Apparel companies are preparing for a slower end-of-year holiday season in the wake of the coronavirus, and they are managing their inventory accordingly.

Retailers and apparel brands such as The Gap Inc., American Eagle Outfitters Inc., Urban Outfitters Inc. and Steven Madden Ltd. are already coping with reopening stores and deciding what to do with spring and summer inventory after missing most of the season to sell that merchandise. Now they need to figure out how much to order for the fall and winter, including the key holiday shopping season, as the U.S. economy attempts to recover from a pandemic-fueled recession.

So far, companies have cut orders, made arrangements to store fall and winter inventory that doesn't sell until next season and rejiggered already finalized contracts with suppliers. Many clothing retailers place their orders three months before the start of a season, B. Ellie Jin, a professor at North Carolina State University's Wilson College of Textiles, said in an interview. That means many will be locking in their fall orders in June if they have not already, with similar deadlines for the holidays looming later this summer.

"The consumer demand will not be the same as before COVID-19," Jin said, referencing consumers' new work-from-home reality. "It's not like you want to buy more clothing to wear in a public setting."

While forecasts call for retail spending to recover from spring lows through the second half of 2020, analyst estimates indicate that sales will still be down from 2019 during retailers' busiest season.

"We're expecting significant declines in inventory purchases for the holiday," David Silverman, senior director for corporates at Fitch Ratings, said in an interview, adding that he expects sales at discretionary retailers to be down between 5% and 10% from 2019 during the holiday season.

Department stores and other mall-based clothing retailers such as Macy's Inc. and J. C. Penney Co. Inc. are especially at risk, even as movement and distancing measures ease, S&P Global Ratings said in a May 26 note.

Those kinds of forecasts are guiding retailer and brand decisions now, with many already taking fewer deliveries from factories overseas. Under Armour Inc.'s seaborne May imports fell to their lowest levels since 2010, according to data from Panjiva, a division of S&P Global Market Intelligence. Footwear brand Steve Madden's imports, meanwhile, fell to levels below those seen during the Great Recession in 2008 and 2009, and American Eagle's shipments fell more than 76% from May 2019.

Besides cutting new orders, many apparel brands have also asked manufacturers for discounts on already-signed contracts — or hinted that they will avoid paying altogether. Roughly 40% of brands surveyed by the Business and Human Rights Resource Centre, including Gap and Walmart Inc., did not guarantee that they would pay for all already-completed apparel orders, while 23% had asked for discounts on existing orders.

Retailer and brand desire for more discounts on orders is likely to pressure manufacturers and their workers in countries such as Bangladesh and Pakistan, many of which were struggling even before the coronavirus ravaged the global economy, said Thulsi Narayanasamy, senior labor researcher at the Centre.

"The level of discounts that they're asking for amounts to billions of dollars," Narayanasamy said. "As it is, suppliers barely cut even," but many lack the leverage to negotiate and are likely to capitulate to demands from customers.

Wisconsin-based Lands' End Inc. ended its first quarter with about $30 million in extra inventory as a result of the coronavirus-created sales slowdown, Executive Vice President, COO, CFO and Treasurer James Frederick Gooch told analysts June 2. But the company has been "able to reduce our receipts for fall and holiday as a hedge against potential softness in consumer demand," Gooch added.

Among Gap's initial reactions to the pandemic were a tightening of inventory purchases as well as its decision to pack away seasonal inventory for sale in 2021 — a strategy that the company plans to use for summer and fall inventory if demand proves underwhelming, Executive Vice President and CFO Katrina O'Connell told analysts June 4. "While there is a cost to storing this product, the economics are more advantaged than flowing the goods into what is likely to be a highly promotional environment," she said.

Steve Madden Chairman and CEO Edward Rosenfeld told analysts May 28 that retailers are looking to keep spring and summer lines on their shelves longer than usual in an effort to clear inventory. That, in turn, means that fall and holiday apparel will roll out up to a month later than usual, he added.

"I think it's pretty widely understood that retailers are planning fall conservatively," Rosenfeld said.

While spring represented a "lost season" for clothing retailers, fall and winter orders represent an opportunity to adjust inventory to post-lockdown demand, Silverman said. In addition to scaling back orders, retailers and brands have sought cheaper materials, removed buttons, or made other adjustments to garments during past downturns to bring down their on-the-rack prices. "There are things that you can do like that that can help control some of the costs," he said.