The current situation in the German textile and clothing industry is tense and the coming year does not appear to bring any recovery for the time being. To date, more than 90 companies have filed for insolvency in 2023, but the international credit insurer Atradius expects a double-digit increase in insolvencies in the industry in the coming year.
“Companies are suffering from consumers’ reluctance to spend – money is no longer so easy given inflation, economic uncertainty and high electricity prices,” said Frank Liebold, Country Director Germany at Atradius in a statement on Tuesday.
The consequences of insolvency reports are particularly significant for suppliers. Non-payments for deliveries to German textile companies rose by 79.1 percent in the first nine months of the year compared to the same period last year. However, according to the credit insurer, the number of suppliers who did not have their claims paid by their customers when due this year is currently below the number in the years before the corona pandemic.
Atradius: ‘Imbalance in the industry only affects small and medium-sized companies’
The current challenges in the clothing trade are diverse and affect not only small and medium-sized companies, but also major players in the industry, such as the fashion retailer Peek & Cloppenburg KG, Düsseldorf, the department store chain Galeria or the Munich women’s clothing brand Hallhuber. The reasons for this include, among other things, the increased costs for rent, people and energy, which, according to the credit association, are not offset by the sales development. “This much already seems certain: companies will not achieve their planned sales and revenue targets this year,” says Liebold, who also describes the improvement in the fourth quarter of the year as unlikely.
“There is little reason to assume that consumer spending will increase significantly in the next few weeks due to the Christmas business. We therefore do not expect the situation to improve by the end of the year,” said Liebold.