The Most Valuable Thing In Clothing Is Inventory.

There is such a "laughable talk": even though all the garment enterprises in China are now discontinued, it is only in the warehouse that they can at least sell the clothing sales enterprises in the country for 3 years. The seriousness of the problem of overstock in clothing industry is evident.

"If clothing companies earn money in inventory, they are not earning money. Clothing is the most valuable commodity." Xia Guoxin, chairman of Shenzhen Ellassay Apparel Industrial Co, pointed out the danger of inventory to clothing enterprises.

Statistics show that in 2010, China's clothing inventory reached 20% of the production volume, about 15 billion, and the annual growth rate remained at 10%. According to the forecast of normal growth rate, there will be 17 billion pieces of garment tail cargo in 2011.

Because of its seasonality and clothing product The speed of updating is fast, and how to deal with the increasing inventory has become one of the most headache problems for the clothing industry. If the product is overloaded, it will not only occupy the company's operating capital, but also waste manpower and material resources. It will also increase the management cost and profit cost of the company, lengthen the turnover period of the product and reduce the overall profit of the company. The low price sell-off will also damage the brand, and will also hurt the confidence of the channel players.

In the sportswear market, many enterprises are experiencing high inventory nightmare. Adidas, Smith Barney, Lining, XTEP, China trend and other sports brands are investing a lot of manpower and material resources to clean up inventory.

Lining and America are suffering from inventory problems.

Inventory is beset by far more than Li Ning Co. High inventory nightmare is still spreading in the industry.

The international sporting goods brand Adidas reported in the second quarter of 2011 that its net profit for the quarter was 140 million euros ($200 million), an increase of 11% over the previous year, which is better than analysts' expected 137 million 300 thousand euros. Sales in Adidas Greater China amounted to 552 million euros, up 37% from 403 million euros last year. Excluding exchange rate factors, it grew 38% over the same period last year, ranking first in Adidas's six largest market. Adidas executives stressed that Adidas's inventory in China has recovered to a healthy level.

In 2008, as a sponsor of the Beijing Olympic Games, Adidas was too optimistic about the market. production The scale, after the Olympic Games, has suffered from the global economic crisis and is in a dilemma of high inventory. It took Adidas more than two years to clean up the backlog of sales channels. Inventory problems made Adidas's sales performance in China in the first half of last year fall behind the domestic brand "one brother" Lining.

But what is dramatic is that Lining seems to have encountered Adidas's post Olympic inventory problem. Long term occupation of local sporting goods boss's throne has also been lost due to inventory trouble. The semi annual report released by Li Ning Co on 24 showed that the stock amount was 992 million yuan, while the stock amount at the end of 2010 was 806 million yuan, and the stock amount increased by about 200 million yuan. In the first half of this year, Li Ning Co revenue was 4 billion 290 million yuan, down by 5% compared with the same period last year. In the first half of, the turnover increased by 4 billion 450 million to nearly 30% and net profit to 930 million yuan. In terms of revenues and profits, Lining was surpassed by Anta.

Data show that Lining accounts receivable time this year increased by 20 days compared with the same period last year, inventory turnover days may increase by about 25 days. In 2010, the average period of trade receivable for the company was 52 days, with an average turnover period of 52 days. That is to say, the products sold by dealers can not be sold, they become inventories, funds can not be recovered, and there is no money to buy Lining's new products, which leads to a decrease in the income of Lining in the new financial year.

Excessive inventory pressure on the company has become increasingly prominent, inventory problem has become the death point of Lining's performance growth. Zhang Zhiyong, President and CEO of Li Ning Co, admits that this period of time has been particularly difficult. In the next two to three years, it will be a transitional period.

It is reported that Lining plans to invest 300 million yuan this year to recycle inventory. Whatever new goods Less than 60%-75% stores will make room for new goods through repurchase stock. Morgan Stanley expects Lining to spend only 1 billion 448 million yuan on inventory repurchases in the next few years.

Inventory is beset by far more than Li Ning Co. High inventory nightmare is still spreading in the industry.

The company has two brands of "Meters/bonwe" and "ME&CITY", which cover many fields such as adult wear, children's wear and underwear. In August 22nd, the United States announced that the operating revenue of the company during the reporting period increased by 48% compared with the same period last year, and the gross profit margin increased by 4% to 47% over the same period last year. During the reporting period, the company achieved a net profit of about 376 million yuan, up 833% from the 40 million 340 thousand yuan a year earlier.

