How To Track High Inventory And Reverse The Disadvantages Of Footwear Industry

In the industry, Anta, Lining, XTEP, 361 degree and PEAK's five brands annual reports and market trends, to a certain extent, represent the development trend of sports goods industry.

From the data released by last year's sports brand annual reports, last year, Anta sold 4 billion 451 million yuan in half a year's revenue, and surpassed Lining in net profit and share price.

According to the annual report released by Anta last month, Anta turnover increased by 20.2% to 8 billion 900 million yuan in 2011 (the same below), and the profit attributable to shareholders increased by 11.5% to 1 billion 730 million yuan. Although Anta's turnover continued to grow steadily compared with 2010, compared with the 4 billion 451 million yuan in the first half of 2011 and a year-on-year increase of 28.9%, Anta's performance in the second half of last year was obviously lower than expected. After the announcement of half year's earnings report last year, it has been optimistic from Anta to the whole industry, and another "bumper harvest year" of Anta has become inevitable.

In March 12th, a 361 degree announcement was issued, from July last year to the end of December 6 months, the company's turnover was 2 billion 380 million yuan, gross profit was 1 billion 50 million yuan, net profit 360 million yuan. Supplementary financial information in the annual report shows that the company's turnover increased 14.8% to 5 billion 569 million yuan in 2011.

In March 13th, PEAK sports announced its annual operating income of 4 billion 647 million yuan in 2011, up 9.4% from 2010's 4 billion 250 million yuan, and net profit of 778 million yuan in 2011, down 5.4% from 2010's 822 million yuan, and the inventory was 421 million yuan, an increase of 25.67% over the same period last year. The average turnover days of the company's receivable account increased from 63 days in 2010 to 66 days.

In March 22nd, XTEP International released its 2011 results announcement. The announcement shows that the group's revenue in 2011 was 5 billion 540 million yuan, up 24% over the same period last year, and its net profit rose 19% year-on-year to 966 million yuan. Among them, the income of XTEP brand products was about 5 billion 374 million 900 thousand yuan, up 28% over the same period last year.

The Li Ning Co announced in January that the group's revenue is expected to decline by about 6% to 7% compared with the same period in 2010, and the net profit may fall more than 50%. The company's net interest rate will drop by about 7 percentage points to 8 percentage points from 11.7% in 2010. According to the analysis, according to this pure interest rate, Lining's net profit last year may drop more than 50%. Lining made a net profit of 1 billion 108 million yuan in 2010.

From the above data, we can see that compared with last year, the growth rate of the five major sports brands slowed down significantly, and the profit margins decreased. Ma Gang, an independent critic of sports industry, believes that the sporting goods industry is experiencing the most painful adjustment period in the industry, which has fallen from high income and high growth and intensified competition in the industry.

"Wan shop plan" has been postponed

Corresponding to the decline in revenue growth is the slowdown in the pace of brand opening.

In the past few years, people in the industry referred to the growth of Chinese local sports brands in the past few years as "barbaric growth". During this period, the increase in the number of stores has almost become the "magic weapon" for many manufacturers to increase sales or profits.

In the first quarter of last year, Anta announced that it would enter the "Wan Dian era" for its high market growth. Other brands in the same city also claimed to increase the speed of 800-1000 stores a year and complete the "Wan Dian plan" in two to three years. However, looking at the data of the five major brands in 2011, it is easy to see that the growth of the number of stores has begun to slow down, and their contribution to performance has begun to fail.

Anta announced in its semi annual report last year that it plans to increase the number of Anta shops, life series stores, children's series stores and its FILA stores to 8200, 1100, 600 and 300 by the end of 2011, so that the number of total stores will exceed 10000, and take the lead in the era of sports brand store operation. However, Anta's 2011 Annual report shows that in 2011, the number of Anta stores increased by 229 to 7778 over the same period last year. Anta's annual report revealed that by the end of 2012, the number of Anta stores was expected to be 7800 to 8000, the number of sports life shops was 800 to 900, and the number of children's stores was 800 to 900. According to industry sources, as early as last October, the target of 8200 Anta stores was reduced to 7800 to 8000.

