A fragile ceasefire between Israel and Iran took hold Tuesday, but the still-simmering conflict is injecting yet more uncertainty into the global fashion industry’s already tempestuous year.
The agreement came nearly two weeks after Israel launched an offensive on Iran and a few days after the US dropped massive “bunker buster” bombs on key nuclear facilities in the country. Israeli prime minister Benjamin Netanyahu and US president Donald Trump have proclaimed the operation a success, while intelligence reports offer a more mixed picture. Iran has avoided significant retaliation against the US, but remains defiant; on Wednesday, Iran’s parliament approved a bill to end cooperation with the UN’s nuclear watchdog.
Now, as the world waits to see what comes next, fashion must contend with yet another geopolitical crisis.
The industry has had to adapt to all sorts of once unthinkable disruptions, from the pandemic and Russia’s invasion of Ukraine to the war in Gaza, Houthi attacks on global shipping, Trump’s tariffs and now, Iran. And while this week’s ceasefire may hold, the knock-on effects of the last two weeks and the threat of future conflict in the region, range from the emotional to the economic.
Fashion is one of many industries that could feel an impact, both directly in rising costs should trade be meaningfully disrupted, and indirectly, should consumer sentiment sink further. Uncertainty is not good for business.
“[What is happening in Iran] is another shock to the system and macro picture of what consumers are looking at all the time,” said Sonia Lapinsky, partner at retail consultancy Alix Partners.
How does the crisis impact fashion?
All eyes are on the Strait of Hormuz.
This crucial chokepoint, just 30 miles wide at its narrowest point, handles about a quarter of global seaborne oil trade. Were the conflict to resume, Iran’s control over the Strait gives it the ability to cut off about one-fifth of the world’s supply of oil and natural gas via a blockade or attacks on ships, which could send prices soaring.
Shipping organisation Bimco warned of the threat to commercial freight in the Strait of Hormuz, Red Sea and Gulf of Aden rising. Surrounding areas around Dubai and the Gulf of Oman are seeing more congestion, as ships await orders, said Lara Tandy, associate director and Head of Middle East and North Africa, at S-RM, a corporate intelligence and cybersecurity consultancy.
Iran has threatened to block the Strait during previous conflicts, but has not actually done so. On Sunday, prior to the ceasefire, the country’s parliament approved a measure to close the shipping route, reported Iran’s Press TV. Experts say the prospect remains unlikely, given the adverse economic impact it would have on Iran as well as China, which has friendly relations with Tehran and is one of the biggest customers for its oil.
But even just an elevated sense of risk in the area is affecting shipping and insurance costs. In the days following US and Israeli attacks on Iran, the price of insuring shipments to the Middle East and Gulf doubled, according to Reuters.
Fashion doesn’t ship much apparel through the Strait of Hormuz, though disruptions there could cause cargo in the nearby Suez Canal from manufacturing hubs like Pakistan and India to see longer lead times and higher spot rates, said Chris Considine, head of retail supply chain at Alix Partners, in an email to BoF. Following Israel’s initial strikes, the Bangladesh Garment Manufacturers and Exporters Association warned should oil prices go up there could be “a spillover effect” on the ready-made clothing sector.
Oil prices are a bigger concern. Petroleum-based synthetic fibres like polyester are incorporated into 60 percent of clothing worldwide, said TD Cowen in a note.
The price of Brent crude, the international oil benchmark, jumped to a four-month high prior to the ceasefire, but have since given up most of those gains. The rapid rise in US oil production over the last 15 years has also reduced the world’s reliance on crude from the Middle East, lessening the impact even the closure of the Strait of Hormuz would cause.
Still, volatile oil prices are one more headache for businesses. Typically, there’s a close correlation between prices at the pump and apparel spend — when the former rises, the latter falls. General economic uncertainty has already forced brands to do everything in their power to keep consumers shopping, including turning to promotions and discounting, said Lapinsky; this means yet another hurdle.
“This is one more thing that retailers are like ‘Oh geez, we are not catching a break,’” said Lapinsky.
How are consumers reacting?
Dubai, Qatar, Bahrain and other Gulf States have been a bright spot for the challenged luxury industry, and are just across the Persian Gulf from Iran. Where Bain & Co. sees global luxury sales shrinking by up to 5 percent this year, sales in the Gulf Cooperation Council countries are set to grow an average of 6 percent from 2024 to 2027, retail giant Chalhoub Group estimated in a May report.
While locals and expats are adept at carrying on despite conflict nearby, tourism and travel shopping around the region will likely be disrupted. Airlines including United and American paused flights to Dubai and Doha until early July. (Emirates flights are mostly pushing on, though rerouting to avoid Iranian airspace.)
It’s against a backdrop of already slowing global travel: International visits to the US were down 12 percent in March and summer bookings from the US to Europe sunk nearly 10 percent from January to May compared to last year, according to aviation data firm Cirium.
War, uncertainty and fear can depress consumer spending in countries far from the fighting. Consumer confidence plunged across Europe after Russia invaded Ukraine, another conflict that pushed up energy prices.
People “get practical,” said Katie Thomas, head of Kearney’s Consumer Institute. “You’re really just spending on necessities.”
There’s also a psychological toll.
In the US, consumer confidence has been on a rollercoaster ride this year, plunging after Trump’s tariff announcement in April, rising when most of those levies were put off in May, then falling again in June as some retailers began to increase prices, according to data published by the Conference Board this week.
