American apparel companies are benefiting from retail revival, as well as from cost savings initiatives and acquisition synergies. The positive outlook for the US retail industry reflects increasing topline growth and operating profits, as companies’ investments in e-commerce and in-store shopping experience continue to gain traction. Growth is also getting a boost from a strong macro-economic environment, which will drive consumer spending.

Retail operating income is expected to grow five per cent to six per cent in 2019. Sales growth is predicted to range from 4.5 per cent to 5.5 per cent. Reduced inventories and improved lead times have helped stabilize merchandise margins. Air freight demand has slowed as companies have increased lead times on import orders, allowing them to opt for cheaper ocean cargo.

Operating income for discounters and warehouse retailers is forecast to increase about 2.4 per cent in 2019 after a strong gain in 2018. Among apparel firms, nearly all rated companies will show some form of profit growth in 2019, with the majority exceeding six per cent growth. More companies are seeing the benefits of cost-saving initiatives, acquisition synergies, restructurings, reduced inventory and clearance activity.