The evolution of Cambodia apparel exports has been marked by a steady increase in volume and value. While basic knitwear remains a staple, the integration of advanced production techniques has allowed factories to handle more sophisticated orders. This transition is a critical element of the broader garment industry growth observed across the region, as international buyers seek suppliers capable of delivering diverse product categories under one roof.

Strategic Framework for Industrial Advancement

To support this transition, the government has implemented the Cambodia Garment, Footwear and Travel Goods Sector Development Strategy 2022-2027. This textile sector strategy provides a roadmap for upgrading the industrial base, focusing on human resource development and the improvement of working conditions. By aligning local capabilities with international standards, the strategy aims to attract higher levels of foreign direct investment into specialized manufacturing segments.

A central pillar of this textile sector strategy is the promotion of sustainable manufacturing practices. Global brands are increasingly demanding transparency and environmental responsibility from their partners. Consequently, factories in Cambodia are adopting energy-efficient technologies and waste reduction protocols to meet these rigorous compliance requirements. The adoption of sustainable manufacturing is no longer optional but a necessity for maintaining long-term partnerships with major Western retailers.

Trade Agreements and Market Expansion

The success of Cambodia garment diversification is also tied to the country’s participation in various regional trade pacts. Agreements such as the Regional Comprehensive Economic Partnership (RCEP) and the Cambodia-China Free Trade Agreement (CCFTA) have opened new avenues for trade. These frameworks facilitate easier access to raw materials and provide preferential tariffs for Cambodia apparel exports, making the nation’s goods more competitive against other manufacturing hubs.

Despite the positive trajectory of garment industry growth, the sector faces ongoing challenges, including fluctuating energy costs and logistical bottlenecks. However, the continued emphasis on product diversification and the modernization of infrastructure are expected to mitigate these risks. By focusing on high-margin products and operational efficiency, the industry is positioning itself to remain a vital contributor to the national economy. The ongoing Cambodia garment diversification efforts reflect a maturing market that is adapting to the complexities of modern global trade.

According to the latest CNBC/NRF Retail Monitor, released by the National Retail Federation (NRF), US retail sales at clothing and accessories stores increased 0.63% from May to June on a seasonally adjusted basis. Compared with June 2025, sales surged 13.65%, making apparel one of the best-performing retail categories during the month. Only digital products recorded stronger annual growth among the sectors tracked by the index.

Commenting on the latest figures, NRF President and CEO Matthew Shay said: “The summer shopping season got off to a strong start in June. Consumers took advantage of summer sales events, and many began their back-to-school shopping early.”

He added: “The capacity for retail spending has been supported by the sector’s focus on keeping prices accessible and by a stable labour market. Year-over-year improvements are especially notable, given the comparatively weak results seen in June 2025.”

The broader US retail sales picture also remained positive. Excluding automobile dealerships and fuel stations, total retail sales rose 0.33% from the previous month on a seasonally adjusted basis and increased 9.41% year over year.

In comparison, May recorded a stronger monthly gain of 0.42%, while annual growth stood at 7.19%.

Core retail sales, which exclude restaurants, motor vehicle dealers, and gas stations, also continued to strengthen. Sales advanced 0.36% between May and June and were 10.08% higher than the same month last year. The previous month had recorded a 0.39% monthly increase and 6.98% annual growth.

Annual sales gains were reported across all major retail segments. Sporting goods, electronics, and apparel stores posted the strongest combined year-over-year increase of 18.53%, highlighting sustained consumer spending across discretionary product categories.

On a month-to-month basis, nearly every retail category experienced growth. The only exceptions were electronics and appliance retailers and furniture and home furnishings stores, both of which recorded declines during June.

Performance during the first six months of 2026 also remained encouraging. Total unadjusted retail sales increased 6.81% compared with the same period a year earlier, while core retail sales rose 6.84%, underscoring steady consumer demand across much of the retail sector.

The latest results indicate that retailers have benefited from seasonal promotions, competitive pricing, and stable employment conditions, providing a solid foundation for consumer spending as the industry moves further into the second half of the year.

