The operating margin for apparel retailers is anticipated to expand by 175-200 basis points (bps) year over year to 7.75–8%, with help from price increases, better fixed-cost absorption, and a higher percentage of private brands. Higher input costs will, however, constrain the operating margin 50–70 basis points (bps) below the pre–pandemic level. Domestic cotton costs nearly doubled between April 2020 and May 2022, making up one of the major inputs. They have moderated somewhat after June 2022, although they are still anticipated to be higher than they were before the outbreak.
Through timely equity raising, clothing retailers were able to effectively manage their balance sheets during the pandemic and lessen the effects of revenue and profitability fluctuation. Now that revenue and profitability have improved, garment retailers are doing better financially.