Fashion
Tariff pressure casts shadow on Gujarat’s textile landscape
Industry insiders are ringing alarm bells over the unfolding situation “There’s no way to absorb a 50 per cent tariff hike; we don’t have the margins,” claimed one industry player in conversation with Fibre2Fashion.
Many within the industry are worried that the abrupt increase in US tariffs could derail their businesses completely.
The duties on Indian textiles and apparel exports to US, across categories, will reach alarming levels.
Carpets will reportedly face a 52.9 per cent tariff, knitted garments 63.9 per cent, woven garments 60.3 per cent, and textiles & made ups 59 per cent.
In FY25, Gujarat’s export landscape was led by petroleum products at $43.9 billion, followed by engineering goods worth $16.6 billion, gems and jewellery at $8.3 billion, and textiles at $5.6 billion, as per some estimates. While textiles may not be the state’s top export, it is especially important due to the large-scale employment and deeply integrated supply chains that it supports. Now, with tariffs set to double—from 25 per cent to 50 per cent—industry players are bracing for the worst even as some expressed apprehensions that the abrupt increase in tariffs could derail their businesses altogether.
Reflecting the wider sentiment, an industry player explained that US shipments across the board have been put on hold while many well-established direct exporters are also struggling to keep operations running smoothly as shockwaves from the tariff hike spread through every link in the textile value chain. Mills, job work units, and raw material suppliers are already beginning to feel the heat, and if large exporters start losing orders, the consequences could cascade down to the smallest players in the ecosystem, creating a widespread disruption.
Order cancellations for US shipments are already piling up, media reports claim, and industry players confirm the slowdown is real—with no clarity on what lies ahead.
What compounds the issue further is the fact that the 50 per cent tariff is not a standalone levy—it is in addition to the standard import duty already in place in the US. Some estimates indicate that total duties on Indian textiles and apparel exports to the US will now reach alarming levels across various categories: carpets will face a 52.9 per cent tariff, knitted garments 63.9 per cent, woven garments 60.3 per cent, and textiles and made ups 59 per cent.
These figures illustrate just how uncompetitive Indian products will become under the new regime, effectively pricing them out of the US market.
In response to the emerging crisis, the Ministry of Commerce and Industry has reportedly begun reaching out to export-heavy states like Gujarat, Maharashtra, and Tamil Nadu, urging them to extend support to labour-intensive industries such as textiles. Simultaneously, the Central Government is reportedly working on a three-pronged approach to help exporters navigate the fallout from the US tariffs. One key component of this strategy involves the launch of a sector-specific support scheme under the proposed ₹2,250 crore Export Promotion Mission. The objective is to offer immediate relief to impacted sectors, while also identifying alternative international markets for redirected exports and encouraging domestic consumption of surplus products.
The Union Ministry of Textiles, for its part, has reopened the Production-Linked Incentive (PLI) scheme for the textile sector, inviting fresh applications from eligible entities. This decision came in response to growing appeals from the industry, which has been seeking urgent support to weather what many view as an existential threat.
The Government has also recently removed the 11 per cent import duty on cotton till September 30 this year, in a move to help the domestic textiles industry to deal with the US tariff issue.The decision, notified by the Central Board of Indirect Taxes and Customs (CBIC), is expected to lower input costs across the textile value chain encompassing yarn, fabric, garments, and made ups and provide much needed relief to manufacturers.
However, there is still scepticism within the industry if such interventions could help insulate it from the implications of high tariffs and long-term damage.
Fibre2Fashion News Desk (DR)
Wholesale revenue dropped 12.8 per cent on a currency-adjusted basis to €4.9 billion, while direct-to-consumer (DTC) sales increased 3.4 per cent, lifting the DTC share to 32.4 per cent from 28.9 per cent.
Regionally, sales fell 6.9 per cent in Europe, Middle East and Africa (EMEA), 7.4 per cent in Asia-Pacific and 10 per cent in the Americas, with North America driving much of the decline.
Puma has reported sales of €7.3 billion (~$8.61 billion) in FY25, with currency-adjusted revenue down 8.1 per cent amid strategic reset actions.
Wholesale declined while DTC share increased.
Margins contracted and EBIT turned negative, leading to a net loss.
Q4 saw sharper declines across regions and categories.
Puma expects further sales softness and negative EBIT in FY26.
By product segment, footwear sales decreased 7.1 per cent, apparel declined 9.7 per cent and accessories fell 8.5 per cent, although selective growth was observed in running, training and premium sport style lines, Puma said in a press release.
Profitability weakened significantly during the year. Gross margin contracted 260 basis points to 45.0 per cent, impacted by promotional activity, inventory reserves, unfavourable mix and currency effects. Adjusted EBIT turned negative at €165.6 million, while reported EBIT declined to -€357.2 million after €191.6 million in one-off costs related mainly to the cost efficiency programme and goodwill impairments.
Loss from continuing operations widened to -€643.6 million, translating to earnings per share of -€4.37 versus €1.88 in the prior year.
From a balance sheet perspective, inventories rose 2.3 per cent to €2.06 billion as inventory takebacks from wholesale partners supported distribution clean-up. Working capital increased 20.2 per cent, while trade receivables and payables declined sharply in line with reduced sales and purchasing activity. Puma ended the year with additional financing capacity, including €1,202.2 million in unutilised credit lines.
Fourth quarter (Q4) performance reflected the peak impact of the strategic reset. Currency-adjusted sales declined 20.7 per cent to €1,564.9 million, with reported revenue down 27.2 per cent due to currency headwinds. The decline was driven by deliberate reductions in wholesale exposure, inventory clearance actions and lower promotional intensity.
Wholesale sales fell 27.7 per cent in Q4, while DTC revenue decreased 8.0 per cent, although DTC share increased to 41.1 per cent from 35.5 per cent. Regionally, sales dropped 12.6 per cent in Asia-Pacific, 22.2 per cent in the Americas and 24.3 per cent in EMEA.
Across product divisions, footwear sales declined 25.4 per cent, apparel fell 13.7 per cent and accessories dropped 18.2 per cent, with selective resilience in training and performance running categories.
Profitability deteriorated sharply. Gross margin declined to 40.2 per cent from 47.7 per cent due to promotions, inventory provisions and currency effects. Adjusted EBIT fell to -€228.8 million, while reported EBIT reached -€307.7 million following one-off costs linked to restructuring and impairment charges. The quarter ended with a loss from continuing operations of -€335 million.
Arthur Hoeld, CEO of Puma, said: “2025 was a reset year for us. We want to establish Puma as a top 3 sports brand globally, return to above-industry growth and generate healthy profits in the medium term. It is crucial to make the Puma brand less commercial and ensure we once again excite our consumers with attractive products, compelling storytelling and distribution in the right channels. I am satisfied with the progress we have made so far. We cleaned up most of our distribution by reducing promotions in our own channels and cutting our exposure to those wholesale channels that damage our brand’s desirability. To better position our product icons and our performance offering and tell more engaging product stories, we created the right structures inside our company. We also addressed operational inefficiencies and further optimised our cost base.”
Looking ahead, Puma expects currency-adjusted sales in fiscal 2026 to decline in the low- to mid-single-digit percentage range, with EBIT projected between -€50 million and -€150 million. Capital expenditure of around €200 million is planned as the company continues investments in brand repositioning and digital capabilities, added the release.
Fibre2Fashion News Desk (SG)
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