Jerash Holdings (US), Inc. (JRSH): SWOT Analysis [Nov-2025 Updated]

You need a sharp, actionable analysis of Jerash Holdings (US), Inc. (JRSH) for late 2025, and here it is: The company's strategic strength-its vertically integrated, ethically sourced production in Jordan and Ethiopia-gives it a powerful cost and transparency edge, but this advantage is defintely offset by a critical vulnerability. Their reliance on a small number of top clients means a single contract change could dramatically shift their financial outlook, so understanding this customer concentration risk is the first step before weighing the opportunities for geographic and product expansion.

Jerash Holdings (US), Inc. (JRSH) - SWOT Analysis: Strengths

Operates primarily in Jordan, benefiting from Qualifying Industrial Zone (QIZ) trade agreements with the U.S.

The core strength of Jerash Holdings is its strategic manufacturing base in Jordan, which provides a massive competitive advantage in the U.S. and European markets. Operating within a Qualifying Industrial Zone (QIZ) allows the company to export products to the United States duty-free and quota-free. This benefit is critical, especially when competing against manufacturers in countries facing reciprocal tariffs, like the 15% new reciprocal tariff on Jordan (under the Free Trade Agreement), which is still substantially lower than the 30% tariff on China. The QIZ status requires that the total cost of production must be at least 35% of the product's appraised value, with a minimum of roughly 20% coming from Jordanian and Israeli inputs.

This tariff mitigation is a direct driver of revenue, as evidenced by U.S. sales accounting for 89% of total sales in the second quarter of fiscal year 2026 (ended September 30, 2025). For fiscal year 2025, the company achieved a record annual revenue of $145.8 million, a 24.4% increase year-over-year, which demonstrates the value customers place on this tariff-friendly supply chain.

Vertically integrated manufacturing capabilities, controlling the entire production process from knitting to finishing.

Jerash Holdings maintains a high degree of control over its production process, operating a vertically integrated model that covers everything from cutting and embroidery to sewing, ironing, and final packaging. This control minimizes reliance on external vendors for key stages, helping to manage quality and lead times. The company's production facilities in Jordan comprise six factory units and four warehouses, employing approximately 6,000 people.

This robust infrastructure supports an annual production capacity of more than 20 million pieces of ready-made sportswear and outerwear. The company is actively scaling this capacity, with a 15% increase expected to be realized starting in the second quarter of fiscal year 2026 due to facility expansions. That's a significant jump in output. The vertical setup also helps Jerash maintain a solid gross margin, which improved to 15.3% for the full fiscal year 2025, up from 14.4% in the prior year.

Strong, established relationships with major global apparel brands and retailers.

Jerash's long-standing reputation as a reliable, high-quality manufacturer is one of its most valuable intangible assets. The company serves a diverse, yet blue-chip, list of global apparel brands and retailers, which provides a stable revenue base and validates its operational excellence.

In fact, the factories were fully booked through December 2025, showing strong, near-term demand. The customer base is concentrated but highly valuable, a double-edged sword that is currently a strength given the caliber of the brands. For the second quarter of fiscal year 2026, the sales mix shows this concentration clearly: VF Corporation accounted for 60% of sales, and New Balance for 12%. They recently secured a major initial order from a large U.S.-based multinational and omnichannel retail corporation through a strategic partnership with Hansoll Textile, which is a clear sign of growing customer diversification.

Production facilities in Jordan offer geographic diversification and cost flexibility.

While the company's manufacturing is centralized in Jordan, the multi-site structure within the country and the specific trade agreements provide a significant form of geographic and cost diversification. The facilities are spread across key areas in Jordan, including the Al Tajamouat Industrial City in Amman and a facility in Al-Hasa County, south of Amman. This internal diversification mitigates single-site operational risks. The labor force of approximately 6,000 people is highly diverse, including local Jordanian workers and imported workers from countries like Bangladesh, Sri Lanka, India, Myanmar, and Nepal, which helps ensure a steady and skilled labor supply.

