CONFINDUSTRIA MODA: Revenues Down 9.5% in the 1st Quarter of 2024

The slowdown in production and the decline in exports hinder the sector's recovery, while the use of social safety nets increases.

Confindustria Moda, the Federation that brings together the associations representing the footwear, leather goods, fur, and tanning sectors, comprising approximately 11,000 companies, has announced the results of the 1st Economic Survey among the sectors of the supply chain for the first quarter of 2024. The data shows a challenging start for the entire sector, due to a decrease in domestic and, especially, international demand. The associated companies estimate a decline in revenues of -9.5% compared to the first quarter of 2023, indicating a worsening economic situation—which follows the slowdown of 2023—and this is further confirmed by a sharp return of employment-related issues: according to data on social safety nets, 28% of the associated companies resorted to wage integration tools in the first quarter. These trends align with the figures released by INPS regarding the number of authorized hours in the leather supply chain at the start of 2024, with a surge in the first quarter, when 7.8 million hours were authorized, a +128.6% increase compared to the same period of the previous year.

Economic Trends in the First Quarter of 2024

The analysis of data for the period January - March, indicating entrepreneurs' expectations, shows that:

• 57% of the sample recorded a decline in revenue, with 18% experiencing a contraction of more than -20%.
• Three out of five entrepreneurs reported a "dissatisfactory" production performance for the first three months of the year, with 31% describing it as "very unsatisfactory."
  

Exports

The final data for the period January/March of the new year shows a slowdown in exports already recorded in the second half of 2023, with a decrease of -10.1% compared to the same period of the previous year. Among the main markets, exports to Germany fell by -8.4%. Exports to Switzerland collapsed (-64.6%), indicating the ongoing logistical decisions by brands to replace triangulations in Swiss warehouses with direct shipments to final destination markets. Regarding Russia and Ukraine, two years after the conflict began, the trends diverged: after a rebound in both in 2023, Russia slowed again in early 2024 (-18.7%); however, Ukraine continued its recovery (+23.4%). Exports to France decreased slightly, by -1.4%, and to the USA (-4.8%). Exports to China increased (+2.4%), as did exports to Japan (+1.9%) and Spain (+10%).

Forecasts for the Current Year

In parallel, an ex-ante analysis was conducted to investigate expectations for the second quarter of 2024. Based on the data and information made available by Confindustria Moda’s membership base, the outlook remains stable-negative, with predictions remaining uncertain:

• Only 10% of the sample expects an improvement in the scenario; moreover, while 47% of respondents anticipate a stable economic situation next quarter, 43% expect a further worsening.
• Regarding revenues, 6 out of 10 entrepreneurs expect a further decline in revenues compared to the same period last year; while 24% of companies expect sales to remain at the levels of April-June 2023, only 17% are optimistic.
• Among the challenges, the weakness of demand is considered by 9 out of 10 entrepreneurs to be the greatest threat to their company's growth; followed by the increase in energy and raw material costs due to the current geopolitical context. The lack of professionals aligned with the industry and generational turnover also remains a central issue, highlighting the need for training.

"It is undeniable that this first quarter, following the exhaustion of the post-pandemic rebound, has seen companies experience a difficult time, not only due to unsatisfactory domestic and international demand but also because of the instability of the current geopolitical situation and its effects," commented Annarita Pilotti, President of Confindustria Moda. "The new slowdown in production rhythms and the consequent recourse to wage integration tools further delay the recovery time for the entire sector."

"As Confindustria Moda, we stand by the companies and are also available to the Government to work with institutions and within the Fashion Table established at Mimit. We are working diligently with Confindustria Nazionale and the involved Ministries to resolve the issue of the tax credit, both for the past (it is still unclear what will happen to projects from 2015 to 2019) and for the future, giving role and voice to what our companies do to be competitive in the markets thanks to the collections they prepare with great R&D work."

"Our goal is to protect companies, supporting them in facing the most demanding challenges, ensuring a level playing field for all, whether they have received the pvc or have legitimately benefited from the tax credit, and who currently do not know how things will end. Today, the challenges are indeed numerous, from economic uncertainty to employment-related issues, from sustainability—now a fundamental component in business strategies—to training. Our sector has shown over the years to be strong and resilient, and we believe it is necessary to work so that every company is put in the best conditions to continue competing in international markets, where we have always represented the quality and beauty of Made in Italy."