The epidemic has taken over the world, and stock markets in various countries have continued to fall. The stock index of the United States, the world’s largest economy, has suffered four consecutive circuit breakers. The economies and societies of all countries are facing or have already experienced shutdowns, and global production and supply chains have also been partially disconnected. , and face more uncertainties. Recently, Hong Kong textile and clothing companies such as Xtep International, China Lilang and Tianhong Textile have successively disclosed annual reports. At the press conference, they made outlooks for the first quarter of this year and future development, which can provide a glimpse of the impact of the epidemic.
Brand clothing:
With discounts in exchange for sales, Q1 retail sales fell by 30%-40%, and the impact is still expected in Q2
Retail sales of social consumer goods in January-February (referred to as According to data from Social Zero, the retail sales of clothing, shoes, hats, needles and textiles fell by 31% year-on-year, showing an expected cliff-like decline, which is consistent with recent disclosures by Hong Kong stock companies.
Take Xtep International as an example: in the sports subdivision field, with a superimposed three-year reform results release period, Xtep’s full performance in 2019 Annual/single Q4 retail growth exceeded 20%. The peak sales season before the Spring Festival in January 2020 still maintained a retail growth of more than 20%. However, since the impact of the epidemic, retail sales have declined by 80%/40% in February and March respectively. Discounts The rate dropped from 7-7.5% off to 5.5-6.5% off, and channel inventory increased from 4-4.5 months to 5-5.5 months. Since the absolute value of sales in the first quarter was the highest in January, although there was a significant decline in February and March, overall the company expects the decline in retail sales in the first quarter to be between 25% and 30%. At the same time, from the perspective of agent support, the company has taken measures including allowing agents to exchange goods (exchanging Q1 goods for Q3 goods and reducing the production of Q3 goods), providing discount subsidies for the May Day or June 18th promotions, and temporarily extending the general agent account period by one month. and other measures, which will also put certain pressure on subsequent quarterly revenue and profit performance.
From the perspective of men’s clothing leader China Lilang, the company’s retail sales still increased in January 2020, fell by 90% in February, and have also fallen by 70-80% since March. Therefore, the company expects Q1 retail sales to fall by 40% % or above, 50-60% of sales can be restored in April, and the impact is greater than that of Xtep. We believe it is related to the small proportion of e-commerce in sales (Xtep e-commerce reported revenue accounts for 20%+, and the lilang is a single digit) .
As two representative sub-industry leaders, Xtep and Lilang’s fundamental changes are representative: Although 80% of the stores of most brand companies have begun operations as of March, passenger flow is still slowly recovering. It is expected that it will be difficult to return to the sales level of the same period in 2019 before May. At the same time, considering that most companies will increase the return rate of Q1 products, allow exchanges with Q3 products, and reduce the production of Q3 products to reduce the pressure on dealers and their own inventory. , it is expected that brand clothing reports in the first three quarters of 2019 will be negatively affected by the epidemic, but in 2020Q4 due to the low base brought by the warm winter of 2019Q4 + the Spring Festival, most companies are expected to achieve relatively good growth.
From this, our overall judgment on the domestic retail demand for clothing in 2020 is: a 30% decline in the first quarter, a 15% decline in the second quarter, a flat third quarter, and a certain growth in the fourth quarter.
Manufacturing side:
The global epidemic spreads, and the impact on export demand will gradually be reflected in Q2
The manufacturing side was mainly affected by the delayed resumption of domestic production capacity before March. From the perspective of exports, textile and clothing exports totaled US$29.8 billion from January to February, a year-on-year decrease of 21.8%.
As the epidemic spreads globally after March, the overseas demand market faces: 1. The postponement of multiple large-scale international events, 2. Most brands represented by Nike announced the temporary closure of retail stores in key epidemic areas around the world, 3. Overseas e-commerce is not as developed as domestically. It is expected that the clothing retail end of most overseas markets will be under pressure in Q2 no less than the domestic Q1 level. Most of the top countries in China’s textile and clothing exports are epidemic areas, so it is expected that the overall exports from March to June will also be will face a decline crisis of about 30%. Exports from March to June accounted for more than 30% of the annual exports. In addition, the 20% decline from January to February. Even if exports begin to recover in July, the annual textile and clothing exports are expected to still be dropped by more than 15%. However, for each enterprise, the impact will be different depending on the customer structure and product category. </p