Addressing Synthetic Fiber Pollution Through Innovation

For decades, synthetic textiles have been the primary choice for performance clothing due to their cost-effectiveness and inherent technical properties. These materials are particularly valued for their durability and effective moisture management. However, the long-term consequences of microplastics and carbon emissions associated with these fibers are under increasing scrutiny. As a result, product developers are now prioritizing sustainable performance apparel that balances technical requirements with environmental responsibility.

The definition of performance is evolving to include factors such as comfort, odor control, and biodegradability. Market stakeholders are now exploring a variety of options, including natural fibers and cellulosic fibers, to replace or supplement traditional synthetics. This movement is supported by advancements in textile engineering that allow natural materials to perform in ways that were previously impossible.

Advancements in Natural and Cellulosic Fibers

Technological breakthroughs are enabling natural fibers to overcome historical limitations. For instance, advanced yarn engineering and fabric construction are improving the ability of cotton to wick away perspiration, effectively enhancing its moisture management capabilities. Leading athletic brands and technical specialists have introduced initiatives to ensure these natural options can compete with the quick-drying properties of synthetics.

Furthermore, cellulosic fibers such as lyocell, modal, and viscose are seeing increased integration into next-to-skin garments. These materials are prized for their breathability and soft texture. Technical performance ranges are also being developed from textile waste and agricultural by-products, with several specialized firms working on processes to convert discarded materials into high-quality circular fibers.

Overcoming Technical Barriers in Sustainable Textiles

While the adoption of alternative materials is growing, certain challenges remain regarding their use in high-intensity applications. Compared to traditional synthetics, some bio-based options may exhibit lower elasticity or slower drying times. To address these hurdles, many manufacturers are adopting a blending strategy. By combining natural or regenerated fibers with synthetic components, brands can achieve the functional requirements of performance clothing while still advancing their sustainability goals.

The move toward sustainable performance apparel represents a comprehensive effort to reduce synthetic fiber pollution across the supply chain. As research continues into next-generation materials, the industry remains focused on maintaining the high standards of durability and technical excellence that athletes and outdoor enthusiasts expect.

Expert perspectives on resilience and capacity

Economic and development expert Umar Salis said the production increase shows the resilience and creativity of Nigerian entrepreneurs despite prevailing economic challenges. According to Salis, the country is steadily reversing years of dependence on imported garments through higher domestic output of jerseys, trousers, jackets, suits and T-shirts. He noted that the gains support job creation, conserve foreign exchange and reinforce Nigeria’s manufacturing base within the textile industry.

Salis called for industrial clusters, affordable credit, uninterrupted electricity and advanced production equipment, especially for young entrepreneurs. He added that with the right support, Nigeria could emerge as a leading textile and garment production hub in Africa, strengthening local manufacturing and contributing to broader economic development.

SMEs scale up as demand grows

Garment manufacturer Musa Ibrahim said rising demand for locally produced clothing has encouraged many small and medium-sized enterprises to expand production across the country. He explained that stronger consumer confidence in Nigerian-made products has stimulated investment, increased employment and bolstered activity throughout the textile value chain, underpinning job creation and the growth of the garment industry.

Ibrahim highlighted that producers are delivering quality jerseys, trousers, jackets, uniforms and corporate wear that compare favourably with imported alternatives. He identified access to modern machines, stable electricity and affordable financing as key challenges that still affect local manufacturing and limit efficiency gains.

Women and youth drive enterprise

Fashion entrepreneur Aisha Muhammad described the trend as a positive opening for women and young people seeking sustainable livelihoods in garment production. She said many women have set up tailoring and garment businesses, generating income, expanding entrepreneurship and reducing unemployment in their communities—an important link to economic development.

Muhammad urged the establishment of more vocational training centres, provision of grants and subsidised modern sewing and textile equipment for young people. She said that empowering youth and women with the right facilities would increase production, reduce poverty and strengthen the nation’s economy.

Sustaining Nigeria textile growth

The experts agreed that sustained investment in domestic textile production would accelerate industrialisation, expand exports, strengthen manufacturing and further reduce Nigeria’s dependence on imported clothing. Continued focus on reliable electricity, accessible finance, modern equipment and practical training is seen as essential to support Nigeria textile growth, deepen local manufacturing and consolidate gains across the garment industry and the textile industry.