As the leading leisure wear brand in China, the substantial growth in the mid-term performance of Smith Barney has not failed to live up to the expectations of the market. However, the US stock in the same period last year amounted to 903 million, compared with 2 billion 889 million this year, an increase of 222% over the same period last year. The net assets in the reporting period were only 3 billion 200 million, and inventories accounted for 90% of the net assets of the same period.

From the first quarter of 2011, the United States achieved 2 billion 75 million yuan in revenue, an increase of 46.26% over the same period last year, a net profit of 203 million yuan, an increase of 1222.70% over the same period, and an increase in revenue and profits. But a quarterly report shows that inventory pressure is obvious, and the number of stocks has increased from 706 million at the end of the first quarter of 2010 to 3 billion 162 million in the first quarter of this year. In just one year, inventories increased by 347.88%.

Zhou Chengjian, chairman of the US state board, explained: "the main reason is that the climate is abnormal. In addition, the shortage of labor has led to the fact that clothing in spring and summer has been delayed until 4-5 months, and missed the best time to market. Climate anomalies disrupted the production and marketing plan of Smith Barney clothing. In 2010, due to the shorter winter time, winter clothes were too late to digest, but this spring came late again, and the sales of spring clothes were also affected. The company will sell it at a lower discount in the form of a special store, which will be higher than the cost price and will not lead to loss of apparel.

It is worth noting that the United States Clothes & Accessories The increase in inventory also brings out a series of problems, for example, accounts receivable increased by 316% in the same period, short-term loans increased by 106% during the same period, cash in the same period decreased by 53%, and cash flow reporting ended at negative 554 million. In the case of a sharp increase in business, short-term loans increased, cash on account decreased, and cash flow from operations was negative.

The Research Report of Huachang Securities pointed out that due to the continuous expansion of the scale of income, the higher proportion of direct operation, and the reason of autumn loading to warehouses, it was estimated that the absolute amount of the inventory in the mid and year-round year was less. At the same time, the gross profit margin of the company may be flat this year. On the one hand, because of the high inventory and special discount stores, the price increase of the company has declined. As a result, the discount rate of the company is smaller than before. In the first half of the year, the discount rate is about 7.5-8.

In addition, the local sports brand XTEP announced its first half performance, revenue and profit increased by 25% over the same period last year, but its inventory value was 887 million yuan, an increase of about 92%. In the first half of the year, the average number of turnover days increased from 46 days in 2010 to 81 days. This index is more than doubled than that in Anta. The total operating capital turnover days of XTEP extended from 27 days in 2010 to 66 days; the trend of Chinese brands with kappa brand was 1 billion 179 million in the first half of the year, 45% lower than that in the same period last year, and net profit reached 225 million yuan, down more than 70% over the same period. China's move also said it had offered a 220 million yuan pre tax non recurrent provision to repurchase excess inventory of dealers.

Enterprises to increase clearance channel construction

Opening up a special store for digestion is an important way for most garment enterprises to solve their inventory problems.

As for the reasons for the widespread inventory of clothing enterprises, Zheng Wenbin, chief expert of the enterprise management research center, said that the unreasonable inventory of 50%-60% in China's clothing enterprises is not due to production and inventory management, but rather from improper management of brand names that people have not attached much importance to.

For example, there is no in-depth study and segmentation of the market, blindly implementing the strategy of non differentiated marketing, and still follow the "great unification strategy" in the market oriented era, which leads to the "melee" in one level. Enterprises with inadequate design and competitive strength will naturally leave many stocks. Without accurate brand positioning and brand personalization, we can not brand positioning and guide product R & D, and inventory is inevitable.

Some experts have pointed out that the inventory problem of clothing enterprises is concentrated on the management of supply chain. For the inventory problem of clothing industry, promotion can only dispel evil measures, while supply chain optimization management can consolidate the right and cure the root.

In addition, too optimistic about the market outlook has also led to high inventory, Adidas, Lining, and the United States are victims.

For Lining stock causes, insiders said that in addition to the market outlook is too optimistic forecast, Lining's inventory backlog should also be seen as from 2010 onwards the pain brought about by the channel reform.

Since last year, Lining began to adjust channels and integrate some smaller and inefficient dealers. In the strategic transformation, Lining put forward that from vertical growth in the past to horizontal growth, that is, by promoting brand value to drive growth. The purpose is to enhance the overall business efficiency.

