KRNT, KTB: Retail Destocking Pushes Screen Printers to Digital

Kornit Digital (KRNT), Kontoor Brands (KTB) and Gildan Activewear (GIL) each said on quarterly earnings calls held between 30 July and 12 August 2026 that retailers are holding inventory and forward order commitments at low levels, and that on the equipment side of the same chain about 60% of digital printing systems are now sold to traditional screen printers [1][2][3].

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Why retail destocking pushes screen printers to digital

The graphics on branded apparel are usually applied by contract decorators. The traditional method is screen printing: a mesh screen is made for each design, then ink is pressed through it garment by garment. Making the screen is a fixed cost, so it only pays off when several thousand identical pieces are printed. Digital printing works more like an inkjet printer, spraying the design straight onto the garment with no screen to make, so the cost of printing one piece is close to the cost of printing a thousand. The division of labor used to be clear: long runs went to screen, short runs and customization went to digital.

What changed is how orders are placed. Once retailers cut their forward order commitments, brands broke orders into smaller batches, placed them later and moved production closer to where the goods are sold. Kornit's CEO said in the Q&A that screen printers now want agility, flexibility, faster turnaround and much shorter run lengths, and that labor has become both hard to retain and expensive, which makes automation matter more [1]. When orders for several thousand identical pieces become scarce, the fixed cost of making a screen no longer amortizes, and screen printers start buying digital equipment themselves. Because the cause sits with the retailers' ordering policy, decorators serving the same customers face it together.

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Three companies at three points in the chain, within two weeks

Kornit said on 12 August that approximately 60% of system sales in both the second quarter and the first half of 2026 went to traditional screen printers [1]. In the first quarter that share was approximately 65%, with about 40% of system sales coming from new customers buying primarily for long-run production environments [4]. Holding across two consecutive quarters, the mix is more than a single quarter's noise.

On the same day, Kontoor's CFO described the other end of the chain. Wrangler's point-of-sale performance was solid and the brand kept gaining share, yet retailers remained very cautious about inventory management and forward order commitments, which affects the brand's sell-in from quarter to quarter. Inventory at retail was down high single to low double digits in certain parts of the market, and the company has not assumed in its forward growth plans that this improves [2]. Gildan added a third vantage point on 30 July, reporting lower seasonal inventory builds at certain large retail customers, which management attributed to softness in the broader market and to retailers managing their inventories [3].

The three companies sit in different places and measure different things. What they jointly support is that lean retail stocking has lasted long enough for a brand to treat it as the base case, and that the buyer mix for printing equipment changed over the same period. What they do not jointly establish is the cause: Gildan's explanation stops at weak demand, which is a cyclical reading.

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The decorator's capital budget moves, and the vendor's customer base widens

Shifting a decorator's capital budget from screen to digital is hard to reverse. A shop does not keep a screen room and a digital floor running side by side indefinitely, so the next restocking cycle does not easily undo the decision. On the vendor side, the addressable customer moves from custom and short-run shops to mainstream high-volume decorators, which raises the size of the deals available.

For the brands, the effect lands on who can serve a retailer's replenishment orders. Kontoor said Wrangler is more replenishment driven and that its own manufacturing helps in that regard, given the short lead time [2] — an arrangement that holds up better when retailers compress forward commitments.

The boundary sits in where the evidence comes from. The shipment mix is disclosed by the equipment vendor that benefits from it, and nothing in the record shows that run lengths at those shops have actually shortened. Buying one digital system may add a capability at the margin rather than convert bulk production. Kornit was already arguing in November 2022 that brands wanted to move offshore mass production to near-shore and onshore on-demand production [5], so the argument predates this round of destocking. Three things can be checked from here: the screen-printer share of Kornit's system shipments, the new-customer share, and whether retail inventory recovers.

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Companies exposed to this shift

• Cimpress Plc (CMPR): runs a custom printing e-commerce business that already produces in single units and short digital runs [6], competing for the same orders that are being broken into smaller batches, so shorter retail ordering feeds directly into its order mix.
• MIMAKI ENGINEERING CO.,LTD. (6638.T): a Japanese industrial inkjet equipment maker whose line covers textile and garment digital printing [6], facing the same screen printers now considering a change of equipment, which is the widening customer base described above.
• Hangzhou Honghua Digital Technology (688789.SH): a digital textile printing equipment manufacturer [6] on the supply side of the same purchase, and one of the places a decorator's capital budget can go when it moves away from screen.

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Sources

[1] Drillr · Kornit Digital (KRNT) · 2026-08-12 · FY2026 Q2 earnings call

"Approximately 60% of system sales in both Q2 and the first half of 2026 were to traditional screen printers, providing clear evidence of the momentum we are seeing in the transition from analog to digital production."

[2] Drillr · Kontoor Brands (KTB) · 2026-08-12 · FY2026 Q2 earnings call

[3] Drillr · Gildan Activewear (GIL) · 2026-07-30 · FY2026 Q2 earnings call

[4] Drillr · Kornit Digital (KRNT) · 2026-05-13 · FY2026 Q1 earnings call

[5] Drillr · Kornit Digital (KRNT) · 2022-11-09 · FY2022 Q3 earnings call

[6] Drillr · company search · 2026-08-13 · candidate companies in digital textile printing and garment decoration equipment

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