Affected by the epidemic, the performance of the footwear and apparel industry last year “falled more than it rose”, and brand owners who survived the cold winter encountered a “cold spring” again. Huge inventory provisions, house sales, and even “cross-border” self-rescues were successively launched in A-share shoes. Serving listed companies “staged”. Under the “sequelae of the epidemic”, the inventory and cash flow of the footwear and apparel industry are under pressure.
But this lonely scene may be repaired in 2021. More than one garment factory told the Associated Press that orders in the first quarter of this year improved significantly compared to last year, but were slightly worse than before the epidemic. An insider from a well-known domestic clothing listed company said, “The retail sales of the clothing industry during the Spring Festival should be higher than during the epidemic and even during the Spring Festival in 2019, but it is not completely certain whether the trend is sustainable.”
Shoes and clothing companies encounter “sequelae of the epidemic”
Domestic listed clothing companies The overall performance suffered a setback. According to incomplete statistics from a reporter from the Financial Associated Press, the performance of clothing brand companies in 2020 shows that Semir Apparel (002563.SZ) net profit fell 48% year-on-year, Souyute (002503.SZ)’s profit-to-loss ratio dropped 572% year-on-year, the highest, and Tanlu (300005.SZ)’s profit-to-loss ratio dropped by nearly 200% year-on-year. Wind data statistics show that textile and apparel includes 103 constituent stocks with existing data, showing that the average net profit in the third quarter of 2020 was a year-on-year decrease of 203%.
Domestic brands are facing obstacles, and foreign brands are not having an easy time either. Among them, Adidas’s net profit fell by nearly 78% year-on-year last year, and the performance of Fast Retailing Group (which owns “Uniqlo”, etc.) in fiscal 2020 showed that the profit attributable to the company’s owners decreased by 44.4% year-on-year. This is the result of Fast Retailing Group in 2017. For the first time since the beginning of the year, annual performance has declined. Kering Group’s 2020 financial report showed that net profit fell by 7% (of which Gucci brand operating profit fell by 33.8%).
It is a general consensus in the industry that inventory provisions will increase due to the impact of the epidemic on income. For example, Septwolves (002029.SZ) plans to make a provision for asset impairment of approximately 341 million yuan in 2020, accounting for 98.23% of the net profit in 2019. As of the end of 2020, the book balance of “inventory” is still 1.558 billion yuan, and the net realizable value is 1.011 billion. Inventories in the industry such as Jiumuwang (601566.SH) and Meibang Apparel have also increased to varying degrees.
“It is impossible to avoid high inventory in a short period of time. The key is to look at the inventory management strategy before and during the epidemic and the inventory digestion situation after the epidemic to determine who can replace it. Return to normal inventory as soon as possible.” Industry insiders told reporters from the Financial Associated Press that if the inventory in the current season is too high, it will occupy the funds of the company and franchisees, and will affect orders for the next season.
It is worth noting that Meibang Apparel (002269.SZ), which is in a tight liquidity situation, has recently planned to jointly hold Shanghai Model Industrial Co., Ltd. with its controlling subsidiary. Co., Ltd. 100% equity is sold, with a total planned sale amount of RMB 448 million. The main asset of the subject company is the real estate located in Pudong New District, Shanghai, which was previously a brand pavilion owned by Metersbonwe. On the other hand, Youngor (600177.SH) recorded a net profit increase of about 80% last year “mainly due to the sale of Ningbo Bank equity”.
“Cross-border” and “self-rescue” are two sides of the same coin
The main business is sluggish and the industry is in the doldrums. A-share listed shoes and apparel companies are playing cross-border business.
For example, Semir Group, the company behind the “selling house” Meibang Apparel, has begun to lay out the pharmaceutical track and Shinur (002485.SZ) by holding 8.7% of the equity of Vitan Pharmaceuticals. New bulk commodity supply chain businesses have been added, such as Langzi Holdings (002612.SZ) and Heilan Home (600398.SH), which have already entered the medical beauty industry.
But more shoe and clothing companies do not “give in”.