Iran likely wasn’t a factor in the June dip, but with consumers already feeling unsettled, it may not take much to further dampen the mood.
“All it’s going to take is something to snap,” said Thomas. “We can’t keep stretching forever and ever.”
THE NEWS IN BRIEF
FASHION, BUSINESS AND THE ECONOMY
Nike fourth-quarter sales fall by less than expected. Nike said it would cut its reliance on production in China to mitigate the impact from US tariffs on imports, and forecast a smaller-than-expected drop in first-quarter revenue, sending its shares up 11 percent in extended trading.
Target is reportedly exploring the factory-direct shipping model used by Temu. The retailer is in the early stages of trialing the delivery of products from factories directly to customers’ homes in order to broaden its low-cost offerings, which would include apparel, household goods and other non-food items.
Forever 21’s US operator won court approval to liquidate. F21 OpCo’s plan to partially repay vendors and other creditors was accepted on Tuesday, three months after the company filed for bankruptcy in March. Per the agreement, unsecured creditors will receive 70 percent of any net proceeds F21 OpCo recovers during liquidation.
Selfridges won approval for a private members’ club. The department store chain’s request to convert staff office space in its flagship London outlet into a membership venue with a terrace and private dining room, as part of a wider push for a “shopping and social destination” in the spring, was approved by the Westminster City Council.
Elliott-backed Claire’s is eyeing a sale as tariffs hit the budget jeweller. Houlihan Lokey Inc. is reportedly leading the search to find potential buyers of all or part of the embattled Claire’s Stores Inc., which must address an almost $500 million loan due in December 2026 and endure high tariffs on cheaper goods from China.
Fashion’s suppliers want more say on climate action. A new initiative led by apparel and textile manufacturers aims to give suppliers a bigger voice at the table. At present, “brands just make a statement and then expect us to pay the bill for it,’ said Bangladesh-based manufacturer Miran Ali.
Retail emerges as most distressed sector in Europe, report says. Retail is suffering from weak discretionary spending, margin compression and tightening credit conditions, pushing distress in the sector to the highest level since the global financial crisis in 2009.
THE BUSINESS OF BEAUTY
Unilever will acquire men’s personal care brand Dr. Squatch. Financial terms were not disclosed, though Dr. Squatch’s sales are reportedly upwards of $400 million. Founded in 2013, Dr. Squatch is distributed in retailers including Walmart, Target and Boots.
Swiss antitrust authorities opened an investigation into Nivea pricing. The COMCO investigation will probe into whether Nivea parent Beiersdorf is charging Swiss retailer Migros Online higher prices for its Nivea products than comparable retailers abroad, and will determine if Beiersdorf has relative market power over Migros.
Amazon’s Premium Beauty push may be a buffer against Trump’s tariffs. The Seattle-based e-tailer has been cracking down on counterfeits and fortifying its beauty offerings, which now include Estée Lauder’s Clinique, Olaplex and L’Oréal’s Urban Decay, in order to offset the impact of tariffs on its upcoming Prime Day shopping event in July.
PEOPLE
Prada CEO Gianfranco D’Attis will exit the brand. D’Attis will leave the Italian luxury brand at the end of the month, when Prada Group CEO Andrea Guerra will assume the role at the brand on an interim basis.
Glossier CEO Kyle Leahy will exit the company. Leahy will leave her role by the end of 2025 after three years at the brand’s helm, during which she oversaw Glossier’s expansion into Sephora, the opening of brick-and-mortar stores and the brand’s successful foray into fragrances. She will remain in her board seat through next year, and will assist in the search for a successor.
Ulta Beauty chief financial officer will depart, an interim leader was appointed. CFO Paula Oyibo resigned after just over a year in the position and named senior vice president comptroller Chris Lialios its interim finance chief. The beauty retailer has begun an external search for a permanent successor.
UTA named Darnell Strom to lead its London office. Partner Strom will oversee the United Talent Agency’s UK operations and lead its expansion across Europe, the Middle East and Africa in a newly created role. Strom, whose clients include Jonathan Anderson, Gisele Bundchen and i-D Magazine, has been a UTA partner since 2019.
MEDIA AND TECHNOLOGY
Anna Wintour makes room for new editorial leader at US Vogue. Wintour has begun the search for a new ‘head of editorial content’ to steer day-to-day operations at the American edition of Vogue. The longtime editor-in-chief will continue to oversee the title as global editorial director of Vogue as well as chief content officer at publisher Condé Nast.
Swedish textile recycler Syre will partner with Gap, Target as demand for sustainable clothing grows. Syre, which was co-founded by H&M and investment group Vargas, plans to provide Gap with 10,000 tons of its polyester chip per year, while Target aims to incorporate its recycled polyester into select products.
AI shopping platform Daydream launched in the US. The Julie Bornstein-co-founded platform which offers AI-curated products tailored to users’ tastes launched to the US public on Wednesday. Daydream already has over 200 retail and brand partners and a catalogue of almost 2 million products.
Fantastic Man magazine launches in China. Former Wallpaper China editor-in-chief Jiacheng Guo will join the publication, which will debut on digital platforms and release its first print issue in September, as editorial director.
Compiled by Jessica Kwon and Diana Pearl.
