Net Profit And Inventory Rise, The Domestic Garment Industry Needs To Slow Down The Pace Of Expansion.

Esprit recently released its 2011 financial year performance report (up to June 30th), with a net profit of HK $79 million, a sharp decrease of about 98% compared with HK $4 billion 226 million in the same period last year.

At the same time, the latest data released by Japan's fast retailing company running the "UNIQLO" brand, the Spanish Inditex company running the "ZARA" brand and the H& M company show that sales revenue and net profit of these companies have also declined to varying degrees or narrowed.

As Esprit79% sales come from the European market, the European debt crisis has led to a weak local market consumption.

And the depressed Europe

Profit rise is not demand pull

Publicly available data show that sales of clothing sector listed companies reached 40 billion 627 million yuan in the first half of the year, up 22.43% over the same period last year, and net profit attributable to parent companies was 3 billion 629 million yuan, up 49.12% over the same period last year.

Dongxing securities textile

Domestic clothing that has a certain overlap with the target consumers of the above multinational clothing companies.

The main reason for the increase in net profit is that the price of clothing is also rising as cotton prices skyrocketed, commercial real estate rents rise and labor costs rise.

Guo Jin securities (600109) analyst Zhang Bin told reporters, "before 300-500 yuan can buy a good clothes, now clothes will be thousands of dollars."

"The rise of prices has directly contributed to the rapid growth of net profit of listed companies, but this is not the pull of demand, not the increase of sales volume. This can be seen from the simultaneous increase in inventory."

Zhang Bin told reporters.

According to WIND statistics, in the 2011 China Daily, the inventory turnover days of Smith Barney clothing were 243.31 days, compared with 110.69 days in the same period last year, and the turnover days of Semir clothing inventory were 103.22 days, compared with 72.87 days in the same period last year.

In the first half of the first half of this year, Li Ning Co's revenue and China's trend in Hong Kong stock market were reduced by 4.8% compared with the same period last year due to inventory and other factors. China's trend revenue plunged 45.1%.

Stock growth exceeds revenue growth

It is not just Lining and China that are facing inventory problems.

In the first half of this year, the stock value of XTEP was 887 million yuan, compared with 46 thousand and 300 yuan in the same period last year, an increase of about 92%, of which the finished product amounted to 474 million yuan, compared with 84 million yuan in the first half of last year, the former was 5.64 times the latter.

"From the annual report this year, the brand clothing industry inventory growth rate has exceeded the growth rate of sales revenue."

Zhang Bin told reporters that "after the rapid growth of the garment industry since 2009, it began to decline as a watershed in May this year.

At this point, after the crazy expansion of the domestic brand clothing industry, the phenomenon of overcapacity has gradually emerged.

Take the sports clothing brand as an example, market analyst Ma Gang statistics, from 2006 to 2009, the number of Lining's stores increased from 4297 to 7249, a net increase of 2952, and the number of stores in Anta also increased by 2483.

"Chinese enterprises feel that they have lost market share just as enterprises are dying, so they have been struggling to keep their horses in the market, but less shops do not mean sales revenue will be reduced."

Zhang Bin said, "with the intensification of competition and the rising cost of labor, the old model of crazy expansion and high growth has been hard to replicate."

"Early expansion, product homogenization is serious, especially sports brand, such as Lining, China trend, etc. it is hard to see the difference after logo is removed."

Zhang Bin said: "the period of high growth of Chinese clothing (000902) is coming to an end, and even the first tier cities are showing signs of saturation. The integration of the whole industry has become a top priority.

Domestic brand clothing enterprises must reduce their production capacity, change their thinking and develop their individuality so as to increase sales and maintain high growth and high profits.