“Summer is over, and we haven’t come out of winter yet.” Talking about the clothing business in recent months, Ge Yang (pseudonym) told reporters that the performance in July was still only about 40 to 50% of previous years.
With the sudden onset of the new coronavirus pneumonia epidemic, clothing consumption has completely shifted to online, and many offline clothing stores are being Forced into a desperate situation. Since physical stores were unable to open their doors to welcome customers at the beginning of the year, resulting in a large backlog of merchandise, “selling clothing for all seasons together” has become a common sight in many stores. Many brick-and-mortar stores even use full circle of friends for marketing, trying their best to convert inventory into cash.
01 The gameplay has changed dramatically
Recently, Ms. Wang visited Nanjing Buying clothes in a large department store in Xinjiekou. What surprised her was that several brands she often patronized now sold summer, spring and autumn clothing, and winter clothing together. In particular, winter clothing such as down jackets, coats, and heavy sweaters occupy most of the space in these stores, and the price discounts range from 30% to 50% off. Different from previous off-season sales, many of these winter clothes are still fashionable styles. As for summer clothes, they are usually 50% off, and newly released autumn clothes are also discounted by 20% to 10% off.
Even so, the vast majority of stores are still empty, with more staff than customers, and only a handful of stores have customers staying. On the contrary, several restaurants nearby are bustling with people, which further reflects the deserted clothing and shoe brands.
Ms. Wang told reporters that these stores used to be “cool-style” and rarely offered discounts. Now, not only are discounts flying all over the store, but the staff have also been offering discounts one after another this month. He pulled her into several discount groups, and the main pictures and purchase links of various products flooded the screen. But what’s embarrassing is that most of the time the customers in the group don’t respond.
Ge Yang has been in the clothing business for 15 years and is now the manager of two clothing stores in a city in Jiangsu. The two stores represent two clothing brands respectively, one is a high-end fashion brand and the other is a casual girl brand. “After the Spring Festival, the store was closed for a few months. At that time, my mentality was relatively peaceful. After all, this is the case in all walks of life.” She said that the store reopened in April, which was not long before the May Day holiday. At that time, shopping was depressing. The desire exploded, and the business in the store was booming for a while, but the good times did not last long. The customer flow in the store dropped sharply in the past month or two, and the monthly sales were less than half of the previous ones.
Ge Yang analyzed that in addition to factors such as repeated epidemics, the clothing industry has undergone tremendous changes in the past six months. She told reporters that currently the boss is operating two brands as a franchisee, and the price of goods purchased from the brand owners is about 30% off. Adding in rent, personnel and other costs, the cost of clothing operated by the boss is already about 40% off. But for some time, the online official flagship stores of these brands have been able to offer discounts of around 50% off.
Before the epidemic, many regular customers still preferred to shop in stores. After all, they could “try it and touch it”. The offline conversion rate was still higher than online, but With the rise of live streaming, the advantages of physical stores have been rapidly weakened. Coupled with price shocks, offline sales still show no signs of recovery.
It is understood that the battle of “extreme survival” has already started in many salespersons’ WeChat Moments, and many physical clothing stores have launched full-staff marketing. “To say it is miserable, it is better than Not like a little sister. Her clothing store is located in a small shop on the street, and she has planned to transfer it, but she has not been able to find a buyer,” Ge Yang said.
02 Valuation Repair Expectations
Industry leaders such as listed companies are not immune, and many The clothing giant handed over a dismal mid-term report card.
Among them, Semir Clothing announced that the company is expected to achieve a profit of 0-72.2106 million yuan in the first half of this year, a year-on-year decrease of 90%-100%. Children’s clothing, known as a high-quality track, is also in deep trouble. Anaier is expected to lose 13 million yuan to 18 million yuan in the first half of this year, compared with a profit of 56.2979 million yuan in the same period last year, a year-on-year decline of 123.09% to 131.97%.
Seven Wolves, a well-known and established men’s clothing brand, is also not immune. The company expects to achieve a net profit of 20 million to 30 million in the first half of this year, a year-on-year decrease of 75.70-83.80%. 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.
Statistically, nearly 90% of A-share textile and apparel companies experienced a decline in performance in the first half of the year, and nearly half had a net profit decline of more than 50%.
The announcement shows that in order to minimize the impact of the epidemic, each company has shown its own magic. Anair adopts social marketing, all-employee marketing, and WeChat mini program marketing methods to link online and offline. On July 21, Semir Clothing announced that it planned to sell 100% of the equity of its wholly-owned loss-making subsidiary French Sofiza SAS to reduce the company’s operating risks and avoid greater losses in performance.
The reporter noticed that Zheshang Securities analyst Ma Li pointed out that leading e-commerce brands that already have traffic advantages on online platforms have shown stable growth during the epidemic. and certainty are also more recognized by the market. For example, Antarctic e-commerce has increased by nearly 100% year-to-date.
At the same time, the market has always shown strong confidence in leading consumer goods brands. The stock prices of Anta Sports and Li Ning both fell sharply in the first quarter and hit a record high in the second quarter.It may be close to a record high, which fully demonstrates the stability premium that the market gives to the leader when the fundamentals of the entire industry have been significantly adjusted. According to brokerage observations, leading companies have also recovered faster. Some companies have seen significant recovery in sales in May and June, and distribution and delivery have also begun to increase.
In the eyes of market participants, the current median valuation of A-share textile and apparel companies is about 23 times. Compared with other A-share industries, the valuation is The value is still at a low level. For apparel companies that performed poorly in the first half of the year, under the influence of a low base, the performance recovery in the second half of the year may be greater than expected, thus leading to the restoration of the company’s valuation. </p
