Covid as the reason. At the time Nike was hit hard in its fourth quarter as store closures and a 38% drop in sales pushed it to a loss. For the three months to 31 May 2020, the company swung to a quarterly loss of US$790m, compared with a net income of $989m a year earlier, while revenues fell 38% to $6.3bn. 

However, the world’s most valuable apparel brand of 2021 (with a valuation of over $30bn) did bounce back, and by March 2022, Nike saw revenue increase by $514m in the third quarter to surpass the pre-pandemic period in FY2019/20, largely, it claimed, due to the success of ramping up its direct-to-consumer (DTC) strategy. 

Neil Saunders, GlobalData Retail’s managing director believes Nike cannot discount further supply chain disruption or more competition

Saunders says: “The main issue for Nike has been supply chains and with a lot of production coming out of Vietnam, the company has faced something of a crunch. However, it seems to have largely worked through these issues and the latest results show a very strong growth – especially in the US. Sales have been boosted by more consumers working out, and by the rising popularity of casual and comfortable sneakers now fewer people are going into the office”

He points out that Nike has continued to pull back from third-party distribution in favour of a direct-to-consumer model and this has helped it to improve margins and more effectively manage supply.

All that said, however, he points out: “Further supply chain disruption cannot be discounted as shipping times from factories remains extended. Nike also faces more competition from Reebok – which is now under new ownership and from Lululemon which is entering the sneaker space. These things are small threats for the global behemoth, but they’re things it will need to keep an eye on”.

2. Adidas AG

As early as March 2020 and just before the first European lockdowns, German sportswear giant Adidas announced it was expecting sales to drop by up to EUR1bn (US$1.13bn) in Greater China in the first quarter, due to Covid. Adidas said revenues slumped 80% in Greater China below the prior-year level between Chinese New Year and the end of February.  

By November, the brand had seen a strong sequential sales improvement in the third quarter thanks to a recovery in its business but offered a rather cautious outlook for the remainder of the year as lockdowns continued worldwide.  

Adidas appeared to be better protected than other apparel retailers with its reputation for high-quality sports-inspired casualwear and technical sports clothing, making its products desirable in the long term. 

This year (2022) saw Adidas formally complete the divestiture of Reebok to Authentic Brands Group and it has also entered the Metaverse, with Adidas announcing plans to hire thousands of new employees in the coming months, including over 500 positions to be filled in the areas of digital, IT and data and analytics. 

Darcey Jupp, GlobalData associate apparel analyst explains China is a key market that Adidas still needs to crack but she remains positive about its full year outlook

Jupp points out that “despite its sportswear specialism, Adidas felt the full force of the pandemic, with its lacklustre proposition failing to capture the attention of consumers unlike its rivals Nike and Puma”. She says: “Intense supply chain problems in Q3 and Q4 of FY2021 heightened its issues, with the brand finishing the year 1.3% down on FY2019.”

Jupp believes a key market for Adidas to crack is China, where the rapidly growing apparel market presents attractive opportunities for global brands, yet she says it has faced a boycott due to its stance on alleged human rights violations of Uyghurs, and sales in the region increased just 3% on a currency-neutral basis in FY2021 when it previously expected to hit double-digit growth.  

She is positive about the brand’s success in 2022 and says: “Adidas’ new ‘Own the Game’ strategy is still in its infancy, and a clear focus on its key markets and reinvigorating its proposition with strong collaborations should push Adidas to recover in FY2022.”

3. Inditex SA

Inditex, owner of brands including Zara and Bershka, recorded a EUR287m (US$316m) inventory charge on the back of the Covid outbreak in the first few weeks of March 2020. Between 1 and 16 March that year, store and online sales in local currencies had decreased by 24.1%, when the group had temporarily closed 3,785 of its stores across 39 markets in a bid to control the spread of the virus. 

Covid continued to severely impact the company’s Q1 results with its key European market being badly hit by a third wave of the pandemic, however the ‘destination appeal’ of its Zara stores aided its retail reopening in June 2021.

This year (2022) Inditex has recovered enough to invest $269m (EUR238m) on a complex that will house Zara’s apparel sales and design teams in Arteixo, Spain. The company’s full-year sales in local currencies exceeded pre-pandemic levels and were boosted by online revenue from its digital channels, which reached EUR7.5bn ($8.3bn) and accounted for 25.5% of total sales. 

