Q3 2025 apparel industry review: landscape of polarisation and protectionism
Sector Highlights and Resilient Performers
Despite macroeconomic headwinds, specific segments delivered exceptional results. The sportswear and footwear category proved robust, with On Holding raising its annual forecast after a 32 percent sales surge in Q2, and Deckers Brands reporting a 16.9 percent jump driven by Hoka and UGG. Skechers remained on a growth course, posting a 10 percent revenue increase for the first half of the year. In the mass market, Inditex and Mango continued their upward trajectory, while Abercrombie & Fitch achieved record quarterly revenues, fuelled by its Hollister brand. The resale market also showed signs of maturation, with ThredUp and The RealReal reporting improved profitability and narrowing losses, validating the circular economy's shift from niche to essential.
The Luxury Slowdown and Insolvencies
In stark contrast, the luxury sector faced its most significant wobble in years. LVMH reported a decline in revenue and profit, citing weaker demand in fashion and leather goods. Kering faced even steeper challenges, with first-half profits plunging 46 percent as it struggles to revitalise Gucci, however, recovering in Q3 with revenue only down 10%. Burberry also saw comparable sales dip, though it noted an uptick in brand desirability. This slowdown is largely attributed to the ""aspirational consumer"" pulling back in the US and a sluggish recovery in China. The mid-market also faced casualties; Claire’s filed for bankruptcy in the US, while Esprit shifted to a licensing model following insolvency proceedings, and Ssense sought bankruptcy protection to block a creditor-led sale.
Tariffs: The Dominant Trend Line
The most remarkable and disruptive force in Q3 was the aggressive trade policy emanating from the US. The Trump administration's implementation of reciprocal tariffs and the removal of the de minimis loophole has sent shockwaves through the supply chain. This protectionist wave is the quarter's biggest trend line, forcing immediate strategic recalibrations. Nike has reportedly raised prices to offset these costs, while companies like Levi’s and G-III Apparel flagged tariff-related headwinds in their outlooks. The tension has prompted a scramble for supply chain diversification, with brands looking to move production away from China, though new tariffs on India are complicating these alternative sourcing strategies.
Corporate Movements and Consolidation
Major brands responded to this volatility with significant strategic movements. Skechers is set to go private in a massive 9.4 billion dollar acquisition by 3G Capital. In a landmark deal for the beauty sector, Kering agreed to sell its beauty division to L’Oréal to pay down debt. Furthermore, EssilorLuxottica saw Meta acquire a stake in the company, signaling a deepening convergence between fashion and big tech. VF Corporation continued its portfolio transformation by selling Supreme and agreeing to sell Dickies to Bluestar Alliance.
Macroeconomic Projections
Looking ahead, the outlook is one of managed instability. According to the State of Fashion 2026 report by McKinsey, executives are preparing for turbulence as the standard operating environment. Inflation remains a concern, and the full impact of US trade policies on global pricing is yet to be fully realized. While growth is expected to be muted in Europe and China, the industry is banking on technology—specifically AI—to drive efficiency. Ultimately, Q3 2025 has cemented a reality where agility and value proposition are the only defenses against an increasingly fractured global market.
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