The real cost flexibility, however, comes from the trade agreements. The QIZ status is not only about tariffs but also about access, which is why Jerash is attracting new global brands seeking manufacturing partners outside of Asia. This is a defintely a strategic advantage. Beyond the U.S. QIZ, the company also benefits from long-standing duty-free agreements with the European Union (EU) and the United Kingdom (UK), further broadening its market access and insulating it from regional trade disputes that affect other sourcing hubs.

Jerash Holdings (US), Inc. (JRSH) - SWOT Analysis: Weaknesses

Significant Customer Concentration Risk

You need to be clear-eyed about Jerash Holdings' over-reliance on a few major customers; this is the single biggest operational risk. The company is a contract manufacturer, so its revenue stability is directly tied to the purchasing decisions of a handful of large, global apparel brands. Honesty, this level of concentration is a red flag for any analyst.

Looking at the second quarter of fiscal year 2026, which ended September 30, 2025, the sales mix remained heavily concentrated. The top two customers accounted for a massive portion of total revenue. If one of these key clients decides to shift its supply chain to another region, the impact on Jerash Holdings' top and bottom lines would be immediate and severe. Here's the quick math on the concentration:

Furthermore, geographic concentration compounds this risk. Sales to the U.S. market made up approximately 89% of total revenue in the same quarter, meaning any adverse trade policy changes specific to U.S.-Jordan relations could also be catastrophic. One-liner: Too many eggs are in too few baskets.

Limited Brand Recognition and Direct-to-Consumer Presence

Jerash Holdings operates exclusively as a wholesale manufacturer, producing custom, ready-made sportswear and outerwear for leading global brands like VF Corporation (which owns The North Face and Timberland), New Balance, and American Eagle. This business model, while providing stable, large-volume contracts, means the company has virtually no proprietary brand equity or direct-to-consumer (DTC) channel to fall back on.

The company's success is entirely dependent on its manufacturing efficiency and its customers' brand performance. They are essentially a 'silent' partner. This limits their ability to capture higher margins that come with brand ownership and makes them vulnerable to pricing pressure from their powerful clients. They simply cannot dictate pricing; they must accept the contract terms. This is a classic contract manufacturing limitation.

• Lack of proprietary brand to drive consumer demand.
• No direct-to-consumer channel to capture higher retail margins.
• Revenue growth is capped by the capacity and demand of wholesale contracts.
• Limited control over the final selling price of their manufactured goods.

Exposure to Geopolitical Instability and Regulatory Changes

Operating primarily in Jordan, with some expansion into East Africa, Jerash Holdings is inherently exposed to the geopolitical volatility of the Middle East. While Jordan offers a competitive advantage through trade agreements, regional conflicts can quickly disrupt logistics and operations. We've seen this play out recently.

During fiscal year 2025 and into fiscal year 2026, the company faced concrete logistics challenges due to regional conflicts, which forced them to explore alternative shipping routes. While they successfully navigated this by using the Aqaba port and Jebel Ali as alternatives to the disrupted Haifa port, these diversions add complexity and cost. Also, the regulatory environment is a moving target. The U.S. tariff landscape shifted in 2025, with a baseline tariff on imports implemented and later modified to 15% on July 31, 2025. Although the importer pays the tariff, such changes can influence customer demand and sourcing decisions away from regions like Jordan.

Pressure on Gross Margins Due to Rising Costs

Despite a strong full-year fiscal 2025 gross margin of 15.3% (up from 14.4% in FY 2024), there is clear and recent evidence of margin pressure. The core issue is that rising input costs are outpacing the company's ability to raise prices on its fixed-term manufacturing contracts.

The second quarter of fiscal year 2026 saw gross margin compress to 15.0%, down significantly from 17.5% in the prior year quarter. Here's the key metric: the cost of goods sold (COGS) rose to an alarming 85% of sales in Q2 FY2026, up from 82% in Q2 FY2025. This compression is a direct result of rising production costs, including labor and raw materials, even as the company strives for efficiency through economy of scale. The near-term outlook confirms this trend, with Q3 FY2026 gross margin guidance projected to be between 13% to 15%. This indicates that cost management is a defintely ongoing struggle.

