TNG Investment and Trading JSC., which manufactures clothing and footwear for various domestic and international brands, reported first half revenues and net profit were down 10 percent and 29 percent at VND1.84 trillion ($79.3 million) and VND66 billion ($2.84 million).
The Vietnam National Textile and Garment Group (Vinatex) reported a 15 percent decrease in revenues and 25 percent decrease in profits despite partially switching to manufacturing face masks and protective clothing and retaining all its workers.
The situation was “better than predicted,” according to Vinatex’s deputy general director, Cao Huu Hieu, who said the company had anticipated declines of 30 percent and 50 percent.
Song Hong Garment JSC. reported its profit had fallen by 44 percent to just VND122 billion ($5.26 million).
RTW Retailwinds Inc., one of its major partners in the U.S., has filed for bankruptcy but still owes it around VND166 billion ($7.16 million).
According to a report by the Ministry of Industry and Trade, Vietnam’s apparel production in July increased by 13.2 percent from June but was nearly 5 percent down year-on-year in the year to date.
Exports of textiles and footwear are down 21 percent and 8 percent in the first seven months of the year.
While the switch to making face masks and protective clothing was considered a lifesaver for many garment firms in the first half of the year, a global oversupply of these products have caused prices to plummet. Firms such as TNG have even stopped manufacturing masks and started focusing on high-value products.
With many countries, including Vietnam, being hit by a new wave of Covid-19, getting orders has also become a difficult task for the majority of garment firms. Many did not receive a single order for high-value products in the second half of the year, according to the ministry.
Another challenge facing the garment industry is the fact that consumer behaviors have changed dramatically due to the pandemic.
Recent surveys by the global professional services company Deloitte of the international market and Vietnamese garment producer Vinatex of the domestic market show that the top priorities for consumers now are medicines, food and savings. While clothing did come fourth in the list, the budget for clothes was very limited.
“The trend of consuming less, using basic products more and low purchasing power will dominate the fashion market in future,” Le Tien Truong, CEO of Vinatex, said.
Vinatex forecast the country’s garment exports to decrease by 14-18 percent year-on-year in the second half, and full-year exports to drop by 16 percent to around $32.75 billion.
The International Textile Manufacturers Federation said if the Covid-19 pandemic lasts until the end of the year, the global textile and garment trade would decrease by 15-20 percent this year to $600-640 billion, but even if it is controlled well, it would still take at least until the third quarter of next year for demand to return to normal.