Pippa Stephens, GlobalData apparel analyst reveals investments in online and trend-led products have aided the company’s success during the latter part of the pandemic

Stephens explains that “while Inditex experienced dampened demand during the beginning of the pandemic, as the group’s fashion-forward, dressy styles were rendered mostly redundant during the lockdowns, the group has rebounded well in FY2021/22, aided by its superior trend credentials, with sales in constant currencies up 3% on a two-year basis”.

She is quick to address that its significant investments in online have been crucial to the group’s success with sales via this channel rising by 14% in FY2021/22, on top of the strong growth of 77% experienced in the prior year.

She says: “Of its brands, Zara has continued to be Inditex’s star performer, with its fast reaction to trends driving its top-of-mind appeal among shoppers, while Massimo Dutti has struggled the most, as its formal offering has been less favoured by shoppers as they continue to work from home and office dress codes become more casual.”

4. Hennes & Mauritz AB (H&M Group) 

By the start of the first lockdown in Europe, Swedish fashion retailer H&M Group was already considering job cuts as the global spread of the virus continued to impact its operations. Then, 3,441 of its 5,062 stores were closed and of its remaining stores, subdued demand had “significant negative impact” on sales in March 2020. 

H&M Group had mobilised its supply chain to produce PPE to be delivered to hospitals and health care workers after newly appointed CEO Helena Helmersson told the European Union the retailer was keen to help. However, the brand soon found itself at the centre of allegations regarding worker layoffs at one of its Indian supplier facilities, when a factory closure resulted in more than 1,000 employees being left out of work. 

By November 2021, the company had announced it was expanding its distribution centre in Stryków, Poland to strengthen its supply chain in Eastern Europe and only a month later, it revealed that Q4 sales were back to pre-pandemic levels. Since then, H&M has concentrated on offering customers easy and accessible ways to prolong the lifecycle of their garments, and its wider sustainability agenda.  

Emily Salter, GlobalData senior apparel analyst suggests H&M’s lack of online presence and Gen Z appeal mean its lagging behind its nearest rival

Salter says: “H&M paid the price for being an online laggard throughout Covid, with its heavy reliance on stores and European markets being detrimental to its sales. Because of this, H&M’s revenue is yet to recover to pre-pandemic levels, with sales 14.5% lower in its FY2020/21.”

She points out that H&M is lagging behind key multichannel rival Inditex, as its eponymous brand lacks the same reputation for fashionable apparel as Zara, and says the group does not have the same appeal among Gen Z shoppers as Inditex has with brands Stradivarius and Bershka.

On the plus side, she notes that “H&M will benefit from its low-price points, which will be especially attractive to consumers as inflation rises and disposable incomes fall”.

5. Fast Retailing Co Ltd (Fast Retailing) 

Fast Retailing, which owns Uniqlo, rolled out a series of measures to cut the risk of Covid to its manufacturing partners and workers across its supply chain in April 2020, including payment to its suppliers for complete orders or part orders. The company also worked with the United Nations International Organization for Migration (IOM) to ensure vulnerable workers based outside of their home country or region received adequate support from their employer factory. 

By July, the virus had taken its toll, and Fast Retailing halved its profit expectation for the year, saying it expected an annual operating profit of JPY130bn, with Net profit expected to be 47.7% lower year-on-year at JPY85bn. 

By January 2022 the firm was on the road to recovery and said for the three months to August 2021, operating profit rose 5.6% to JPY119.4bn (US$1bn), while revenue increased 1.2% to JPY627.3bn despite declines in its Uniqlo Japan and greater China unit, as well as its dessert brand, Gu. 

Louise Déglise-Favre, GlobalData associate apparel explains Fast Retailing is currently experiencing growth in two key regions

Déglise-Favre says “Fast Retailing had seen a slow recovery in early 2021, held back by its more formal brands, such as Theory and Comptoir des Cotonnier, and its overall low online penetration.” However, she highlights the group’s casual ranges across the Uniqlo and Gu brands allowed it to mitigate its losses and a renewed focus on its online proposition boosted the company’s performance in the second half of 2021.  

She concludes: “Fast Retailing has benefitted from a surge in demand and brand awareness in North America and Europe in late 2021, allowing it to grow within these regions.”

6. Moet Hennessy Louis Vuitton SE (LVMH)

At the start of the pandemic, manufacturer and marketer of luxury fashion goods, LVMH switched from manufacturing perfume to hand sanitiser for French hospitals. 