Jerash Holdings (US), Inc. (JRSH) - SWOT Analysis: Opportunities

Expand manufacturing capacity in lower-cost regions like Ethiopia to improve cost structure.

The most immediate and actionable opportunity is to continue expanding production capacity to meet the growing demand, which currently has factories fully booked through at least February 2026. Jerash Holdings already completed a significant facility expansion in Jordan in June 2025, which added approximately 15% to its production capacity. This move is critical for sustaining the revenue growth seen in fiscal year (FY) 2025, which hit a record $145.8 million, up 24.4% year-over-year.

While the long-term plan includes evaluating strategic acquisitions and land development to further increase capacity, the goal is to improve the gross margin, which was 15.0% in Q2 FY2026, down from 17.5% in the prior year. A successful long-term expansion into a truly lower-cost region, even if not specifically Ethiopia as of late 2025, would be a game-changer for margin recovery. The company's stated goal is to return to a 20% gross margin within the next five years. Here's the quick math: pushing the gross margin from 15.0% back toward 20% on a base of over $145 million in annual revenue creates a substantial increase in gross profit, so that's the focus.

Diversify the customer base by targeting new mid-tier and specialty retailers in the U.S. and Europe.

Customer concentration remains a significant risk, so the ongoing diversification effort is a clear opportunity. As of Q2 FY2026, sales are still heavily concentrated, with VF Corporation accounting for 60% of total sales and New Balance representing another 12%. The company has already made headway in fiscal 2025 and 2026, which is driving higher U.S. shipments.

A key win for diversification is the strategic collaboration with South Korean apparel group Hansoll Textile, which resulted in a major initial order for a large multinational U.S. retail corporation. This order includes more than 3 million pairs of girl shorts, with shipments scheduled through February 2026. Moreover, the company has successfully entered the European market, which is a massive opportunity given its duty-free access to the European Union (EU) and the United Kingdom (UK) from Jordan. The strategy is working, but it needs to accelerate.

Capitalize on the global trend toward supply chain transparency and ethical sourcing, a key strength of their Jordanian operations.

The apparel industry is defintely moving toward ethical sourcing and supply chain transparency, and Jerash Holdings is perfectly positioned to capture this shift thanks to its Jordanian operations. The company's manufacturing is conducted in a special free trade zone, allowing sales within the U.S. without tariff or quota restrictions under the Qualifying Industrial Zone (QIZ) agreement, which was later modified to a reciprocal tariff.

The tariff advantage is stark and directly influences global brand sourcing decisions:

• Jordan's reciprocal U.S. tariff is 15%.
• This compares favorably to China's tariff of 30% and India's tariff of up to 50% (as of August 2025).

Plus, the company has strong ethical credentials. Jerash Holdings holds multiple international certifications for labor, social, and ethical compliance. Their efforts to employ Syrian refugees, which was highlighted by the World Bank, provide a powerful narrative for global brands like The North Face, which had a collection made by an all-female Jerash factory. This ethical advantage is a major selling point to U.S. and European brands facing intense consumer scrutiny.

Increase product offerings beyond knitted apparel into adjacent categories like accessories or technical textiles.

While Jerash Holdings is known for its ready-made sportswear and outerwear, expanding the product mix is a clear path to higher wallet share with existing customers. Their current product mix for FY2025 shows a heavy reliance on core categories: Crew Neck at 37% of total pieces sold, and Pants/Shorts/Vest at 25%. The company is actively discussing additional product categories with customers, which is the right move.

