Coats Group Maintains Outlook Despite 1% Revenue Decline from Weak Demand

We start with a key fact: Coats Group’s revenue fell by 1 % in the four‑month period to 31 October 2025. Despite that decline, the company has held its full‑year outlook unchanged.
That sends a clear message: while demand is weak, Coats Group believes in its strategy and resilience. We look at who Coats Group is, what caused the revenue dip, how the company is responding, and what could come next.

Company Overview

Coats Group is a British company with a long history; its roots trace back more than 250 years.
It is a world‑leading manufacturer of industrial threads, structural components for footwear, technical yarns and fabrics, and digital solutions for apparel and footwear supply chains.
The company serves major brands in apparel and footwear. It operates globally and is listed on the London Stock Exchange, being part of the FTSE 250 Index.

In simple terms, Coats Group supplies the threads and engineered materials that go into clothes and shoes, as well as technical fabrics and digital tools for manufacturers. It’s a key player in the textile‑industrial world.

Recent Financial Performance

In its trading update covering 1 July to 31 October 2025, Coats Group reported group revenue was down 1 % at constant exchange rates (CER).
Breaking this down by division:

• The Apparel division’s revenue fell by 2 %.
• The Footwear division’s revenue dropped by 4 %.
• Performance Materials, however, grew revenue by 4 % in the period, helped by safety fabrics, energy tapes, and automotive‑thread growth.

Despite the dip in revenue, operating profit was broadly in line with the same period last year, and margins remained at the company’s medium‑term target range of about 19‑21 %. Cash generation remained robust, though net leverage (net debt to EBITDA) rose slightly due to the acquisition of OrthoLite Holdings LLC. The company expects leverage to fall below 2× by the end of 2026. Comparing this to previous reporting: in its half‑year report earlier in 2025, Coats had shown modest growth at CER and margin improvements.
In short, revenue dipped modestly, but the business held up in profit and cash terms, and management is signalling confidence.

Market Challenges and Weak Demand

What caused the revenue decline? The company cites subdued market conditions and cautious buying patterns from customers.
Some of the specific headwinds:

• Global macroeconomic uncertainty. Tariffs and trade‑policy volatility affect apparel/footwear supply chains.
• In the Footwear business, brands are ordering more cautiously, reflecting softer consumer demand and possibly inventory concerns.
• In Performance Materials, weakness in telecoms and industrial end‑markets weighed in some segments.

For Coats Group, this means that while their orders are strong in some growth areas, overall volume is under pressure. The growth in the adjacencies (like safety fabrics, energy tapes) helped offset some of that softness.
This all shows that even established players like Coats are sensitive to broader demand swings and supply‐chain dynamics.

Strategic Response and Maintaining Outlook

So, how is Coats responding? And why is it still optimistic?

First, Coats has taken steps to improve the quality of its business portfolio. It exited its low‑margin North American Yarns business, focusing instead on higher‑growth, higher‑margin segments.

Second, the acquisition of OrthoLite (closed end‑October 2025) adds a footprint in the footwear insole market, a fast‑growing component area for the footwear industry. Coats says this improves the mix of its business.

Third, cost and margin discipline: even in the weak demand environment, Coats maintained margins and managed pricing and mix effectively. For example, in the Apparel division, it maintained around a 20 % margin by focusing on premium and sustainable thread offerings. 

Fourth, Coats is leveraging its sustainability and innovation credentials. It is pushing more recycled thread products and digital solutions for manufacturers, which gives it a differentiation edge.

Finally, the company kept its full‑year outlook unchanged. It expects full‐year trading to be in line with expectations, supported by a resilient model and global presence.
In short, we see a company that is not just reacting to a weak period but adapting its business to be stronger for the future.

Conclusion

To sum up: Coats Group recorded a 1 % revenue decline in the recent period, driven by weaker demand in its core apparel and footwear markets. Yet the company held its full‑year outlook firm. That shows that management believes they have the tools and portfolio to ride out the current headwinds. The strategic shifts, exiting low‑margin business, acquiring growth‑oriented assets, a   focusing on innovation and sustainability, point to a company preparing for the next phase of growth. We will watch as the full‑year results come in (scheduled 5 March 2026) to see whether that confidence pays off. For now, Coats Group’s message is clear: “We see the challenge. We’re handling it. And we’re ready for what’s next.”

Disclaimer:

The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.