I've found this recent statement from the Salvation Army (my bolding).
TL;DR, yes when it's a Sally Army clothing bank they do try to re-use good quality clothing. But for less good quality stuff there's global oversupply.
https://salvationarmytrading.org.uk/statement-on-reduction-in-clothing-banks/
Statement on Reduction in Clothing Banks
16.2.2026
Salvation Army Trading Company Ltd (SATCoL) has made the difficult decision to reduce its clothing collection bank network around the UK.
Like many charity collectors, SATCoL is experiencing challenging market conditions. A combination of global, local and economic pressures has significantly affected the textile reuse and recycling sector and means we are no longer able to cover the full cost of collecting and processing donations through our clothing bank network.
Our profits go towards The Salvation Army’s community work and so we want to ensure every donation helps us raise money for the UK’s most vulnerable people.
Although the demand for second-hand clothing has increased in recent years in the UK, there remains an oversupply and we have to sell many donations on the international second-hand textiles market via trusted traders, similar to other charities and textile collectors. In recent years, there has been a huge increase in low quality second-hand clothes in circulation across the world which has significantly decreased the value of this market. This directly impacts how much we are able to help fund The Salvation Army’s essential community work which is why we have to make changes to how we operate.
Therefore, from February we will start to remove some of our clothing banks from locations across the UK but thousands of clothing banks will remain in place and be available for public use. You can also donate by post to us.
Aaron Johnson, SATCoL’s Director of Clothing Collection Division, said:
“We are always really grateful when people make the effort to donate their clothing. There are still thousands of Salvation Army clothing banks in operation but we understand it will be frustrating if you visit one that has been removed.
“We want to reassure our generous donors that we are giving careful thought to any decisions to remove clothing banks. We know that you want your donations to go towards supporting vulnerable people and reducing our clothing bank network will help ensure that your donations do just that.
“We are still in need of good quality second-hand clothing for sale in our charity shops and donation centres, and many thousands of these items are passed on to people who have very little or nothing at all. If your nearest clothing bank has closed, please use the map to see where the next donation point is or consider using our Donate by Post scheme.”