Although export performance has remained encouraging, specialists warn that Vietnam continues to rely heavily on a limited number of overseas markets and product categories. At the same time, many export-oriented industries generate relatively low domestic value because production depends extensively on imported raw materials and components.

The Vietnam textile exports sector has been one of the country’s strongest performers, generating nearly US$19 billion in export revenue during the first half of 2026. However, manufacturers are operating in an increasingly demanding global environment marked by rising production expenses, higher logistics costs, and stricter compliance requirements.

Industry competition is also evolving. Buyers are placing greater emphasis on transparent supply chains, shorter delivery times, and adherence to environmental, social, and governance (ESG) standards rather than focusing primarily on low manufacturing costs.

A major obstacle remains the industry’s reliance on imported inputs. Raw materials sourced from overseas account for an estimated 60–70% of production requirements, limiting manufacturers’ ability to maximize the benefits offered by Vietnam’s free trade agreements (FTAs). Since the beginning of the year, the sector has imported materials worth more than US$13 billion, including approximately US$5.53 billion in fabric purchased from China.

The National Statistics Office has warned that weaker consumer demand in key international markets, declining commodity prices, expanding trade barriers, and elevated global interest rates could continue to weigh on export growth during the remainder of the year.

To strengthen the Vietnam textile exports outlook, the Ministry of Industry and Trade plans to expand support for businesses by improving the utilization of existing FTAs, intensifying trade promotion initiatives, and addressing market access challenges in major export destinations.

Authorities also intend to strengthen inspections aimed at preventing trade fraud and false declarations of product origin, particularly for high-value export categories. Verification of certificates of origin will be enhanced to reduce exposure to international trade remedy investigations.

In addition, the ministry will closely monitor global commodity markets to optimize imports of energy and fuel, helping businesses avoid purchasing during periods of elevated international prices. Improving logistics efficiency and reducing supply chain costs will also remain key priorities as Vietnam works to maintain export momentum through the second half of 2026.

According to the latest trade data, Sri Lanka apparel exports reached US$394.14 million in May, representing a 7.96% year-on-year increase and marking the industry’s strongest monthly performance so far in 2026.

The United States accounted for the largest share of this growth. Exports to the American market climbed 15.36% from a year earlier to US$149.96 million, highlighting robust demand despite ongoing global economic uncertainty.

Shipments to emerging and non-traditional markets also posted healthy gains, rising 14.61% to US$70.67 million. Performance in more established destinations, however, remained relatively modest. Exports to the United Kingdom edged up only 0.87%, while shipments to the European Union declined slightly by 0.3%, totaling US$121.35 million.

The latest figures indicate that the Sri Lanka apparel exports recovery is becoming increasingly dependent on the US market. Although exporters continue to diversify into new destinations, American consumer demand remains the primary driver of short-term growth.

This dependence also exposes the industry to trade policy risks. Manufacturers are closely monitoring proposed US tariff measures scheduled to take effect on July 24, which could significantly affect the competitiveness of Sri Lankan apparel in its largest export market.

Under the proposed framework, Sri Lankan garment exports would face an additional 12.5% tariff, compared with a 10% tariff proposed for several competing apparel-producing countries. While the difference appears relatively small, industry stakeholders believe it could reduce Sri Lanka’s pricing advantage and influence sourcing decisions by international buyers.

The Joint Apparel Association Forum (JAAF) has emphasized that maintaining the industry’s current growth momentum will largely depend on securing a competitive tariff arrangement with the United States. Industry leaders remain optimistic that a favorable trade outcome could support stronger export performance during the second half of 2026 and transform the recent recovery into sustained long-term growth.

The Sri Lankan government is also working to finalize negotiations before the proposed tariff changes are implemented. The Ministry of Trade, Commerce, Food Security, and Co-operative Development has indicated that discussions with US authorities are nearing completion, with efforts focused on reaching an agreement that would prevent the higher tariff from being applied.

