This year, the textile and apparel industry is experiencing a serious “big retreat”.
With frequent closures and leasing conditions, the clothing market may evaporate by 400 billion this year
Chegongmiao Fengsheng Town is one of the popular shopping places for many young people in Shenzhen. It is home to many clothing stores.
“@Everyone, dears, our store has now withdrawn from Fengshengcho store. Thank you for your continued support. , wait for the follow-up.” One day in July, such a message suddenly popped up in the WeChat group of a children’s clothing store that has been operating in Fengsheng Town for nearly ten years, which somewhat surprised the reporter.
According to the owner of the store, the reason for withdrawing from the site where it has been operating for nearly ten years was mainly due to the impact of the epidemic. , the store’s operating performance was poor, but the landlord was unwilling to lower the rent appropriately. Finally, the contract expired, and the store owner was forced to decide to evacuate, although he might lose some customers as a result.
In the country-famous and largest women’s clothing wholesale market in Shenzhen, the current situation of the clothing industry’s downturn is also vaguely visible. In a certain area of a certain building in the wholesale market, several nearby shops 502A, 503A, 505A, and 507A are all closed and rented. The transparent glass door of the store is eye-catchingly posted with the words “Management Office rents at original price, Li Sheng 159…” , “Sublet, contact number…” and other rental advertisements.
Similar store closures are also common in other business districts in Shenzhen, such as Shangmeilin Metro Station and Futian Metro Station business districts. visible.
Another old weaving factory went bankrupt and auctioned: the starting price was 35 million, but the auction failed!
According to the Alibaba Judicial Auction Network, at the beginning of this month, a textile company in Zhejiang called Zhejiang Loncin Textile Co., Ltd. held an auction with a starting price of 35,030,000 yuan. It encountered a problem 24 hours after it was put on the shelves. Unsuccessful auction…
According to public information, Zhejiang Loncin Textile Co., Ltd. was established in 2009 with a registered capital of 50 million Yuan is an enterprise that mainly produces mid-to-high-end clothing fabrics such as white gray fabrics and imitation denim fabrics. The company owns 64 advanced Japanese Toyota air-jet looms in the textile industry, 96 Italian Shumet air-jet looms, and American Sullair air-jet looms. It has 3 presses and is considered a well-established local enterprise.
Although there is no announcement on the Internet why the company went bankrupt, the continued poor market conditions this year have indeed crushed many companies. The “last straw”. In the first half of the year, affected by the super “black swan” of the epidemic, the global economic environment was weak, and the survival conditions of textile companies were much more difficult than in previous years. There were also many bankruptcy auction cases on Taobao Judicial Online.
“This year is the most difficult year for the apparel industry since the reform and opening up.” Textile and apparel brand management expert, Shanghai Liang Cheng Weixiong, general manager of Qi Brand Management Co., Ltd., said in a recent interview with reporters that after decades of rapid development, the domestic clothing industry itself is already in a state of overcapacity, and the epidemic has accelerated the decline of the industry.
“2020 is bound to be a turbulent year. It is expected that the Chinese clothing market will evaporate at least 400 billion in revenue, and the overall market size will shrink. 15%.” Liu Jinyan, vice president of marketing department of Convertlab, said during a keynote speech at a clothing conference in Shenzhen recently.
It is worth mentioning that under the epidemic, the global garment industry is having a hard time. Public information shows that Nike has launched public layoffs and suffered a huge loss of 5.6 billion yuan in the fourth fiscal quarter of 2020. In addition, Levi’s net loss in the second fiscal quarter of 2020 was US$364 million, compared with a profit of US$28.507 million in the same period last year. The company Announced that it will lay off about 15% of its global corporate employees. In addition, H&M will close 170 stores, and Zara is considering closing thousands of stores.
In the first half of the year, listed apparel companies were almost “annihilated”
Who knows whether the industry is going well or not? As top students and representatives of the industry, the performance of listed apparel companies can best reflect the outlook of the entire industry. According to statistics from reporters, as of July 21, a total of 19 A-share textile and apparel companies have disclosed performance forecasts or performance reports for the first half of the year. Among them, 17 have shown a year-on-year decline in performance, accounting for nearly 90%, and their net profits are expected to decline by more than 50%. 15 companies.