Souyute insiders said: “The company is currently operating normally in sales and summer stocking. Raw materials are in a price increase and costs are rising. The company will adjust sales according to the situation. The price will be adjusted accordingly. The company has pre-stored some raw materials in advance, and the adjustments will be different for different raw materials.”
In terms of destocking, Souyute insiders said, “The epidemic situation has improved significantly this year. The company will increase promotion efforts in physical stores and also cooperate with online platforms. In 2021, it will mainly focus on supply chain management and other aspects to prevent the impact of the epidemic. Operations are gradually returning to normal. At the same time, the company will expand new businesses, and the details are still being planned.”
“The epidemic has had an impact on the company’s performance, but the company is currently operating normally.” Although the insiders of Jinfa Rabbi (002762.SZ) expressed calmness, but its website Celebrities walked into the company to visit and bring goods. More than a dozen “Internet celebrity mothers” from the maternal and infant field visited the company’s brand Baby Rabi care R&D center and laboratory, and brought goods in the live broadcast room, online Promote and sell company products.
A person close to Jiumu Wang said, “After the epidemic, the company reduced the number of product SKUs, which also helped reduce inventory and procurement costs. At the same time, it continued to reduce orders from trade fairs throughout the year. The proportion of revenue will increase and the proportion of rolling development will increase.”
According to the third quarterly report, Annair (002875.SZ) inventory is accelerating the clearance.��. In the first three quarters of 2020, Anair’s inventory amounted to 426 million yuan, a decrease of 35.24 million yuan from the beginning of the year. At the same time, in addition to reducing production from the source, the company has opened up a variety of clearance channels to reduce inventory burdens, including increasing the layout of offline outlet channels and developing more private traffic sales channels.
The footwear and clothing industry may welcome repairs in 2021
A clothing trading company in Guangdong said, “The situation in the first quarter of this year is definitely better than last year, but it is still worse than 2019.” According to its business analysis, consumption trends may change, “The rise of e-commerce, Douyin When it comes to live streaming, many brands may not be able to compete with the low-priced products on the market. But I believe that after a period of time, domestic consumers will still prefer good brands with guaranteed quality.”
Some garment factories located in Guangdong judged that “the overall sales of domestic brands this year (compared to before the epidemic) can reach 80%. Due to the impact of the epidemic and the overall increase in raw materials this year, it is estimated that export sales will still be relatively difficult.” A certain A person from a listed clothing company said, “The order meeting hasn’t started yet, so it’s not clear yet, but it is expected to be relatively optimistic.”
A person close to Jiumu Wang said, “Since last year, It has begun to gradually recover since May. In some months, retail sales have exceeded the same period before the epidemic, but the recovery situation is not stable. During the Spring Festival, the retail sales of the clothing industry should have increased compared with the epidemic period and even the Spring Festival in 2019, but whether the trend is sustainable is still unclear. Not entirely sure.”
“In addition to accidental factors such as the epidemic and weather, what affects the recovery is the cash flow pressure and inventory pressure caused by the epidemic, as well as consumer confidence. The incomplete recovery has led to intensified competition between brands and price wars, etc., which will still have a negative impact on brand operations.” Industry insiders analyzed the recovery situation in 2021.
The above-mentioned person further explained, “Individual outstanding companies may be the first to break through, and some companies may not be able to survive the difficulties and be eliminated. The industry as a whole will still be more difficult, but whether it can break through In the end, it depends on the company’s brand power, channel power and product power, whether it can be recognized by consumers.”
A recent research report from Everbright Securities stated that 32 representatives from domestic and foreign countries During the “March 8th Festival” period for clothing and home textile brands, the number of Tmall flagship stores’ GMV increased year-on-year for 24 brands, while 8 brands experienced a year-on-year decline. In the long run, the prosperity of the track and the general trend of online and offline integration will not change. Against the background of rising traffic costs, the long-term competitiveness of enterprises with a balanced channel structure, emphasis on new retail and cross-channel coordinated construction will gradually emerge. </p
