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Home » Sales of Italian Fashion Jump 22.6% in 2021 But Geopolitical Instability Looms

Sales of Italian Fashion Jump 22.6% in 2021 But Geopolitical Instability Looms

by News Desk

MILAN — The Italian fashion sector is on track for a full recovery, as suggested by the better-than-expected 22.6 percent jump in 2021 sales compared to 2020. But growing pressure on the bottom line from increased raw material and energy costs, as well as the Russian-Ukrainian conflict dampening consumer confidence and stability, are looming.

That was the outlook provided by Cirillo Marcolin, president of industry association Confindustria Moda, on Thursday. According to figures presented by the organization, the sector posted sales of 91.7 billion euros last year, an increase of 16.7 billion euros on 2020 but still 6.3 percent below 2019 revenues.

“Data suggest that the fashion system is out of the pandemic-related quagmire, with some sectors even improving compared to 2019,” including jewelry and eyewear, Marcolin said.

A similar trend was highlighted by Sistema Moda Italia, the consortium of Italian fashion and textile companies, which posted sales of 52.9 billion euros in 2021, up 18.4 percent versus the year prior.

Confindustria Moda said exports of Italian fashion goods jumped 23.5 percent last year to 67.5 billion euros, with France, Germany, China and the U.S., among the best-performing importers.

General manager Gianfranco Di Natale highlighted how the U.S. showed “impressive acceleration” compared to mostly flat growth over the past two decades. At the same time, exports to the U.K. decreased 10.2 percent last year, signaling the impact of inflation on consumer consumption there.

Although figures for the first quarter of 2022 were still being collected, a survey carried out among its associated companies allowed the group to forecast that like-for-like sales will improve 19.3 percent in the quarter. “The trend in the first quarter has exceeded our expectations and proved our companies were resilient and a leading force of the Italian economy,” Marcolin said.

The same survey highlighted an expected slowdown in revenue growth for the second quarter, when the impact of the Ukrainian conflict is being felt more broadly and sales should increase 12.9 percent on a comparable basis.

“There are shadows on the horizon, including the Russo-Ukrainian conflict, which leaves us without clear answers on future prospects, as well as a number of issues such as energy and raw materials costs, that are impacting the sector as a whole,” Marcolin said.

According to Confindustria Moda, exports to Russia and Ukraine amounted to 1.72 billion euros in 2021, representing 2.5 percent of total exports and down 3.1 percent versus 2019.

Although Marcolin contended that the sector’s overall exposure to the region is moderate, he underscored how some districts and product categories are particularly affected by halted business.

The renowned footwear hub in the Marche region, as well as garment manufacturers in Veneto, are among the most pressured. Confindustria Moda estimated that 3 percent of Italian fashion companies generate more than 50 percent of revenues in Russia and 11 percent between 10 and 50 percent.

“We have always supported the institutions and the government on sanctions because we firmly believe that they can help spearhead a peace deal,” he said. “The context is particularly complex right now, and despite knowing that sanctions are impacting some of our associated companies, we can’t help but sympathize with affected populations living a humanitarian crisis.”

Nonetheless, the ripple effect of the war is being felt across the sector, impacting costs and denting consumer confidence globally. According to the survey conducted by the organization, 49 percent of fashion enterprises expect second-quarter sales to remain flat versus the previous quarter, while 43 percent of them forecast a deterioration in their performance.

The conflict, as well as the stop-and-go lockdown strategy in China, “pose the risk of vanishing the post-pandemic rebound, with a potential disastrous effect for our companies,” Marcolin said.

To this end, the executive reiterated the importance of building a supportive culture among the country’s entrepreneurs to power through the geopolitical instability and pilot the digitization, internationalization and sustainability of the sector.

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