Market-share gains, recycled-thread sales and the OrthoLite acquisition supported results, but cautious ordering and higher financing costs continued to pressure earnings.
Coats Group reported first-half 2026 revenue of $837 million, up 19% on a reported basis but only 1% organically at constant exchange rates. The difference largely reflects the acquisition of footwear insole specialist OrthoLite. Coats said its underlying apparel and footwear markets declined by a mid-single-digit percentage as brands and manufacturers maintained lean inventories amid tariff and geopolitical uncertainty.
Apparel gains share, but margin narrows
Apparel division revenue increased 1% to $486 million, outperforming a declining core thread market. Growth came from customer gains, stronger domestic demand in China, automotive threads and continued expansion of 100% recycled sewing thread.
Adjusted apparel EBIT fell 2% to $92 million, reducing the division’s margin by 50 basis points to 18.9%. Coats attributed the decline to investments in technology and growth initiatives, including Coats Digital, despite productivity measures and price increases offsetting inflation in raw materials, wages, energy and freight.
Revenue from 100% recycled thread rose 11% at constant exchange rates to $297 million, compared with $269 million a year earlier. Coats Digital also launched an AI-enabled garment-costing tool, while bookings for its GSD product suite increased 57%.
OrthoLite lifts footwear scale
Footwear revenue reached $351 million, up 57% as reported but flat organically. Adjusted EBIT increased to $74 million, while the margin improved 30 basis points to 21.1%. OrthoLite contributed to the reported increase, although its own revenue weakened against a strong comparison period and temporary capacity constraints in Indonesia.
Coats expects at least $5 million of OrthoLite cost synergies in 2026, rising to $20 million annually by 2028. It also sees more than $40 million of incremental annual sales synergies by 2030.
Orders remain tightly managed
Group adjusted EBIT rose 19% to $166 million on a reported basis but declined 2% organically. The 19.8% margin was unchanged, while adjusted earnings per share fell 6% to 4.4 cents because of higher acquisition-related interest costs and additional shares in issue.
Coats retained its full-year outlook and expects about $15 million of additional cost benefits in the second half. For apparel suppliers, its results indicate that brand inventories are lean, but meaningful order recovery remains dependent on improved market confidence and reduced tariff uncertainty.
