Smith Barney'S Doubling Of Clothing Inventories &Nbsp; When To Digest Into Doubts

Doubling of inventories

August 22, 2011 casual wear in Wenzhou

But in the surge of perfect performance, the United States and the rise of clothing inventory.

As of June 30, 2011, the United States apparel inventory grew 220% to 2 billion 890 million yuan over the same period, while the stock in 2010 was only 903 million yuan in the same period, the net assets in the reporting period were only 3 billion 200 million yuan, and inventories accounted for 90% of the net assets of the same period.

In the same period, the proportion of the same type of clothing enterprises accounted for 20% of net assets.

In fact, the high growth of American barrack clothing inventory has appeared since 2010.

The company's inventory value in 2010 was 2 billion 548 million yuan, up 183% over the same period last year, accounting for 77% of net assets.

At the same time, net cash flow from operating activities was negative 1 billion 54 million yuan, down 223.03% from the same period last year.

In 2011, a quarterly report showed that the number of inventories has increased from 706 million yuan at the end of the first quarter of 2010 to 3 billion 162 million yuan in the first quarter of this year.

In just one year, inventories increased by 347.88%.

It is worth noting that the increase in the number of American barrack apparel also brings out a series of problems: in the middle of 2011, the accounts receivable increased by 310% in the same period, 106% in the same period in short-term loans, 53% in cash, and 555 million yuan in the end of operating cash flow reporting.

Zhou Chengjian, chairman of the American Apparel, blamed the high storage in 2010 for a relatively short time in winter and late in 2011, and sales were affected.

The company will sell it at a lower discount in the form of a special store. The discount of these products is higher than the cost price, which will not lead to loss of apparel.

Tang Shuangshuang, an analyst with the textile and garment industry of Huachang securities, told correspondents that the reason for the weather did have a crucial impact on American Apparel. At the same time, it also showed that American Apparel had no judgement on the demand of that year, and the rapid response capability of the supply chain needs to be strengthened.

In order to eliminate inventory, the sale of Smith barrack clothing will lead to a 2-3 percentage point drop in gross profit margin in 2012.

When to digest into doubt

In the third quarter of 2011, the growth of revenue and net profit slowed down in the first half of the year.

The net operating cash flow was 270 million yuan, the first time since the three quarter of 2010.

Mei Bang clothing said that the third quarter of 2011 digestion inventory is good.

However, for the question of the company's stock life, the United States people's clothing and securities department did not give a positive answer. It only explained the following questions: "the preparation for the inventory decline in 2011 and zero account receivable account receivable". "My company's products are priced by cost plus pricing. Because the rate of addition is higher, the actual selling price of the goods in season is generally much higher than that of the cost. The net realizable value of the new stock in the current period does not generally show any sign of impairment.

However, according to our accounting policy, "the company should measure the inventory in terms of the cost and the net realizable value on the balance sheet date, and prepare for the depreciation of the stock at a cost higher than the net realizable value". Therefore, at the end of the reporting period, the company carried out the impairment test on the stock. The final calculation of the final price of the inventory is consistent with the actual situation. Therefore, there is no need to adjust the inventory allowance for the current period.

Those who also said, "since the third quarter of 2011, inventory digestion is relatively smooth.

The scale of inventory is expected to decline further in 2012.

By the end of 2010, there were 3659 stores in the United States, including 690 outlets and 2969 stores.

Cheng Yuan, an analyst with Huatai Securities and textile and garment industry, said that the flat effect of the United States direct dress store increased by nearly 30% in the first half of 2011, and is expected to continue to improve in 2012.

Compared with ZARA, H&M and other brands, there is still a lot of room for improvement.

The leveling effect of ZARA and H&M is about 50 thousand -6 yuan, while the Ping Bang effect of Mei Bang dress is only 18 thousand -1.9 yuan.

But Tang Shuang Shuang said that the improvement of flat effect was mainly due to the slowdown in the volume expansion of the apparel stores in the United States.

Under the strong attack of ZARA and H&M brand, the low-end brand products of the mall will be impacted.

Tang Shuang Shuang also said that although the Me&City brand of Smith Barney wore its losses in 2011, but because of the more frequent strategic adjustment of the company, the fast fashion supply chain capability is still lacking. With the increasing competition in the public leisure apparel industry, the future of American Apparel is not optimistic.