The opportunity lies in leveraging their expertise in high-performance fabrics, which is a core capability from their work with outdoor clothing experts. Moving into technical textiles-things like smart fabrics, high-durability materials for industrial use, or specialized accessories-would open up new, potentially higher-margin revenue streams. They have the capability to pivot, as demonstrated by their quick shift to manufacturing non-medical face masks during the pandemic. The current product breakdown shows where the focus is, and where the white space is:

• Crew Neck: 37%
• Pants/Shorts/Vest: 25%
• Jackets: 21%
• Polo/Others: 17%

The 17% 'Polo/Others' category is where adjacent products, like accessories or specialized technical apparel, could be strategically grown to a much larger share. Finance: Model a scenario where the 'Others' category grows to 25% of total unit volume by EOY FY2026.

Jerash Holdings (US), Inc. (JRSH) - SWOT Analysis: Threats

You're looking for the clear-eyed risks that could derail Jerash Holdings' recent momentum, and honestly, the biggest threats are structural and tied directly to their operating model. The company's heavy customer concentration and the shifting sands of global trade policy-specifically the new U.S. reciprocal tariff-are the two most immediate concerns that could impact their fiscal 2026 performance.

Potential loss of a major customer or a significant reduction in orders from top clients

This is the single largest near-term threat to Jerash Holdings. The company relies on a very small number of clients for the vast majority of its revenue. In fiscal year 2025, sales to VF Corporation (which owns brands like The North Face, Timberland, and Vans) accounted for approximately 65% of the company's total sales.

Here's the quick math: if one customer represents nearly two-thirds of your business, any hiccup in their ordering cycle or a strategic shift away from Jordan manufacturing immediately creates a massive revenue hole. Plus, Jerash Holdings is not protected by long-term contracts or minimum purchase requirements with VF Corporation or any other major customer. This means orders are essentially discretionary, and that's a precarious position for a publicly traded manufacturer.

• One client risk: 65% of FY2025 sales came from VF Corporation.
• No contract safety: Sales arrangements lack minimum purchase requirements.
• Orders are variable: Revenue stability is highly dependent on a few major buyers.

Increased competition from lower-cost Asian manufacturers as global supply chains re-optimize

While Jerash Holdings benefits from brands seeking to diversify away from China, the competitive landscape is still brutal. Jordan's appeal is partly its favorable trade status, but new tariffs and increasing local competition are chipping away at this advantage.

The company is seeing increased competition right on its doorstep. Other large apparel groups, including some from Bangladesh, have recently launched or are exploring new factory operations in Jordan. This intensifies the fight for skilled labor and local resources. What this estimate hides is the potential for a race to the bottom on pricing, which would pressure Jerash's gross margin, which was 15.3% for the full fiscal year 2025.

Changes to U.S. trade policy or the expiration of key QIZ benefits could erode their cost advantage

The core of Jerash's competitive edge is Jordan's trade agreements, but policy changes are introducing new costs. The long-standing duty-free status for Jordanian apparel imports into the U.S. has been replaced by a new reciprocal tariff of approximately 15%. To be fair, this 15% is still significantly lower than the 30% tariff cited for China or the potential 50% for India, but it is a direct, material increase in the cost of goods sold for their U.S. market, which accounted for 88% of total sales in fiscal 2025.

Also, local operating costs are rising. The sales tax exemption granted to Jerash Garments by the Jordanian Investment Commission expired in February 2024. Furthermore, the corporate income tax rate in Jordan has been steadily climbing, reaching 19% or 20% plus a 1% social contribution as of January 1, 2023. This means the company is paying more to the Jordanian government, which directly impacts net income.

Currency fluctuation risk, particularly the Jordanian Dinar's peg to the U.S. Dollar, impacting operating costs

Jerash Holdings is exposed to currency risk because its revenue is largely denominated in U.S. Dollars, but a substantial portion of operating expenses-like personnel and facilities-is paid in Jordanian Dinars (JOD).

The JOD is currently pegged to the USD, which provides a welcome stability. But still, the risk is that this peg could be abandoned or adjusted. Any defintely significant appreciation of the JOD against the USD would directly increase the cost of their JOD-denominated expenses when translated back into USD for reporting purposes, squeezing their operating income, which was $1.4 million for the full fiscal year 2025. The risk is low-probability but high-impact. Finance: Monitor the JOD/USD peg stability indicators weekly.