US retailers cut India apparel orders by 5–10% amid caution: Pearl Global MD

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Driven by the uncertainty created by US President Donald Trump’s trade tariffs on India and a delayed trade deal, US retailers have become conservative in placing apparel orders, trying to avoid a repeat of the 2022 inventory pile-up, Pearl Global Managing Director Pallab Banerjee told Moneycontrol on November 19.

Pearl Global, which supplies textiles to brands such as Ralph Lauren, Calvin Klein, Macy’s and Gap, is seeing order volumes from US retailers fall by 5–10 percent, with buyers also holding back working capital.

They (US retailers) are not very aggressive in terms of buying. At some point in time, they are pressurising the vendor to absorb. Whatever the vendor is not absorbing, they are absorbing. So naturally, they are not passing on this tariff impact to the consumer, as of now. But as they do, they fear that the consumer sentiment will go down. The demand might go down, so, that's why they are very careful and not buying anything extra because in 2022 they had a huge inventory problem," Banerjee told Moneycontrol.

In 2022, US retailers saw a significant inventory pile-up due to a mismatch between over-ordering, to combat supply chain issues, and a sudden drop in consumer demand.

"American buyers are buying 5-10 percent less, keeping their money aside. If needed, they will immediately buy and put something. So, that's the kind of game they play," Banerjee added. The comment came as the maker of Gap and Zara apparel booked an impact of roughly Rs 21 crore in the second quarter as it offered discounts to its customers to offset the 25 percent penalty tariffs imposed by the Trump administration.

Reduces US exposure to India units

The company also reduced US exposure to India units from the initial 60 percent to 50 percent in Q2FY26, and has further plans to cut reliance on Indian units. It has started using Indian production to cater to markets like Japan to curtail losses caused by a higher US exposure.

"The US is a little soft, 5-7 percent soft. As a company, we have gone deeper into the other markets and are adding new customers. So, you have all these tools and levers to play, to not see any impact. Our endeavour would be to maintain India also on a growth path. So we have to overcome this challenge of the US, replace it with other markets like Japan, Australia, Europe, and the UK. So we are in that process.," Banerjee said.

Exports account for 99 percent of Pearl Global's revenue, and about 50 percent of all shipments are to the US. The company manufactures T-shirts, activewear, shirts, dresses and sleepwear for US brands such as Gap, Kohl’s, Calvin Klein, Tommy Hilfiger, Polo, Ralph Lauren, Macy’s, Walmart, etc., according to its annual report.

However, growing uncertainty has led these brands to consider shift sourcing from India to low-tariff countries like Vietnam and Bangladesh, where the tariffs are currently pegged at 20 percent.

During its Q2 call with analysts , the company outlined its plan to explore additional capacities in Vietnam to further deepen customer engagement and increase wallet share, encouraged by a favourable tariff regime. It has also begun construction of an apparel unit and the laundry facility in Bangladesh, which is targeted for completion by Q2FY27.