The textile market, which is in a weak economic cycle, has already spent a year in the economic environment intensified inside and outside last year. Since the beginning of this year, the epidemic has been raging around the world, and the textile and clothing retail industry is currently falling into a widespread wave of store closures.
Life in the upstream, midstream and downstream sectors of the textile industry, from raw materials to production to sales, can be described as difficult. The economic environment, industrial transformation, and comprehensive social transformation are all forcing the textile industry, like other industries, to enter an era of reshuffle at the same time. Underneath the mediocre performance, there are turbulent worries in the industry. The epidemic has become the “last straw” for some textile and apparel companies.
The risk of bankruptcy of the largest women’s clothing group in North America has increased. Sales of 5 billion have a market value of less than 20 million US dollars.
Ascena Retail Group Inc, a large North American women’s clothing group, has a market value of less than US$20 million after encountering a market impact similar to the 2008 financial crisis. High leverage and huge losses are exactly the type of companies that are easily defeated by the “debt” virus. As of February 1, in the second quarter of fiscal year 2020, Ascena Retail’s long-term debt reached US$1.292 billion. The company explained that debt decreased slightly from US$1.372 billion in the previous fiscal year, mainly due to a US$49 million debt repurchase. In addition, Ascena Retail said the company has an unused revolving loan facility of US$247 million.
After the results were released, the rating agency S&P immediately downgraded Ascena Retail’s credit rating to CCC-, reflecting that the group purchased US$80 million in issue bonds at an actual price of US$49 million, implying that The North American women’s clothing giant is facing the risk of defaulting on its debt and further facing the risk of bankruptcy. However, Ascena Retail later issued a statement criticizing S&P’s ratings, claiming that the company’s business can generate strong cash flow and has US$600 million in cash and credit lines. As the group’s strategic transformation changes, it can ultimately drive long-term value.
However, the market has been worried about Ascena Retail’s debt default and bankruptcy for a long time. Coupled with the current epidemic raging around the world, the U.S. retail industry is currently involved in a widespread wave of store closures. The company is under increasing pressure. As of the close of trading last Friday, the company’s stock price still had a market value of less than US$20 million despite a surge of only 30%. Following an 86% plunge in 2019, the decline this year as of March 13 has exceeded 75%.
At the end of the year, the company conducted a 1:20 reverse stock split to avoid being delisted by Nasdaq. So far, the company’s share price of less than $2 may face a similar situation. risk. In fact, in addition to S&P, another agency, Moody’s, has also been continuously downgrading its ratings, and the company’s debtors are treading on thin ice whenever there is a sign of trouble. In January this year, it was confirmed that the company was preparing to sell its New Jersey headquarters building to reduce debt. Previously, the company sold the maurices brand and closed the dressbarn brand to reduce operating leverage pressure.
Many countries have begun to impose suspensions and border blockades on each other, and the export market may continue to deteriorate
In the previous stage, the analysis report “The Impact of Coronavirus (COVID-19) on Global Trade” released by the United Nations Conference on Trade and Development showed that the new crown epidemic is expected to have an impact on global value chain exports It caused a loss of US$50 billion, mainly due to the stagnation and shortage of China’s manufacturing industry. Currently, the European Union has suffered the largest loss of US$15.6 billion, followed by the United States with a loss of US$5.8 billion and Japan with a loss of US$5.2 billion.
Among the 13 industries analyzed in the report, the textile and apparel industry will lose more than 1.5 billion US dollars (approximately RMB 10.4 billion yuan).
Among them, the European Union was most affected, with a loss of US$538 million. Followed by Vietnam and Turkey, which have concentrated manufacturing industries, the U.S. textile and apparel industry suffered a loss of US$80 million.
Alessandro Nicita, an economist at the International Trade Department of the United Nations Conference on Trade and Development, said in an interview with reporters that the EU’s textile and apparel industry has been greatly affected because France, Italy and Spain and other EU member states have always maintained close cooperative relations with Chinese suppliers.
However, as the epidemic spreads globally, this loss figure will expand again. COVID-19 has been reported in more than 100 countries, and many countries have begun to impose suspensions and border closures on each other. The global economic outlook is worrying. As a major textile exporter, China is deeply under pressure. Due to the extended Spring Festival holiday and the impact of the new coronavirus pneumonia, my country’s textile and apparel exports experienced a significant decline from January to February 2020.
According to the latest statistics from the General Administration of Customs of China, from January to February 2020, my country’s textile and clothing exports were US$29.83 billion, a decrease of 20%, of which textile exports were US$13.77 billion, a decrease of 20%. 19.9%, clothing exports were US$16.06 billion, down 20%. Entering March, the COVID-19 virus is spreading around the world, and market concerns are increasing. Global capital markets have fallen for days this week, and U.S. stocks have triggered “circuit breakers” twice a week. For textile and apparel companies, the export market may continue to decline. deterioration.
The European Union, the United States, and Japan are my country’s three traditional export markets for textiles and clothing, and they are also in the area where the new coronavirus outbreak is concentrated. EU region�The outbreak of COVID-19 in � countries may continue to drag down the EU’s economic recovery, leading to sluggish consumption in the textile and apparel market. Japan is also facing the same situation.
It is understood that on the eve of the Spring Festival, China and the United States have just signed the first phase agreement. The United States has reduced or canceled the additional tariffs on some of my country’s export products. Subsequent trade negotiations may Temporarily stranded due to the spread of the global new coronavirus, China’s textile and apparel exports to the United States may continue to decline this year. At the same time, due to the domestic prevention and control of the new coronavirus epidemic, the start of textile and garment factories has been delayed compared with previous years. Therefore, some of the postponed or canceled orders this year have been transferred to Vietnam and other related countries in Southeast Asia. With the global spread of the new coronavirus, Chinese textile companies The international competition situation we face will become even more severe.
Taken together, affected by the global spread of the new coronavirus pneumonia epidemic, demand in my country’s main textile and apparel export markets will decline, and At the same time, global textile and apparel companies will also face greater production and operation risks. This year’s off-season will be more difficult than in previous years. Textile people need to be mentally prepared in advance! </p