The urgency reflects a policy introduced by the Office of the United States Trade Representative (USTR), which grants a lower 10% additional tariff to countries that have adopted or committed to reciprocal forced-labour import restrictions. Unless Sri Lanka reaches a similar agreement, its apparel exports could remain subject to the higher 12.5% tariff.

With export growth regaining momentum, the outcome of these trade negotiations is expected to play a decisive role in determining whether the recent improvement develops into a lasting expansion or remains a temporary rebound for Sri Lanka’s apparel industry.

Strengthening the Better Work Jordan Initiative

Through this ILO partnership, both entities aim to improve the monitoring of factory conditions and the enforcement of national regulations. The Jordan ministry is set to take a more prominent role in overseeing these processes, which include rigorous inspections and technical support for manufacturing facilities. By prioritizing labor standards, the agreement seeks to maintain the competitive edge of the national export sector while safeguarding the rights of all employees involved in production.

The Jordan decent work program remains a cornerstone of the country’s economic strategy, particularly in its efforts to provide equitable opportunities for both local and migrant workers. The ILO partnership provides the necessary technical expertise to help factories achieve better workplace compliance, which in turn leads to improved productivity and a more resilient garment industry. This transition phase is critical for embedding these practices within the local institutional framework.

Focus on Compliance and Gender Equality

A significant portion of the agreement addresses the need for gender equality and the prevention of workplace harassment. The Jordan ministry and its international partners are committed to creating a safe and inclusive environment that adheres to global labor standards. This includes specialized training programs and the implementation of transparent reporting mechanisms to ensure that workplace compliance is handled with the highest level of integrity.

The collaboration also aligns with the broader Decent Work Country Programme, which serves as a roadmap for sustainable economic growth and social justice. By focusing on the garment industry, Jordan continues to demonstrate its commitment to international labor conventions and the well-being of its industrial workforce.

The Fast Retailing FY26 forecast was upgraded after the company posted strong financial results for the nine-month period ending May 31, 2026. Consolidated revenue climbed 17.1% year on year to ¥3.0651 trillion (approximately US$18.97 billion), while business profit surged 33.6% to ¥592.7 billion (US$3.67 billion). Net profit attributable to shareholders also increased 25.6%, reaching ¥426 billion.

UNIQLO Continues Global Expansion

UNIQLO remained the group’s primary growth driver, recording higher sales and profitability across every major region during the March-to-May quarter. The company attributed the strong performance to effective brand-building initiatives, successful product launches, and an expanding global retail network.

The international UNIQLO division generated ¥1.834 trillion in revenue during the first nine months, representing growth of 25.9%, while business profit jumped 45.4% to ¥345.3 billion.

Third-quarter performance was even stronger, with revenue increasing 33.8% to ¥592.6 billion and business profit rising 65.2% to ¥112.3 billion, supported by improved operating margins.

Demand remained healthy across several international markets. China continued to deliver higher revenue and double-digit profit growth, while South Korea, Southeast Asia, India, Australia, North America, and Europe all achieved double-digit increases in both sales and earnings. Seasonal collections, targeted marketing campaigns, and expansion of flagship and large-format stores contributed to the positive results.

During the quarter, the company strengthened its international presence by opening six additional stores in North America, including a flagship location in Chicago alongside major stores in New York and Boston. European expansion also continued with new outlets in Bristol and Utrecht, while Seoul’s Myeongdong district welcomed a new global flagship store.

Strong Results for UNIQLO Japan and GU

UNIQLO Japan also recorded solid growth during the reporting period. Revenue reached ¥867.6 billion, an increase of 8.3%, while business profit rose 15.1% to ¥172.9 billion.

Third-quarter sales increased 10% as same-store sales climbed 9.9%, driven by strong demand for bottoms, Easy Pants, and UV Protection Parkas. Quarterly business profit advanced 18.3% to ¥62.2 billion.

Value fashion retailer GU also improved its financial performance. Nine-month revenue rose 3.7% to ¥265.6 billion, while business profit increased 28% to ¥32.1 billion. During the third quarter, revenue expanded 7.5%, and business profit surged 36.7%, supported by successful trend-focused merchandise and greater operating efficiency.