Other women’s clothing, shoe companies, sports brands, etc. are almost all “wailing”. Langzi Co., Ltd. expects a loss of 19 million to 28 million in the first half of the year, compared with a profit of 89.1253 million in the same period last year; Jiangnan Buyi expects net profit in the first half of the year to decline by 25%-30% year-on-year; Pathfinder, Sanfu Outdoor, and Saturday all turned from profit to loss, while ” “Affected by the COVID-19 epidemic” has become one of the common reasons for decline in performance in the industry.
In addition, the impact on export business caused by the new crown epidemic is also one of the common reasons for the decline in performance of apparel companies.
UpstreamMaterial prices have bottomed out
The shrinking downstream clothing consumption will inevitably have an impact on the operations of upstream raw material companies and the prices of upstream raw materials.
It is understood that the upstream raw materials for clothing mainly include cotton and chemical fibers. Cotton needs to be imported nearly 2 million tons every year, but The situation is different in terms of chemical fiber. China’s chemical fiber output accounts for more than 70% of the world’s output, and about 10% of its annual output is generally exported.
“If clothing consumption is not good, it will inevitably form a negative feedback on the upstream raw materials, which will lead to a sharp decline. This year, cotton and chemical fiber Raw materials and other upstream textile raw materials have all hit new lows in recent years, and chemical fibers have even hit record lows due to the plunge in crude oil.” Wang Qianjin, information director of the Shanghai International Cotton Trading Center, told reporters.
Wang Qianjin believes that the current cotton price has fallen below the global planting cost. “This year, the lowest price of Zheng cotton has exceeded 10,000 yuan. There have only been two such incidents in history, in 2009 and 2016.” But he also added that due to the direct subsidy policy for cotton planting in Xinjiang, the basic income of cotton farmers can still be guaranteed.
Looking at chemical fiber again, it is understood that in the first half of the year, the chemical fiber industry chain varieties including crude oil, PTA, EG, polyester The absolute prices of filament and staple fiber products have reached the lowest point in more than ten years or even in history. Especially after the price of crude oil turned negative, the price of chemical fiber products fell sharply.
At present, the entire chemical fiber industry chain, except PTA (one of the bulk organic raw materials) has profits, other PX, polyester Basically, they are all losing money, and layoffs, production suspensions and production restrictions in the industry happen from time to time.
Textile and chemical fiber leader opens the road to self-salvation
We are currently in an era of “too many monks and too few people”. In the brutal competition, some companies have to face the risk of being eliminated. However, we have also seen some bright spots in the recent interim performance forecasts of listed companies in the industry. ：
Rongsheng Petrochemical’s recent financial report shows that in the first half of 2020, its net profit increased by 196% year-on-year -221 %;
The net profit of Hengyi Petrochemical, another leading polyester company, also rose by 82% in the first quarter;
Peacebird Clothing’s 2020 half-year report shows that the company achieved operating income of 3.216 billion yuan, a year-on-year increase of 3.09%, which is attributed to shareholders of the parent company The net profit was 120 million yuan. Of course, behind Peacebird’s growth against the trend, the company’s active optimization and adjustment of loss-making assets also played an important role, and this is also one of the mainstream self-rescue methods.
It can be seen that although the market environment is harsh, companies may obtain maximum profits by integrating the entire industry chain and reducing intermediate link costs. , or by arranging online and offline development to increase sales channels and demonstrate its strong ability to resist risks.
Generally speaking, the entire industry chain is still in the destocking stage in the second half of 2020, and the textile industry Manufacturers will face the problem of inventory digestion. Enterprises need to balance the relationship between their own funds and inventory. After the global epidemic is over, demand will be substantially restored and bargaining power can be restored. The industry is currently in a “cyclical trough” and companies have to go through hard times. However, the second half of the year can also be said to be a good time for layout. As long as companies find suitable products, demand will still explode. </p
