The risk of insolvency amongst SMEs in the textile and clothing sector is rising
Over the past two years, the default rate amongst limited companies in the sector has risen by 1.5 per cent. The situation is even more critical for firms in the leather, hide and footwear sectors, with the rate jumping from 3.8 per cent to 6.1 per cent
Milan Women’s Fashion Week always brings a breath of fresh air and optimism amongst industry professionals, but behind the glitz of the catwalk shows, the situation for the Italian textile and clothing industry remains challenging. This is confirmed by data from the CRIF Business Observatory, which reveals a deterioration in credit risk, in line with the trend of the last two years: the default rate for limited companies in the sector has risen from 3.3 per cent in December 2023 to 4.8 per cent in December 2025, compared with a national average that has remained at 3.3 per cent. “It has been a rapid and continuous rise,” notes Luca D’Amico, CEO of Crif Ratings.
Whilst the sector was already exhibiting above-average risk at the end of 2023, the gap was much narrower; however, since then, the default rate in the textiles and clothing sector has risen by one and a half percentage points, whilst the overall default rate for limited companies (across all manufacturing sectors) has risen from 3% to 3.3%. The situation is even more critical for companies in the leather, leather and footwear companies, whose default rate jumped from 3.8 per cent to 6.1 per cent – the highest level among all sectors analysed by Crif.
This deterioration, explain Crif’s analysts, reflects a structural crisis: factors weighing heavily include weak domestic and international demand, rising production costs, geopolitical tensions and competition from Asia, compounded by the slowdown in certain key markets for Italian exports, such as China (see also *Il Sole 24 Ore* of 18 and 22 September). Changes in purchasing behaviour are also having an impact: amongst younger consumers, pressure from fast fashion is squeezing revenues and margins, whilst the middle income bracket is being weighed down by a loss of purchasing power.
Even the luxury sector, whilst more resilient, is showing signs of a slowdown, partly due to changing consumption patterns, even amongst high-spending customers. Signs of weakness are also evident from an analysis of credit and, consequently, of businesses’ propensity to invest. Between April 2025 and March 2026, loans granted to limited companies in the textile and clothing sector by banks and financial institutions increased by just 2 per cent, compared with the 7.1 per cent growth recorded by Italian businesses as a whole.
This already fragile situation is now compounded by the effects of the war in Iran and tensions in the Middle East, the impact of which is particularly significant for a sector that is highly exposed to international markets, D’Amico points out. Fashion companies are not only suffering the direct effects on production and trading costs caused by rising energy and raw material prices or difficulties in sourcing and delivering goods: the crisis has also affected demand in key markets for fashion and luxury goods, such as the United Arab Emirates and, more generally, the Gulf states. This spread of the crisis to the upper echelons of the market represents a new development, observes D’Amico. ‘Until now, we had become accustomed to seeing periods of difficulty – sometimes severe – in the core of the sector, whilst the luxury sector tended to be counter-cyclical,’ explains Crif’s CEO.