Global Brands Face Ongoing Challenges

The company’s Global Brands division delivered mixed results. Although third-quarter revenue increased 2.5% and business profit rose 48.3%, revenue measured in local currencies declined by roughly 4%, mainly because of weaker trading conditions at Theory.

Across the first nine months, revenue for the segment fell 4.2% to ¥96.3 billion, while business profit declined 33.4% to ¥1.9 billion. Fast Retailing attributed the weaker performance to restructuring efforts at Theory and continued rationalisation of the Comptoir des Cotonniers and Princesse tam.tam retail networks.

Higher Expectations for FY26

Reflecting stronger-than-anticipated business performance, the Fast Retailing FY26 forecast has been revised upward. The company now expects full-year consolidated revenue of ¥3.97 trillion (approximately US$24.61 billion), representing annual growth of 16.7%.

Business profit is projected to reach ¥710 billion, while operating profit is forecast at ¥730 billion. Net profit attributable to shareholders is expected to total ¥500 billion.

Compared with the guidance issued in April, the revised outlook includes higher revenue, business profit, operating profit, and net profit projections. The company cited continued strong trading through June and updated foreign exchange assumptions as the primary reasons for improving its earnings forecast.

For the quarter ending 31 May 2026, the company reported net revenue of US$1.6 billion, representing an 8% increase on a reported basis and 6% organic growth compared with the same period last year. The performance has prompted management to revise its full-year expectations upward.

Reflecting this positive trend, Levi Strauss FY26 outlook now forecasts reported revenue growth of 7% to 7.5%, an improvement from the previous guidance of 5.5% to 6.5%. Organic revenue growth expectations have also been increased to 5.5%–6.0%.

The company additionally raised its projections for adjusted diluted earnings per share (EPS) to between US$1.46 and US$1.52, while expecting an adjusted EBIT margin of 12%, both exceeding earlier forecasts.

Growth Across Key Markets

Levi Strauss recorded revenue growth in most major regions during the quarter. The Americas remained the strongest contributor, with reported sales increasing 9%, while the United States market delivered 5% growth.

European revenue advanced 4% on a reported basis, although organic sales declined 1% because of shipment timing related to distribution centre operations during the previous year.

Asia continued to perform strongly, with reported revenue climbing 10% and organic sales increasing 12%, highlighting sustained consumer demand across the region.

Profitability Continues to Improve

The company reported net income from continuing operations of US$95 million, compared with US$80 million in the corresponding quarter of the previous year. Diluted earnings per share from continuing operations increased from US$0.20 to US$0.24.

Adjusted EBIT margin improved to 9.0%, compared with 8.3% a year earlier, while gross margin expanded slightly to 62.7%. The improvement was driven by lower product costs and strategic pricing initiatives, although tariff expenses and currency fluctuations continued to create headwinds.

Operating margin also edged higher, reaching 7.8%, compared with 7.5% in the prior-year period.

Selling, general and administrative (SG&A) expenses rose to US$843 million, mainly reflecting higher selling costs and the impact of foreign exchange movements.

Direct-to-Consumer Business Drives Momentum

Direct-to-consumer (DTC) operations remained the company’s fastest-growing business segment during the quarter. Reported DTC revenue increased 11%, while organic growth reached 8%.

Online sales performed particularly well, rising 19% on a reported basis and 17% organically. Comparable sales across DTC channels also improved by 6%, reinforcing the company’s ongoing digital and retail strategy.

Overall, DTC operations contributed 51% of total quarterly revenue, while wholesale revenue increased 5% on a reported basis and 3% organically.

Outlook Remains Positive

The updated Levi Strauss FY26 outlook assumes that US import tariffs will remain at 30% for goods sourced from China and 20% for imports from other countries. The company also expects broader economic conditions to remain relatively stable, without major increases in inflation, supply chain disruptions, tariff changes, or currency volatility.

Commenting on the results, President and CEO Michelle Gass said: “The Levi’s brand is connecting with consumers around the world in more powerful ways than ever before, and our Q2 results are another proof point that our strategies are working and our team is executing. Our evolution into a DTC-first, denim lifestyle company—with a much larger addressable market—is translating to faster growth and higher profitability. While we are pleased with the progress, we are still in the early stages of our long-term growth journey, with more ways to win than ever before.”

