Despite improved sales performance, profitability slipped slightly, with gross margin percentage (GMP) falling to 60.4 per cent—down 2.5 percentage points (pp) QoQ and 1.7 points YoY. The decline reflects reduced order volumes and ongoing pricing pressures across the supply chain, even as firms increased sales output.
The operational metrics revealed a decisive pivot towards efficiency. Lead times improved significantly, dropping from 32 days to 22 days QoQ—a reduction of 31 per cent. Meanwhile, purchase orders declined sharply by 56 per cent, while stock on hand fell by 33.5 per cent, suggesting firms are prioritising leaner inventory management to minimise risk and optimise working capital.
UK fashion manufacturers saw average Q3 2025 sales rise 4.3 per cent QoQ to £500,517 (~$670,693), though still 4.4 per cent lower YoY, according to Unleashed.
Gross margin percentage slipped to 60.4 per cent as firms reduced purchase orders and stock.
The shift towards leaner inventory reflects cost pressures and soft demand, with operational efficiency expected to be key heading into 2026.
Joe Llewellyn, GM of ERP Small Business at The Access Group, parent company of Unleashed, said the shift was deliberate and strategic.
“The last quarter was characterised by a determined push towards efficiency,” he noted. “Our data shows firms have moved from cautious ‘just in case’ stock building in Q2 to a leaner just-in-time strategy, cutting stock and purchasing activity to protect margins and cash flow.”
Llewellyn added that with the UK manufacturing PMI remaining in contraction through the period, firms responded pre-emptively to weaker demand signals and sustained cost pressures.
“Operational excellence will be increasingly important going into 2026,” he added. “Manufacturers will need real-time visibility of landed costs, improved forecasting, and the ability to convert excess stock into cash. Doing more with less is now the reality.”
The broader manufacturing landscape reflected similar patterns. Firms recorded a 12.9 per cent QoQ rise in sales and a 1.3 percentage point uplift in Gross Margin Percentage (GMP) to 39.66 per cent. Purchase orders fell by 30 per cent, stock on hand dropped 27.2 per cent, and lead times shortened by eight days, the report added.
With global demand stabilising but cost pressures likely to persist into next year, UK fashion manufacturers are expected to continue prioritising automation, inventory precision, and digital forecasting tools to remain resilient.
The figures signal a cautiously optimistic outlook: the industry appears better positioned than earlier in 2025, but sustained recovery will depend heavily on operational discipline, demand visibility, and navigating a still-volatile cost environment.
The report, based on data from more than 600 small and mid-sized firms, suggests manufacturers are entering 2026 on firmer footing as streamlined operations and improving sales help stabilise margins.
Fibre2Fashion News Desk (SG)
