Shoes And Clothing Enterprises Status: Inventory High &Nbsp; Orders Continue To Decline

Inventory is high.

Recently, Anta's annual report shows that as of December 31, 2011, Anta's stock amounted to 618 million yuan, compared with 454 million yuan in the same period last year, an increase of 36.1% compared with the same period last year. Anta's accounts receivable and other receivables amounted to 1 billion 709 million yuan, up from 990 million yuan in the same period last year, an increase of 72.6%. In addition, the average stock turnover of the company, from 36 days last year to 38 days, to support the dealer, Anta will accept the number of days of trade accounts, from 19 days to 26 days.

It is understood that in the field of sports shoes and clothing, Anta's current inventory level and inventory turnover days are still "the healthiest in the industry", and the Treasury sales ratio is about 4.5 times.

Although other sports shoes and clothing 2011 performance has not yet been released, but according to semi annual report, in the first half of 2011, Lining stock up to 992 million yuan, an increase of 186 million yuan compared with the beginning of 2011. It also announced that it would spend about 300 million yuan on the sale of "unsold products" to distributors. It is expected that the group will need to repurchase about 1 billion 448 million yuan of inventory in the next two years.

In addition, XTEP's semi annual report 2011 revealed that the stock amount reached 887 million yuan, an increase of about 92% over the same period, the average stock turnover days rose from 46 days to 81 days, and PEAK's inventory in the first half of 2011 also increased by 41%.

Orders continue to slide

It is understood that, according to the normal operation of the industry, the 10% to 20% range is regarded as safety stock, that is to say, 10 thousand garments are produced, of which 1000 - 2000 belong to the stock market, and it is also within the controllable range of shoes and clothing enterprises. But the reality is that most of the shoes and clothing enterprises have exceeded their controllable inventory. People in the industry say with a smile that even though all the shoe and clothing enterprises in China are now discontinued, they will only be able to sell domestic shoes and clothing sales enterprises for 3 years. {page_break}

High inventory first affects the order growth of shoe and clothing enterprises next season, and the chain reaction has already appeared. XTEP international public information showed that the order volume of the first quarter and the two quarter of 2012 increased by 9% and 5% compared with the same quarter in 2011. The growth rate dropped sharply, while the XTEP orders increased 23% and 25% in the same period in 2011.

PEAK's previously published data showed that the order volume in the second quarter of 2012 increased by 9.5% compared with the same quarter in 2011. This is the lowest increase in PEAK's orders since 2009. Anta's order volume for the first quarter and second quarter of 2012 also showed a low unit growth. The third quarter will see a negative growth in high unit numbers.

Short or lower gross margin

"Lowering the order target and slowing down shop opening" has become a way to control inventory in sports shoes and clothing enterprises. Recently, He Ruibo, chief financial officer of XTEP, said that the current "retail sales ratio" of the retail side is about 5 times, which is 4 times higher than that of the previous year, but the situation is controllable. To cope with this situation, the company has lowered its sales growth target from 15% to single digit sales in 2012, and the sales volume has been lowered to 400 from 800 to 1000 per year. He Ruibo also said that after inventory digestion, business in the second half of this year can be restored.

Anta also said the company would not consider buying back stock. In order to digest inventory of dealers, the company will not only adjust orders promptly, but also flexibly formulate replenishment mechanisms, support dealers' shop decoration, brand promotion and other related expenses. However, analysts worry that some of the adjustment measures of enterprises can maintain dealers' purchase and store operation, but the related expenses will increase or the company's profit margins will be eroded.

In fact, the inventory cleaning campaign of shoes and clothing enterprises affects not only the growth rate of orders, but also the discount rate of retail outlets. "Clearing inventory in the long run will enable companies to get light and get rid of the burden of inventory, but in the short term it may have a certain impact on gross margins." Insiders said.

Credit Suisse's recent report also pointed out that the competition in sports apparel industry is white hot, coupled with overstock and unreasonable discounts to distributors. It is cautious about this year's outlook. It forecasts Anta's earnings per share will decline by 12% in 2012 and 5% in 2013.