PEAK annual report shows that in 2011, the number of PEAK retail outlets increased from 7224 at the end of 2010 to 7806 at the end of last year, with a net growth of 582. Analysts note that in the first half of 2010, the number of PEAK's stores increased by more than 590, which means that the number of stores in PEAK began to shrink in the second half of 2011. Previously, PEAK has disclosed that the number of stores will be reduced to around 7000 in 2012.

Last October, PEAK announced that, taking into account the worsening trend of the backlog of retail channels, PEAK's 2011 sales plan will be reduced from 800 to 500 to 600. The company has reduced net sales from 400 stores to 200 stores a year. It is expected to open 700 new stores this year and close some 500 inefficient or loss shops. "We have begun to coordinate with the distributors, and the branches with low efficiency will be closed. All regions are involved. " PEAK CEO Xu Zhihua told the media at the time, "on the basis of the two or three line cities, we will focus on expanding the first tier cities, and next year will focus on expanding the Shanghai market."

The 361 degree report showed that by the end of 2011, the number of stores was 7765, representing an increase of 602 over the same period in 2010. The previous 361 degrees announced last year that it had planned to open 800 stores a year. It is noteworthy that in June 30th last year, the total number of stores in 361 countries was 7681, indicating that the opening rate of 361 degrees in the second half of last year slowed down significantly, with only 184. 361 degrees in the report explained that the 361 degree net increase in line with the global economic outlook is not clear market conditions to take a more cautious strategy to open shop, plans to open shop in 2012 about 600, the plan does not include 361 children's clothing.

XTEP is also slowing down its sales. It is expected that the number of retail outlets will reach 7600 to 7700 by the end of this year. According to XTEP's open information, the shop opening plan in 2012 is still under discussion. According to the current business environment, it is estimated that the number of retail outlets with a net increase will be about 5% in the next 12 months. The sales growth target of 2012 has been lowered from 15% to single digit, and the opening of stores will be reduced from 800 to 1000 per year, to 400. XTEP has set an annual target of 800 stores.

It takes a year to clean up the stock.

People in the industry have joked that even if all garment enterprises in China stop production now, only the backlog goods in the warehouse can be sold to the domestic clothing sales enterprises for at least 3 years. The seriousness of inventory backlog problem in footwear industry is evident.

The most typical example is Metersbonwe, a casual wear brand. In the first half of last year, the United States apparel inventory grew 220% to 2 billion 890 million yuan over the same period last year, while the stock in 2010 was only 903 million yuan, 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 terms of sports brands, inventory data such as Anta, Lining, PEAK, XTEP and 361 degrees appeared a rising trend last year.

The inventory of sporting goods enterprises generally includes two pieces, one is the brand enterprise's own stock, the other is the inventory of the distributor, namely the sales channel, basically appears in the form of "receivable trade account", and the addition of two parts can roughly reflect the company's overall inventory level.

Anta's earnings report last year showed that Anta's stock amounted to 618 million yuan, an increase of 36.1% compared with 454 million yuan a year earlier. 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%. Lining's inventory reached 992 million yuan in the first half of last year, an increase of 186 million yuan compared with the beginning of the year. It also announced that it would spend about 300 million yuan on the sale of "unsold products" to distributors. Analysts believe that in the next two years, Lining group needs to buy back about 1 billion 448 million yuan of inventory. In the fashion sports market, XTEP, which made a great progress, reached 887 million yuan in the first half of last year, an increase of about 92% over the same period last year. PEAK is also worrying about an increase of 41%.

Anta CEO Ding Shizhong said after the annual report, the company's Treasury sales ratio is 4.5 times, believing that inventory pressure will drop in the second half of the year. "We expect to get better in the second half of the year." Ding Shizhong said, "before the individual enterprises have problems, the adjustment has also been adjusted. This year is also the Olympic year. The Olympic Games have a good pulling effect on the sports industry.

Ding Shuibo, chief executive of XTEP, recently told reporters in an interview with the Morning Post reporter that the current "retail sales ratio" of the retail side is about 5 times, 4 times higher than that of the previous year, but the situation is controllable, "inventory pressure is smaller than other brands". He believes that the increase in inventories is a common problem in the industry since last year, and for XTEP, "in just one year, we can complete the inventory consolidation and cleaning up and return to normal orbit."