In the past, Lining's channel network formed a small and scattered situation, with a large number of distributors. It is understood that Lining currently has 129 distributors and more than 2000 distributors, of which about 1700 are on average operating only 1 stores, many are "husband and wife shop" plus a salesperson, such a dealer structure led to Lining's policy in the implementation of a larger deviation, further increase the pressure on Lining facing inventory.

Based on the status quo of this channel, Lining put forward reforms to encourage distributors to annex small distributors. Theoretically, the distributor's marketing ability is stronger, but in China, there is still no better way to make intensive farming in the 345 line cities, so it still depends on the small retailers who are familiar with the local situation to maintain their flexibility in the local market. After the reform, the sales of small dealers are therefore affected, and larger distributors will get more goods in order to get low discount points and rush for results.

It is supposed to be a long time to upgrade the brand value to the retail price of single product, and Lining's pace is urgent. The original inventory plus sales channels are facing adjustment. Regular shipments will be affected and inventory will be generated.

The situation in China is different. Its inventory problem is affected by both internal and external factors. Insiders say that China's main trend is in the field of sports and fashion. The popularity of fashion is fast, and its problems lie in product design. In the early years, China gained market through big patterns, such as big LOGO, national flag, self-cultivation edition and cutting design. At that time, its profit rate was at a high level in the industry. But now that fashion trend is over, China's trend needs to be restarted, and its R & D and design capabilities are enhanced. Meanwhile, the brand gene of KAPPA is a sport. It should dig more of its sports elements and reflect it at the communication level.

From the external factors, the success of KAPPA has brought others' imitation. Nowadays, the pace of fashion brand movement and sports brand fashion is accelerating, which constitutes a competitive pressure on China's trend.

China said that in the first half of the year, in order to help dealers solve the backlog problem, it took the initiative to reduce sales orders and inventory repurchase measures, so as to help dealers resume normal inventory level as soon as possible.

Opening up a special store for digestion is an important way for most garment enterprises to solve their inventory problems.

Zhou Chengjian, chairman of Smith Baron apparel, said that the United States and its dealers will set up a special store to digest their inventory and strive to basically solve the inventory problem in the first half of next year.

According to the China Merchants Securities Research Center, the sale channel of the United States is gradually being built, and now there are 80 outlets for sale. The company's attitude towards sale channels is also rational. This is only an auxiliary means to digest inventory, and can not become a major means of dependence. Excessive sales channels will have a certain impact on the brand image. Therefore, the company has planned and controlled sales channels.

It is estimated that the majority of digestion will be achieved in the second half of 2010 this year, and the inventory will also be digested in the autumn of this year in the second half of this year. By the end of the year, the main stock products left by the company are mainly spring products in 2011, which will not be resolved until the first half of 2012. Therefore, the stock index must be normalized in the first half of next year, but the inventory structure in the second half of the year can be expected to continue to improve in the second half of 2011.

Li Ning Co CEO Zhang Zhiyong also said that this year will invest 300 million yuan to recycle the inventory of dealers, the amount of recycling for inventory will not exceed this year. At the same time, about 240 factory shops will be opened this year to digest inventory.

Lining has already announced a discount of 3 percentage points to dealers, encouraging dealers to play an active role in improving their performance. In addition, Lining has opened 191 factory stores to digest inventory. Zhang Zhiyong said that at present, Lining's factory store is running better, with an average monthly turnover of 400 thousand yuan per store, higher than that of Lining discount stores and brand stores, and the number of factory shops will increase to about 240 in the future, mainly dealing with inventory.

Zhang Zhiyong said that the proportion of inventory clearance income in January this year accounted for about 6% of Lining's income, rising to 10% in June this year, and will reach 15% in the future. It is estimated that by the second half of next year, inventory will basically be digested, and Lining will try to find a suitable way to restore growth.

He thinks that the short-term strategy is very clear. First, we need to increase the construction of clearance routes and inventory as soon as possible. The two is to reduce 3 wholesale discounts around distributors and distributors. Three, we should strengthen the transformation of brand creativity, and the next stage of brand advertising will be in London Olympic games.

In setting up shop, Lining also adjusted the number. At the end of 2011, 8300 targets were set up, 8650 at the end of 2012 and 9000 at the end of 2013. Zhang Zhiyong said that the focus of Lining's future will be on retail efficiency rather than just shop expansion, and shops will be dominated by quality and efficiency. Some of the new stores will also be opened up in areas with gaps, especially in lower level cities. In the second half of the year, Lining will focus on deepening the reform and implementation of the channel reform.