Affected by the epidemic, the law that consumers will always have one less piece of clothing in their wardrobe seems to be losing its popularity.
In addition to the endless news about large-scale layoffs and store closures, #中国apparmament is expected to evaporate at least 400 billion in revenue a few days ago. #China’s apparel market is expected to evaporate at least 400 billion in revenue.
Cold winter: Apparel companies deliver their worst performance
Judging from the performance warnings for the first half of the year announced by listed companies in the brand apparel industry, the apparel industry seems to have delivered the worst report card.
Among the 18 companies counted by “Lianship.com”, except for Modern Avenue, the net profits of the remaining 17 companies all experienced significant declines. Among them, 9 companies suffered losses, accounting for 50%.
Modeng Avenue’s net profit increased significantly year-on-year, but its revenue still declined year-on-year. In the announcement, Modern Avenue pointed out that the reason for the large increase in net profit was due to the disposal of the headquarters building, the disposal of wholly-owned subsidiaries and holding subsidiaries. As well as non-recurring gains and losses arising from matters such as the Tianhe Branch of the Bank of Guangzhou deducting 13.16 million yuan of company deposits without authorization.
Xtep pointed out that the decline in net profit was mainly affected by three aspects:
1. Affected by the new crown epidemic, factory and store operations were generally hampered, resulting in orders and replenishment of agents. Orders have decreased;
2. Increase support for brand agents through various subsidies;
3. Since mid-March, most of the company’s offices in America and Europe Business operations are at a standstill due to the impact of the epidemic.
These three main factors also plague other apparel companies.
The cold winter is not limited to domestic companies. Judging from the financial reports released by international apparel giants, the situation is not optimistic either.
Adidas’ financial report released on August 6 showed that its net sales in the second quarter of 2020 fell by 35% to 3.579 billion euros, with a net profit loss of 295 million euros, compared with a profit of 531 million euros in the same period last year.
Under Armor’s revenue in the third quarter of fiscal year 2020 was US$930 million, a year-on-year decrease of 34.92%; net profit loss was US$590 million, a year-on-year decrease of 676.34%.
Nike achieved revenue of US$6.313 billion in the fourth quarter of fiscal year 2020, a year-on-year decrease of 38.14%; net profit loss was US$790 million, a year-on-year decrease of 179.88%.
Affected by the epidemic, some companies have begun to cut off loss-making brands to survive.
On July 20, Semir Clothing announced that it would sell 100% of the assets and business of its wholly-owned subsidiary French Sofiza SAS to its shareholder Semir Group.
Previously in 2018, Semir Clothing had spent 110 million euros to complete the acquisition of Sofiza SAS, hoping to increase the visibility and influence of Semir Clothing in the European market.
Semir Apparel said that after the outbreak, Kidiliz Group’s main business areas of France and Italy and the entire European market economy suffered heavy losses, which had a negative impact on the company’s performance. In order to avoid the continued adverse impact of this business on the company’s performance, the company plans to sell the assets and business.
La Chapelle has already had two subsidiaries declare bankruptcy in 2020.
On January 21, La Chapelle subsidiary Jack Walker was approved by the court to apply for bankruptcy liquidation due to its inability to repay its debts. La Chapelle said that the brand is still in the early stages of cultivation and development, and its brand competitiveness is not strong. It will still require a large amount of capital investment in the future, and its profit prospects cannot be optimistically estimated. The current assets are not enough to pay off all debts, and it no longer has the ability to continue operating.
Four months later, on the evening of May 18, La Chapelle issued an announcement stating that the company’s wholly-owned subsidiary French Naf Naf SAS was unable to pay off its suppliers and local governments, and the local court had ruled that it Initiate judicial restructuring.
Sun Yulong, a special columnist of Lianshang, pointed out that as one of the most severely affected industries in the first half of 2020, the apparel industry as a whole is facing a situation of low sell-out rate, high inventory, and extremely tight cash flow. At the same time, under the sudden attack of the epidemic, the collapse of the apparel industry has intensified, and the entire upstream and downstream industry chain of the apparel industry has been in a downturn. At present, the biggest change brought about by the epidemic to the apparel industry is the change in sales model. Most apparel companies have begun to make live streaming a standard feature.
In fact, apparel brands such as Peacebird, GXG, Evely, Feiniao and Xinjiu have successively increased their live broadcasts, and live broadcasts have become a “good medicine” for apparel companies during the epidemic.
Take Peacebird as an example. According to the company’s previously released 2020 semi-annual performance report, Peacebird achieved revenue of 3.217 billion yuan in the first half of the year, a year-on-year increase of 3.09%; it achieved a net profit of 120 million yuan, a year-on-year decrease. 8.55%.
Regarding the increase in revenue, Peacebird said that the company’s new retail and e-commerce retail sales have increased significantly, especially the year-on-year growth in e-commerce retail sales in the second quarter. More than 30%, the company’s operating income bucked the trend and increased by 3.09% compared with the same period.
Anta Group also pointed out that in the first half of this year, the Anta brandThe retail sales of products achieved negative growth in the low range of 10%-20% compared with the same period last year, while the retail sales of FILA brand products showed positive growth in the mid-single digits, while the retail sales of other brands achieved high single-digit growth year-on-year.
In addition to domestic brands increasing their presence online, international giants are not far behind.
Giants such as Nike and Adidas use discounts and other methods to promote sales on Chinese e-commerce platforms.
Adidas pointed out in its latest financial report: Sales in the Chinese market in the second quarter were flat year-on-year, but double-digit growth was achieved in May and June. The company expects operating profit to rebound in the third quarter, increasing by about 1 billion euros from the second quarter.
Under Armor, which has never discounted, had to bow to the Chinese market and cut prices around 618. According to “E-commerce Online” news, Under Armor previously stated that it gained rapid sales in the Chinese market in the second quarter. Recovery, by May the overall sales of offline stores had exceeded last year. The growth rate brought by online discounts is even greater – on June 1, Under Armor went on sale for only 9 minutes, and the transaction volume exceeded the whole day last year; on June 18, the single-day sales volume increased by nearly three digits year-on-year; During the 618 period, overall sales increased by more than 50% year-on-year.
The discount promotions of international giants in the Chinese market will undoubtedly bring new impacts to domestic apparel brands. Sun Yulong pointed out that China’s apparel industry If we want to boost, we still need to start by improving the overall capabilities of the industrial chain, especially the research and development of garment design and fabrics and accessories. Without sufficient R&D and design capabilities, it will be difficult for China’s apparel industry to make breakthroughs. </p