Abstract The COVID-19 pandemic is a public health crisis that has triggered a global economic recession. We investigated COVID-19’s effect on firm performance through the case of the U.S. textile and apparel industry and showed that textile and apparel firms experienced a sharp decline in firm performance following the COVID-19 outbreak. Specifically, the textile and apparel industry has been affected more adversely than have other industries, including transportation, entertainment, and hospitality. Furthermore, COVID-19’s adverse effect on firm performance in the textile and apparel industry is greater than that of the 9/11 terrorist attacks and the 2008 recession. We additionally found that the Coronavirus Aid, Relief, and Economic Security (CARES) Act benefited the textile and apparel industry significantly more than other industries immediately following its announcement. The empirical findings of this study contribute to the existing literature by providing insight into the textile and apparel firms’ financial performance during the COVID-19 outbreak.