The US apparel and footwear industry's outlook remains positive, as manufacturers will continue to benefit from lower input costs and the expansion of their direct-to-consumer businesses. The industry’s operating income is expected to grow 7 to 9 per cent on a constant currency basis for 2015.

But if foreign exchange rates remain near current levels earnings will be significantly pressured in 2016. As a result, growth may drop to 4 to 6 per cent next year. In contrast, if the US dollar weakens, the outlook will likely remain positive for some time.

The positive outlook for the US apparel and footwear industry is based on the belief that companies have hedged a meaningful portion of their 2015 inventory purchases against foreign currency translation risk, alleviating margin pressure in the near term. Pressures are likely to emerge next year, however, as the currency hedges companies took out at more favourable foreign exchange rates expire.

Mergers and acquisitions are set to remain part of the industry landscape over the next 12 to 18 months as large, global clothing makers continue their push into lifestyle brands. This year Germany sportswear group Adidas Group announced the sale of its Rockport brand while Coach has agreed to acquire luxury footwear retailer Stuart Weitzman.