US apparel sector to see steady growth in 2017: Moody’s

December 19, 2016 - United States Of America

Apparel industries in the US will experience steady performance in the year 2017, according to a research. It is expected that apparel sales will increase by 6-8 per cent due to direct-to-consumer selling and exposure in international market. Foreign exchange and excess inventory will help in acceleration of the sector’s operating profit by 5-7 per cent.

The outlook for the US retail industry in the year ahead is stable, with operating income for the sector growing between 4 per cent and 5 per cent, and sales in the range between 3-4 per cent, according to the study carried out by Moody’s Investors Service.

The research also states that a majority of the apparel sellers will continue to emphasise on top-line, organic growth through direct-to-consumer channels, buoyed in part by the significant international expansion opportunities for many brands.

Six of the retail industry’s 13 sub-sectors’ operating income growth will exceed by 5 per cent, led by home improvement, specialty and dollar stores. The performance of broader industry will continue to be tempered by warehouses, apparel and footwear sellers, department stores and office supply stores.

“Dollar stores will be among the top-performers in 2017, as cash-strapped consumers look to save money on multiple fronts,” said Mickey Chadha, Moody’s vice president -- Senior Credit Officer. “Home improvement stores such as Home Depot and Lowe’s will benefit from the continuing robust recovery of the housing market, and the subsiding deflationary pressure on supermarkets in 2017 should result in the sub-sector outperforming the broader retail industry.”

However, it is also expected that the apparel and footwear sellers will be squeezed as consumers will continue to spend more on healthcare, rent, home-related products, electronics and cars, said the report. (RR)