The study, “Mitigating Heat Stress in the Garment, Footwear and Travel Goods Sector,” was prepared by GIZ in collaboration with experts from Cornell University’s Global Labor Institute (GLI), the International Labour Organization (ILO), the International Finance Corporation’s (IFC) Better Work programme, and other technical specialists. Drawing on consultations held in Phnom Penh in January 2026, the report outlines practical recommendations for improving occupational heat management across the country’s apparel manufacturing sector.

The Cambodia garment heat stress challenge has become increasingly severe as extreme temperatures continue to rise. According to the report, Phnom Penh has experienced one of the sharpest increases in extreme heat days among major global apparel manufacturing hubs. Annual days with temperatures above 35°C climbed from an average of 35 days between 2005 and 2009 to 112 days during 2020–2024.

Factory conditions reflect this trend. The report found that 82% of manufacturing facilities recorded indoor temperatures exceeding 32°C in their hottest production areas.

It states: “One in three factories experienced days when indoor temperatures exceeded 35°C. Almost 53% of factories recorded indoor temperatures above 32°C while also being hotter than concurrent outdoor temperatures.”

Worker Health Under Pressure

The report highlights that excessive heat poses serious occupational health and safety concerns for Cambodia’s GFT industry, which employs approximately 1.2 million workers.

Production facilities often combine heat-generating machinery, inadequate ventilation, crowded workspaces, physically demanding tasks, and protective clothing that traps body heat. These conditions increase the likelihood of dehydration, fatigue, heat exhaustion, heat stroke, reduced concentration, discomfort, and workplace accidents while also raising the risk of long-term health complications.

Women, who account for around 78% of the industry’s workforce, face particular challenges. The report notes that pregnant employees and those engaged in physically intensive work are especially vulnerable to prolonged heat exposure, reinforcing the need for targeted workplace protection measures.

Economic Consequences

Beyond worker wellbeing, the report warns that Cambodia garment heat stress could weaken the country’s export competitiveness. The GFT industry generated US$15.7 billion in export earnings during 2025, making it one of Cambodia’s most important economic sectors.

However, prolonged exposure to high temperatures reduces worker efficiency through “presenteeism,” where employees remain at work but are unable to maintain normal productivity. Heat-related illnesses also contribute to absenteeism and increase the likelihood of workplace errors and accidents.

The report states: “Together, these effects translate into reduced productivity, lower wages for piece-rate workers, and broader losses for businesses and national economies in garment-producing regions.”

Without effective adaptation measures, Cambodia’s apparel sector could lose 18% of its potential export earnings by 2030, while creating approximately 50,000 fewer new jobs than expected.

Recommended Actions

The report calls for coordinated action involving government agencies, manufacturers, global brands, and worker representatives to improve heat resilience across the sector.

Among its recommendations are stronger occupational safety regulations, wider adoption of heat monitoring systems, and revisions to Cambodia’s 2002 Ministerial Regulation on Workplace Thermal Environments (Prakas 147) to introduce heat-specific occupational safety standards.

Manufacturers are encouraged to conduct formal heat-risk assessments and establish written heat management plans that include improved ventilation, reliable access to drinking water, scheduled rest breaks, and other workplace cooling measures.

The report also encourages international buyers sourcing from Cambodia to publicly support heat-safe manufacturing by aligning purchasing practices with responsible workplace standards.

Concluding its findings, the report states: “Heat stress is a shared risk and a shared responsibility. Regulation alone will not solve it. Nor will isolated factory pilots or individual brand initiatives. Cambodia needs a coordinated sector response built around measurement, prevention, worker participation, buyer alignment, and practical factory support.

“The opportunity is clear. By acting early, Cambodia can protect workers, reduce productivity losses, strengthen compliance, and show global buyers that its GFT sector is preparing seriously for a hotter climate. Heat-safe production should become part of Cambodia’s responsible sourcing proposition. In a warming world, it is not only about good worker protection. It is a sound industrial strategy.”