Vietnamese textile and garment exports decreased by nearly 18 percent year on year (YoY) to more than $7 bn in the first quarter (Q1) this year, according to General Department of Vietnam Customs Statistics. Several textile firms are struggling with staff reduction resulting from falling revenues.
The April data continued to show not very positive signs, with an export value of $2.5 bn, down nearly 20 percent over last year. The industry is facing challenges due to a sharp decrease in purchasing power in major markets and several businesses have not received orders for the rest of the second quarter.
Inventories of major foreign retailers have increased since the second half of 2022. Both these problems are unlikely to be solved just in the second quarter, according to a report. Reopening of China is another obstacle for garment companies as they have to compete with garment exporters there.
The Vietnam Cotton and Spinning Association (VCOSA) said the price of imported cotton is projected to fall, which will help improve the gross profit margin of yarn companies in the second quarter.
Most textile and garment companies have cautiously planned for this year with negative growth rates.
The Vietnam National Textile and Garment Group (Vinatex) said the industry would face several challenges from the Russia-Ukraine conflict, persistent inflation and falling global demand. Therefore, it plans to reduce its profit before tax in 2023 by half over last year to only VNÐ610 bn ($26 mn).
In the first quarter, the company posted declines in both consolidated net revenue and profit after tax, down 16.2 percent and 255.3 percent YoY respectively.