No, I don’t know. Recently, there have been no news about price increases, closures, or sellouts in Textile People’s circle of friends. At the beginning of the new year, textile raw materials that were priced at one price a day or even half a day have also recently begun to disappear. The trucks lined up to pull fabrics seem to have disappeared. It was promised that the textile peak season will be after the New Year, but why does it last so short? What is this peak season like? Time to take a look at the terminal!
Terrible! The inventory balance of this clothing leader alone exceeds 4.3 billion!
Recently, as a leading enterprise engaged in brand clothing, textile and clothing upstream and downstream raw material supply chain management, etc., Souyute Group Co., Ltd. stated in its announcement that it has been affected by the epidemic. Serious impact.
Souyute recently disclosed that the company’s branded clothing business was affected by the epidemic in the first half of 2020. The opening time of terminal stores was delayed, the flow of people was reduced, and consumption was sluggish, resulting in the company’s spring and summer clothing sales. It is difficult to sell and the inventory is severely overstocked. With the spread of the domestic epidemic under control and the domestic economic situation gradually improving, the company is confident about clothing sales in the second half of the year. To this end, the company has actively organized the procurement and production of autumn and winter products in accordance with the original orders.
However, in the autumn and winter of 2020, the epidemic is still spreading seriously around the world, and local epidemics have broken out in China. Affected by this, the traffic of Souyute terminal stores has decreased, and the revenue of brand clothing business has declined. The return of capital is slow, and many downstream customers of the company’s supply chain business are textile product export companies. Export orders have plummeted due to the impact of the epidemic, which has reduced supply chain business income and also caused the problem of slow return of capital. Moreover, due to the impact of the epidemic, the company’s sales in October and early November after entering the autumn and winter were lower than expected, and the serious inventory backlog of spring and summer clothing caused the company’s clothing inventory to be larger and occupy more funds; in the supply chain management business On the other hand, many upstream and downstream companies were late in resuming work due to the epidemic, and some resuming companies were unable to reach production due to the epidemic, which also caused inventory backlogs. As of September 30, 2020, Souyute’s inventory balance reached 4.373 billion yuan.
Sou Yute introduced that the company’s inventory mainly consists of stocked goods and raw materials. The goods in stock are mainly clothing products. Since the company’s clothing products are positioned in the third and fourth tier markets, the prices are relatively low and the cost also has a comparative advantage. Judging from the company’s before the third quarter of 2020, the goods in stock are basically not sold below cost prices. . The company’s raw materials are divided into raw materials for direct external sales and raw materials for the production of products. Most of the materials for external sales have orders. The raw materials that the company stocks without orders can be both for external sales and for the company’s clothing production. For this part of raw materials and the raw materials used for the company’s production, there is no situation where the net realizable value is lower than the cost based on the estimated selling price of the finished products after production minus the costs incurred on completion and the estimated sales expenses and related taxes.
In order to ease the company’s inventory pressure, reduce capital occupation, and quickly withdraw funds, in Souyute’s previous general manager office meeting, its marketing department proposed: “Due to the greater impact of the epidemic, , the company has a lot of inventory, which takes up funds and affects the company’s production and operations. At present, the sales of autumn and winter products are not as good as expected, and the previous inventory has caused a serious backlog of the company’s inventory. We should increase the inventory processing and withdraw funds as soon as possible.” According to the company’s marketing department , Planning Department, Promotion Department, Development Department, General Manager Office, Finance Department and other departments participated in the study and discussion and decided to carry out vigorous promotion of the company’s long-term inventory. The specific promotional inventory categories and promotional prices will be determined by the market. Prepared by the department and submitted for approval according to company procedures.
Souyu Te’s situation is not an isolated case
Six well-known service companies lost 4.8 billion last year!
In 2020, due to the severe impact of the epidemic, the textile and apparel industry has declined as a whole. The situation of Souyute Company is not an exception. According to the “January-December 2020” report issued by the China Garment Association Briefing on the Economic Operation of China’s Garment Industry: “Production: According to data from the National Bureau of Statistics, from January to December 2020, enterprises above designated size in the garment industry completed a total of 22.373 billion pieces of clothing output, a year-on-year decrease of 7.65%, and the decline was 12.64% narrower than the first quarter. percentage points. Domestic sales: According to data from the National Bureau of Statistics, from January to December 2020, China’s total retail sales of consumer goods was 39,198.1 billion yuan, a year-on-year decrease of 3.9%, and the decline was 15.1 percentage points narrower than the first quarter. Among them, clothing products for units above designated size Retail sales totaled 882.4 billion yuan, a year-on-year decrease of 8.1%, and the decline was 26.2 percentage points narrower than the first quarter.”
As can be seen from the above, the overall apparel industry will show a downward trend due to the impact of the epidemic in 2020. Based on this, Souyute believes that “the decline in our company’s business income and performance is consistent with industry trends and in line with the overall industry situation.”
Souyute said that from the above-mentioned comparable companies in the same industry According to the announced performance forecast for 2020, the performance of the company and listed companies in the same industry are on a downward trend. There is no inconsistency with the downward trend of listed companies in the same industry, and there is no major difference.
Clothing retailers in Europe and the United States are cutting spring orders
Although the recent price increases of raw materials and fabrics have been very good, from a trade perspective,There are not many orders, “Our gray fabric business has been very popular recently, and the quantity is basically guaranteed for the whole year. However, there are not many trade orders, which can only last for one month at most, and customers are hesitant to place orders. “said a trader.
Another trader is also worried: “I think the foreign trade market will not be very good in the first half of the year. First of all, the epidemic has brought great consequences to foreign retail companies. , however, the market has continued to be hot during this period, which has led to better than expected stocking operations for raw materials and gray fabrics. Market orders have been placed one after another, but many of them are traders stocking up, not manufacturers directly placing orders.”
According to a survey by McKinsey & Company, the crisis has caused companies in the textile and apparel industry to lose 30% of sales and 90% of profits globally. The arrival of vaccines gave the industry hope late last year, but the slow pace of vaccinations is likely to prolong the painful period for the textile and apparel industry until at least this summer.
According to Reuters, clothing retailers in Europe and the United States are sitting on excess inventory and are cutting spring orders!
Some traders believe that the current wave of orders is actually overdrafting the volume of subsequent orders. “Even if vaccination gradually becomes popular, the recovery of demand in the European and American markets will still be relatively slow. Slow, we are more worried that orders during this period are actually overdrafting subsequent orders, which will be even more difficult during the off-season.” said a trader who sells orders from Europe and the United States.
From the perspective of the overall environment, it will take some time for the textile and apparel market to return to the state before the epidemic. At the same time, the recurrence of the epidemic and the mutation of the virus are still a “ticking time bomb” that hinders the market from improving. The domestic and foreign trade markets have not fully blossomed. It will take time to confirm whether the peak season can drive orders to continue to improve! </p