This year is very special. For many apparel companies, it is no longer a continuation and supplement of performance, but a life and death battle and an opportunity to determine the ceiling.
This year I saw a lot of text saying that the apparel industry is not good! But is the clothing industry really not good? Is it?
In October, the third quarter reports of various listed companies will be released soon. This year is very special. For apparel companies, it is no longer a continuation and supplement of performance, but a life and death battle and an opportunity to determine the ceiling.
01 Are apparel companies really in dire straits?
From the perspective of the entire industry, revenue has fallen sharply and net profit has been sharp. Reductions or even losses are still the norm. The former “leisure giant” Meiban Clothing lost 478 million yuan in the first half of the year and closed 504 stores; the Chinese version of “ZARA” La Chapelle lost a huge 2.1 billion yuan and sounded the delisting alarm; the former “women’s shoe giant” Daphne closed more than 6,000 stores Home, announced to withdraw from the mid-to-high-end physical retail business…
According to data from the National Bureau of Statistics, the national The total retail sales of textiles and clothing were 595.9 billion yuan, a year-on-year decrease of 17.5%, which was 7.6 percentage points lower than the growth rate of retail sales of consumer goods during the same period.
This also fully demonstrates that compared with rigidly needed products such as food and household appliances, the textile and apparel industry lacked rigid demand during the epidemic, resulting in a historically rare regression in market demand. Especially in the clothing industry, the market competition is extremely fierce. Under the influence of the epidemic, offline sales of clothing are at risk, and big brands are difficult to survive alone.
Shenzhou International achieved revenue of 10.234 billion yuan in the first half of the year, a decrease of 0.4% from the same period last year; the net profit attributable to the owners of the parent company was approximately 2.512 billion yuan, a year-on-year increase of approximately 4.0%. At present, Shenzhou’s market value has approached 200 billion, making it the well-deserved leader in the domestic apparel OEM field. Chairman Ma Jianrong’s personal worth has also reached 50 billion in the Hurun rankings in 2018, ranking first in the apparel industry.
Industry insiders believe that due to the impact of the epidemic in the first half of the year, Shenzhou International’s casual clothing product revenue fell significantly, down 19.2% year-on-year. However, due to the better performance of the company’s mask and shoe upper business in the first half of the year, which made up for the larger decline in casual clothing revenue, Shenzhou International’s overall revenue fluctuated little and was basically the same as the same period last year.
Anta Group achieved revenue of 14.669 billion yuan in the first half of the year, a slight decrease of 1% year-on-year; its gross profit margin reached 56.8%, a record high. In the financial report, Anta specifically mentioned its e-commerce business in the first half of the year. The sales volume increased by more than 50% year-on-year, and the 618 promotion growth rate was as high as 78%; the online business revenue of FILA, Descente, and KOLON SPORT increased year-on-year. Both exceed 100%.
In mid-August this year, Anta’s market value once exceeded 220 billion Hong Kong dollars, setting a record high. Ding Shizhong, chairman and CEO of Anta Group, said: “In 2010, we made an important transformation of our business model from wholesale to retail. Ten years later, Anta transformed and upgraded again and entered a new stage of development direct-to-consumer. This is to maintain the permanent brand. The long-term layout of vitality and competitiveness.”
As the entire clothing market becomes saturated and the room for growth is limited, the market share of many small and medium-sized enterprises has been squeezed by leading companies in recent years. This year’s sudden epidemic has made it difficult for some big brands to survive alone.
Last year, Fuguiniao delisted, and Mulsanne Group and Top Sports entered the market; sports brands delivered the best results, La Chapelle and others continued to close stores; foreign brands were deeply involved in ” “Insulting China” was boycotted, and the national tide movement emerged.
It should be said that there is a tendency for one thing to decline and the other to grow.
Whether it is sales in offline stores or stock prices in the secondary market, sports brands will outperform casual wear in 2019 Even more popular, in comparison, the operating profit growth rates of brands such as Li Ning, Anta, and Xtep far outperform casual clothing.
The 2020 epidemic has hit these big brands indiscriminately. In the first half of the year, among the 15 representative companies in Hong Kong and A that have disclosed their semi-annual reports, only 2 companies achieved positive growth in net profit attributable to their parent companies. Many well-known leading companies experienced declines of more than 50%. Among them, Smith Barney fell by 246.5%. %, Langzi fell by 103%, Semir fell by 97%, and Heilan Home fell by 55.4%. Both casual clothing and sports brands have encountered the strongest cold wave in history.
Even many multinational clothing giants were caught off guard by the outbreak. Brands such as Victoria’s Secret and American clothing brand J.Crew reported bankruptcies one after another. Gap, H&M, Zara, WuAfter a series of survival measures, the industry has finally ushered in the recovery period, which should be a gratifying thing. A lot of arguments in the market are instilling in everyone that digital transformation and onlineization will bring new things to apparel companies. opportunity.
However, there is a gap between reality and ideals.
In the post-epidemic era, this sequelae is even more obvious. No matter which apparel company it is, in the first half of the year, it faced low sell-out rates, high inventory, and abnormally tight cash flow. This was a blow to the entire upstream and downstream industry chain.
Of course, the more important point is that the transformation of apparel companies is not simply online and offline.
The difference between apparel companies is that they cannot abandon the offline market in any case. The online market may seem prosperous, but in fact China’s thirty-year clothing history In China, anyone who wants to establish a trendy brand to maintain vitality, whether it is Giordano, Baleno, Maxbonwe, Semir, Jeanswest, or Yizhen, Clover, Converse, Onitsuka Tiger, etc., can only do it offline and online.
Therefore, the transformation of giants cannot be achieved once and for all only by transformation, e-commerce, and live broadcasting. How to better balance physical stores and online stores is also faced by apparel manufacturers. a big challenge.
This is also the biggest sequelae. From a short-term perspective, making efforts to win these consumers online may be the life-saving straw for various companies with huge losses, but In the long run, most of the decisions made during this period will be unsustainable or even irrational in the long run.
As a typical traditional industry, the operating capability of apparel companies is an important dimension to judge operating conditions. There are two most important indicators, one is the business cycle and the other is Inventory turnover.
In fact, although apparel companies are in the Red Ocean and can achieve the ultimate price-performance ratio, it does not mean the lack of a moat.
In recent years, the trend of domestic clothing has become polarized in consumer habits, either simple and extreme brands, or brands with stylized and outstanding designs. This has caused Uniqlo, which is extremely pursuing cost-effectiveness to simplify styles and designs and reduce SKUs to solve inventory problems, to grow against the trend, while Zara and H&M have fallen into a trend of frequent store closures.
So, 2020 will be very strange for apparel companies. When the market was pessimizing them (in the first half of the year), they were thinking about how to solve the “sequelae” after the epidemic; when the market was praising them, they began to worry about how to take advantage of the opportunity to expand. </p