Headquartered in Paris, France, the company reported revenues of EUR64.215m for FY2021, an increase of 43.8% over FY2020. In FY2021, the company’s operating margin was 26.7%, compared to an operating margin of 17.9% in FY2020. In FY2021, the company recorded a net margin of 18.7%, compared to a net margin of 10.5% in FY2020. 

Déglise-Favre highlights LVMH’s resilience during the pandemic and success with attracting a younger audience

She explains: “LVMH surpassed its 2019 performance levels early in 2021 and largely benefitted from a boom in demand for luxury apparel. The fashion and leather division of the conglomerate did exceptionally well, driven by outstanding performances from Louis Vuitton and Christian Dior.”

She adds: “LVMH’s growth was particularly strong in Asia, boosted by Asian consumers’ strong appetite for luxury fashion, especially as they turned to their home markets as international travel remained difficult for most of the year. Overall LVMH has been successful in making its fashion brands desirable to a global audience but also to an increasingly younger one.”  

Déglise-Favre points out its brands have established themselves as inspirational brands for many Gen-Z consumers through targeted social media marketing campaigns and relevant brand ambassadors.

7. The Gap Inc (Gap)

Gap struggled with the effects of lockdowns in 2020 and ended the year with in-store sales down by 20%. In terms of individual brands, third-quarter net sales at Old Navy Global grew 15% year on year, while comparable sales were up 17%. Net sales were down 14% at Gap Global, while comparable sales fell 5% on the back of reduced stores and lower traffic trends partially offset by a strong online performance.  

The company made the decision to off-load its Janie and Jack business in March 2021 to brand investment platform Go Global Retail as part of its aim to focus resources on its billion-dollar Old Navy, Gap, Banana Republic and Athleta labels. By May the company had come back from a $932m net loss in Q1 in 2020 to make a profit of $166m, with the Old Navy brand named its star performer. Banana Republic on the other hand, lagged behind with sales due to its focus on semi-formal work apparel when most were working from home. 

In July 2021 Gap made the decision to close all of its company-operated Gap Specialty and Gap Outlet stores in the UK and Republic of Ireland by the end of September 2021. The company continued selling online in these markets and sited pandemic-related closures and changing consumer behaviours, such as a dramatic shift to e-commerce shopping across the industry. The closures were also made to remove fixed costs from its structure and drive improved profitability.

Later that year, Gap partnered with UK clothing and homeware retailer Next Plc to manage the Gap brand business in the UK and Ireland as a franchise partner. In March 2022 the first Gap-branded shop-in-shop inside Next’s Oxford Street, London store opened. Gap announced a global Q4 net loss of $16m for the final quarter of 2021, however the fiscal year 2021 net sales of $16.7bn dollars represented a 2% increase versus FY 2019, while comparable sales grew 8% versus 2019.

Gap Inc’s brands displayed mixed results throughout the pandemic explains Saunders

Saunders says: “Overall, Gap Inc. has not had a terrible pandemic. However, the picture is very mixed across the various brands. Banana Republic has been crushed as consumers have turned away from smart casual with the rise of working from home. However, the brand has used the pivot as an opportunity to reinvent itself which appears to be having some traction. Old Navy saw an initial surge in sales, thanks to its casual focus. However, recent results have been poor as it has suffered from supply chain problems which have restricted inventory.

He adds: “Performance at the core Gap brand has been reasonable, and the brand has provoked interest through its partnership with Kanye and various drops. However, outside of this Gap is still a brand in search of a purpose. Athleta has been the star of the show with strong growth thanks to the increase in consumers buying athleisure products.”

The one thing all Gap brands did very well at during the pandemic he says, was masks – which he points out arrived in stores quickly with a range of innovative designs.

8. Kering SA

At the start of the pandemic Kering’s brands Balenciaga and Yves Saint Laurent provided the French health service with three million surgical masks, which the luxury goods group purchased and imported from China, as part of efforts to combat the Covid pandemic in its home country. 

By April 2021, lockdowns had been reintroduced across most of western Europe and consumer confidence remained low, as did the demand for luxury goods. The UK’s reopening of shops and resurgence of social activities did provide some solace for Kering in Q2, however a lack of tourism held back luxury spend. 

Kering benefitted from the growing demand for luxury in the US and Asia at the end of 2021 explains Jupp

She says: “2020 was a tough year for luxury as the Covid pandemic hit the sector hard, with no tourism and the demand for apparel crashing. However, Kering was resilient in the latter end of the year and into 2021, benefitting from the quick bounce back in luxury demand in the US and Asia.”