In addition, the 361 degree Bulletin shows that its inventory in 2011 amounted to 451 million 200 thousand yuan, 81.8% higher than that of 2010's 248 million 200 thousand yuan. The 361 degree stated in the annual report that the inventory ratio of the channel as of December 31, 2011 was 4.2 times, and that the ratio was normal and consistent with the industry situation.

PEAK announced that PEAK's cash flow from business activities plunged from 1 billion 166 million yuan in 2010 to about 310 million yuan last year, mainly due to increased inventory and increased receivables. PEAK CEO Xu Zhihua said that the current retail terminal inventory is about 1 months, distributors inventory is 5 months to 6 months, the whole about 6 months, and said, "2012 is mainly a year to digest inventory, the group will strive to digest inventory this year, it is expected to solve inventory problems in the year."

Ma Gang also supports the idea of "clearing the library for a year". He believes that in the short term, solving inventory can only be done by increasing sales promotion, opening factory stores, adding special stores and online low prices. Judging from the current situation of the whole industry's inventory sales ratio of about 6:1, inventory clearance may take about 1 years.

　 Analysis of the disadvantages of high storage and forced industry

It is noteworthy that the high inventory problem is not a phenomenon of individual sporting goods enterprises, but a concentrated outbreak of the whole industry.

Industry independent critic Ma Gang believes that inventory problems are related to fierce competition in the industry, coupled with factors such as homogenization of products, proximity of prices and other factors, and industry growth is constrained by the growth limit of the channel, as well as the inflation of the economic environment and the decline in purchasing power.

Another analyst believes that since last year, Lining and other domestic brands of high inventory problems, rooted in the prospect of China's sporting goods market is too optimistic. In fact, Nike and Adidas have already gone through this situation. Because of the overoptimism of the 2008 Olympic Games market, Nike and Adidas suffered from high inventory pain in 2009. After two years of squeezing bubbles and digesting inventory, the two companies have embarked on the track of healthy development this year. However, this phenomenon has not attracted the attention of domestic brands, resulting in a repeat of the story since last year. This person said, "geomantic omen" is now the time for domestic sports brands to tighten their belts.

Tan Ke, an analyst with Dongxing's securities and apparel industry, believes that the number of new local sports brand enterprises that have been listed in 2007 to 2009 totaled nearly 2 stores, and the number of terminals increased by nearly 2 times at the end of 2009 compared with the end of 2006. However, behind the crazy expansion, there are many problems, such as scale growth decline, high market concentration, high inventory and so on.

There are people in the industry who think that the serious phenomenon of industry inventory illustrates a problem: after years of crazy expansion, the local sports brand is facing a new cycle. 2012 is a very difficult year for domestic sports brands. Since 2008, the "bomb" planted in the market of sports brand crazy expansion will explode one by one. Besides, sports brand enterprises are facing not only the homogenization competition pressure of the same industry, but also the market squeeze of the leisure industry. On the one hand, a large number of low-cost local brands, which have the ability to quickly make up and transfer goods, blossom everywhere. On the other hand, ZARA, UNIQLO and other foreign brands bring forth new ideas, all of which create pressure on the local sporting goods industry.

Hu Yiqiang, marketing director of Zhengda sporting goods Co., Ltd. also supports the same view. He believes that another reason that can not be ignored is that the consumption psychology and consumption habits of Chinese people have been changing quietly in recent years, that is, the transformation of consumers' needs and hobbies. In the first and second tier cities, the habit of wearing sportswear is changing. Fashion and leisure are another way of life. The transformation of sports brand from sports attribute to leisure fashion is becoming another trend.

Mr. Ye, senior member of the sporting goods industry, thinks that it takes three years to adjust domestic sports brands through inventory. He said that in the past 10 years and more, the domestic sports brands represented by Quanzhou enterprises experienced a golden period of rapid expansion. However, the rapid expansion concealed the serious problems in the homogenization of products, brands and management. At the moment, Quanzhou brand should not only consider the difficulty of breaking through inventory, but also take the year of expansion and contraction to slow down, and actively seek change and upgrading in products, technology, brand and management, and jump out of the competition of homogenization competition. This is a systematic and strategic topic.