Italian Fashion to See 30% Drop in 2020 Revenues as New Restrictions Kick Off

MILAN — The Italian fashion, textile and accessories industry, valued at almost 100 billion euros, might see a decrease of 29 billion euros in revenues in 2020.

This is what emerged from research conducted by Confindustria Moda, an association that groups 64,300 companies in the fashion sector.

While data provided by the association during a digital press conference on Wednesday showed that the sector will close the year down 29.7 percent on average, about 29 percent of the 308 companies surveyed by Confindustria Moda expect to register even larger decreases, between 35 percent and 50 percent compared to last year. Fifteen percent of the companies forecast they will lose 50 percent of their business.

The economic forecasts released by Confindustria Moda, however, don’t take into consideration the potential effects of the second wave of COVID-19 infections, which are spiking across the country.

In fact, in order to contain the pandemic, the Italian government — following the decisions of several other European countries, including France, Germany and the U.K, — has set a series of restrictions which are going into effect on Friday until Dec. 3.

As part of the measures, a nationwide curfew will be effective every day from 10 p.m. to 5 a.m.; movements from one region to another will be strictly limited to work or health reasons, and big stores and malls, except for supermarkets, will be closed during weekends. In regions more severely hit by the pandemic, including Lombardy, where Milan is located, the restrictions will be more drastic. All nonessential retail activities, including fashion and accessories stores, will be shut down for at least two weeks, as will bars and restaurants, which will only be able to offer takeaway and delivery services.

Differently from the lockdown imposed in March, all manufacturing activities across the country will remain open in accordance with the health measures aimed at limiting infections.

In the third quarter of 2020, according to the Confindustria research, Italian fashion and textile companies saw their revenues fall 27.5 percent compared to the same period last year.

In the first and second quarters of 2020, the situation was even worse with decreases of 36.2 percent and 39 percent, respectively, compared to the same periods in 2019.

Despite the small increases registered in the third quarter, the fashion and textile sectors showed less resilience compared to others in Italy, which from July to September saw its gross domestic product gain 16.1 percent compared to the previous quarter.

A sector of the Italian economy traditionally focused on exports, in the first seven months of 2020 domestic fashion, textile and accessories companies registered a 26.4 decrease in sales destined to international markets compared to the same period last year.

Also, according to the research, 62 percent of the companies surveyed said that no actual restart or rebound effect was registered in any market. Only one entrepreneur out of three perceived a certain dynamism in some strategic countries, including Germany, France and China.

“China is unquestionably the only market on the global scale that showed a certain dynamism in the last few months. However, the majority of the Italian companies in our sector are small and medium-sized and the biggest percentage of them are not so active in China,” said Confindustria Moda president Cirillo Marcolin, adding that he hopes that after the elections, the United States, a key market for Italian companies, will find a new stability, bringing a positive impact to the domestic economy. However, the outcome of the U.S. presidential election remained unclear on Wednesday, with votes still being counted in key states and observers saying that no winner might be declared for days or even weeks if the outcome ends up being fought over in the courts.

Marcolin added that, although the Italian government banned layoffs until March 2021, many companies will have to reorganize after the pandemic, probably cutting jobs. “For decades we have praised the flexibility of the small companies that create the Made in Italy sector. However, I think that ‘small is beautiful’ cannot continue to be the right concept for the future of our country,” Marcolin said. “I think that small companies should question themselves and that some entrepreneurs might take a step back with the intent of reinforcing their firms’ financial and distributive structure. I think the future will continue to bring us more unwelcome surprises and we have to be ready to face new challenges.”

Separately, according to research conducted by the Cerved Rating Agency, the Italian fashion industry will be one of the sectors most affected by the crisis. Between 14.7 and 20.5 percent of the sector’s employees are expected to lose their job due to the pandemic.

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