Jupp highlights the group finished FY2021 comfortably up 13% on FY2019 on a comparable basis, fuelled by impressive growth for Saint Laurent and Bottega Veneta, up 23.0% and 28.7% respectively versus FY2019 on a reported basis.  

She also points out that for some time, its largest brand Gucci had been struggling. She says: “As more consumers moved towards minimalist clothing in the pandemic, its maximalist aesthetic fell out of favour, but it managed to find its feet in Q4 FY2021 off the back of its successful centenary collections and saw a recovery, albeit just 1.1% up on FY2019.”

9. HanesBrands Inc (Hanesbrands)

T-shirt and activewear maker HanesBrands ramped up the production of masks and protective garments at the start of the global pandemic. Best-known for brands such as Hanes, Champion, Maidenform and Playtex, in early April 2020 it started converting its production to make reusable and washable all-cotton 3-ply face masks for the US Department of Health and Human Services, with an initial target of 320 million masks. 

Almost a year later, in February 2021, the company revealed plans to exit its personal protective garments (PPE) business and explore strategic alternatives for its European innerwear unit as it looked to the future, which led to the company’s stock price soaring by nearly 25%. 

By May, the company had announced it was ‘revitalising its core’ with a Full Potential plan that focused on doubling its share with consumers under the age of 39. HanesBrands also decided to apply a more consumer-centric and globally coordinated approach to its product design and innovation, and increased its investments in brand marketing and e-commerce initiatives. 

In February 2022, HanesBrands outlined plans to sell its US Sheer Hosiery business and raised its 2024 financial targets to about $8bn of revenue. 

HanesBrands activewear business was the star of the show during the pandemic suggests Saunders

He points out that HanesBrands performed well during the pandemic and has grown both sales and profits over 2019 levels, adding: “Arguably, the company is now in a better position than it was before the pandemic”.

Saunders says: “A lot of this growth has come from increased demand in both the US and Europe, with supply constraints translating into lower discounting and higher margins.”

However, he highlights the company’s activewear business has been the star of the show with sales up by 11% over 2019.

Saunders says: “The Champion brand has performed very well here with sales up 21%. All of this is down to an increased interest in fitness and casual, comfortable clothing among consumers. The essentials business, which covers things like underwear and socks, has performed reasonably but has grown at a slower pace (3% over 2019). It has also suffered more from rising inflation and supply chain costs which has pushed down operating margins.”

10. PVH Corp

Apparel giant PVH Corp closed most of its Calvin Klein and Tommy Hilfiger stores in China amid the initial Covid outbreak in February 2020.

In April that year, PVH completed the sale of its Speedo North America swimwear business to Pentland Group, the parent company of Speedo International, for $170m.

That same month, PVH announced that it was trying to offset the fallout from its store closures across North America and Europe by reducing and redeploying its inventory commitments. Store closures and government-imposed restrictions led to reduced traffic and consumer spending during the first quarter of 2020, in addition to supply chain problems. However, the company benefitted from the Speedo sale with over $1.3bn in cash and available borrowings. 

In July 2020, a cost-cutting exercise saw the brand cut 450 of its office workforce in North America. This came as PVH reported an “unprecedented” decline in revenue and earnings. In fact, revenue for the first quarter ended 3 May, decreased 43% to $1.34bn, while net loss amounted to $1.1bn, compared to net income of $82m the year before. 

Saunders believes PVH has positioned itself to focus on its power brands with the greatest long-term potential

“PVH was hit hard in the initial stages of the pandemic as interest in its core brands dropped back due to reduced socialising, cancelled special events and occasions, and many working from home,” he explains.

He points out that store closures also reduced wholesale orders as retailers were reluctant to buy inventory. Despite this, the company did see some gains in its direct-to-consumer sales as more people pivoted to buying online.  

In saying this, Saunders believes that since the early part of the pandemic, PVH has bounced back strongly with good sales growth in 2021 – especially on the wholesale side. That said, he highlights that overall revenues remain below where they were in 2019.

He says: “Some of this is down to supply chain disruption which has affected deliveries and inventory levels. Some is also because PVH has exited its Heritage Brand business with the sale of brands like IZOD and Van Heusen to Authentic Brands Group.”

Saunders concludes: “Given the shift away from these kinds of offers by consumers, this was a sensible move which will allow PVH to focus on power-brands which have greater long-term potential.”

 By Just Style