As a leading company in the clothing industry, Heilan Home (600398) has recently been pushed to the forefront of public opinion due to its high inventory scale. In response, Xu Qinghua, secretary of the board of directors of Heilan House, responded at a media forum on November 7 that inventory risks are controllable.
Data show that as of the end of the third quarter of 2020, Heilan House’s inventory was approximately 8.638 billion yuan. Although it has declined year-on-year, the volume is still not counted. Small. Xu Qinghua said that everyone thinks the value of 8.6 billion is on the high side, but there is a reason for it. Because our business model is different from our peers, the difference in disclosure standards is relatively large.
Xu Qinghua specifically mentioned that the domestic clothing industry generally adopts the dealer model and the ordering fair model, so the inventory they disclose in their financial reports mainly refers to their stockings in the headquarters warehouse and distribution to agents. The goods in hand are not reflected in the report.
Heilan House’s 8.6 billion inventory can be split, of which 600 million is Sancano’s professional attire inventory. Sancano professional attire is a group customization business and is produced according to orders. There is no risk in this part. The remaining 8 billion is the inventory of retail brands, of which about 2.5 billion is stored in the headquarters warehouse and 5.5 billion is placed in the channel.
Compared with peers, the extra inventory is in the channel, so this is a significant difference in disclosure standards.
How much risk does inventory pose relative to operations? “Judging from this year’s third quarter report, we can see that our inventory price reduction provisions from July to September this year have not increased in the profit and loss statement. This is a significant feature. Whether it is year-on-year or month-on-month, there is no increase in the third quarter of this year. Preparation for inventory price declines shows that our inventory structure is very good. In August this year, we launched an online outlet, which actually processed part of the inventory and greatly improved the inventory structure. From this point of view, the entire inventory structure The risk of inventory is firstly controllable, and secondly, it is relatively low,” Xu Qinghua said.
Xu Qinghua further stated that he will continue to find ways to improve the inventory structure and reduce the scale of inventory in the future. It is necessary to scientifically balance the proportion of first-time orders and subsequent replenishment orders during procurement, and to improve the response speed of the supply chain.
It is necessary to increase product research and development. On the one hand, it is necessary to invest heavily in research and development of style design, strengthen the cooperation model with external institutions, or increase the adjustment and improvement of its own organizational structure; on the other hand, functions The use of special surface accessories should be better integrated with previously innovative products.
Then, combined with various means such as online outlet live streaming, mini programs, community marketing, etc., we can speed up the turnover of inventory, reasonably control the scale of inventory, and reduce operating risks. </p
