Rising Labor Costs And Sports Prices

Several mainland sports brand enterprises listed on the Hong Kong stock market concentrated their mid term results on 25 and 26. According to the report, in order to cope with the pressure of rising production costs, these sports brand enterprises generally adopted the strategy of raising prices.

For two days,

Prices of sports apparel products have gone up.

PEAK's China Daily reported that the group's clothing product average unit price increased by 2.1%, rising from 42.5 yuan in the first half of 2009 to 43.4 yuan in the same period in 2010, while PEAK increased the minimum price in several enterprises. Anta said in the China Daily that the price of clothing products increased by 7.1% to RMB 49.6 yuan in the first half of the year, while the increase in XTEP prices was particularly large, and the average selling price rose 13.9% to 52.5 yuan.

Only Lining did not announce the sales price of his products in the earnings report.

After a substantial increase in product prices, gross margins did not grow significantly.

In terms of PEAK, the gross profit margin in the first half of the year dropped by 0.4 percentage points to 37.7%, and the gross profit margin of the price increased by 0.8 percentage points to 37.6%. The gross margin of Anta increased by 2.2 percentage points to 43.7%, far below the price increase range; and the biggest price adjustment rate was 40.7%, compared with 38.9% last year, only 1.8%.

Labor costs rise is the first cause.

In fact, the general problem faced by these garment enterprises is the rising cost, especially the rise of labor costs.

PEAK said the reason for the price increase was: "the average selling price of most clothing products during the period is slightly increased due to the increase in direct labor costs."

According to the results of the report, the group's "salary, wages and other benefits" increased from 675 million yuan in 2009 to 1 billion 17 million yuan in 2010, but by the end of June this year, the total number of employees in the group was 9765, mainly in the two factories in Jiangxi and Fujian. The number of new employees was far lower than the increase in total salaries, and the average increase in labour wages was evident.

The cost of employees in other enterprises increased. The cost of employees in the Anta period rose from 237 million yuan to 305 million yuan, accounting for 0.5% of the turnover. The cost of XTEP employees was 950 million yuan, slightly higher than that of 810 million yuan in 2009.

The cost of raw materials remains high.

In addition, the rising cost of raw materials is also a problem faced by these enterprises.

According to China's cotton price index, the price of standard cotton has risen from the average price of 12831 yuan / ton in 2009 to 18165 yuan / ton in July this year.

Guangzhou customs also said that since last October, the price of textile raw materials such as cotton and chemical fiber has risen. As of June 30th this year, the domestic 328 cotton spot index was 18309 yuan / ton, up 42.6% over the same period last year.

But a number of enterprises say they have responded to the rise in raw materials by way of purchase channels.

What is the trend of clothing prices in the second half of this year?

Although several companies have not made a clear statement in the earnings report, Lining, the leader of the industry, can be regarded as a weathervane. The Li Ning Co announced in June this year that the price of footwear and clothing products will be raised in the second half of this year, of which the retail price of clothing products will be raised by 17.9%.

It is worth noting that in these two days of the four companies released the performance, the most profitable is not people's eyes, "industry boss" - Lining, but the rising star Anta.

According to the results, Lining's attribution to listed companies was 582 million, while XTEP was 760 million.