Clothing Trader Inventory Risk Fermentation Or Evolution Crisis

In August is about to begin in 2013. Spring and summer clothing When the order is about to start, all garment listed companies are also in the rush period for the second quarter and Mid-term Financial Statements of 2012.

"Chinese textile and garment enterprises will not be too ugly, but they will not look good. There will be great differences between the companies." In August 2nd, a listed garment company executive told our reporter that "the upcoming order will be a test for garment enterprises." He said that for the rapidly expanding enterprises, their expansion and supply chain management in the past one or two years are basically able to determine their life and death. Embodied in the company's inventory management. "If the inventory is high, the cash can not keep up, and the capital turnover rate will be reduced, it will be very easy to have capital problems."

Bad result of inventory

After years of rapid expansion, China's sporting goods industry, including Lining, has entered an integration period. A war on stock went on.

In the rapidly expanding enterprises, the birds and Lining are two typical cases.

In the issuance notice issued by the audited bird, it announced that it would raise no more than 1 billion 500 million yuan to increase the construction of 180 main outlets and 100 main stores in San TiO, and plan to expand from 1200 to 1500 stores in the next 3 to 5 years, with the main purpose being "expansion".

Lining plans to open 100 factory stores and 100 discount stores in 2012, and is evaluated as the "long-term use of this brand may be" way is mainly to reduce inventory effectively. Previously, in order to find a solution to the problem of retail inventory, Lining chose a price war with China. The consequence is that the sporting goods enterprises represented by Lining are "frustrated in profits" and "deteriorating in assets and liabilities".

Guotai Junan interpreted the root cause of deterioration of sporting goods traders' inventory. list The stubborn illness accumulated.

According to a research report of Guotai Junan, the wholesale model played an important role in the rapid growth of the sporting goods industry, because the business model had low capital expenditure and there was no need to recruit salesmen for expansion. The company only delivers the product to the distributor to confirm the sale, and then the distributor transfers the inventory products to the sub distributor. During this period, the retail stocks were overloaded quickly for the sake of different business purposes, which was intended to increase sales by extending distributors' credit period and increasing sales incentives.

In terms of performance, although Lining's 8 billion 929 million yuan sales in 2011 were still the highest, it was only slightly higher than that of Anta (2020.HK) of 8 billion 905 million yuan, while net profit was only 22% of Anta's, which was 386 million yuan. The main reason is the huge increase of Lining's direct outlets and the increase of related expenses.

Lining and China are the first two companies to face the backlog of retail inventories. From the moment they launched the price war, their retail discount stores not only affected their own performance, but also pulled other companies' sales into the whirlpool of cleaning up stocks and cutting prices.

This situation is reflected in the financial statements, which is called "asset liability deterioration" by Guotai Junan. Guotai Junan believes that as of 2011, the inventory of all sporting goods companies rose by 25.7%-81.8% over the same period. In addition to the trend in China, the accounts receivable of the major sporting goods companies increased by 18.4%-82.6% compared with the same period last year. In China, the decline in accounts receivable is due to a decline in sales and an increase in the amount of accounts receivable. 1361.HK was the worst, with inventories and accounts receivable rising by 81.8% and 82.6% compared to the same period, while cash and cash equivalents fell 51.8%. In addition to Anta's reasonable 26 days, accounts receivable accounts for more than 60 days.

At the same time, because of the price war to solve the problem of backlog of retail inventories, the sporting goods business has been integrated into an industry integration period. And when the integration ends, we need to wait until more enterprises in this industry participate in the shopping spree before we can get a timetable and a new pattern. {page_break}

Order and inventory rise

In August 1st, the flush researcher responded to a reporter's effective solution to the inventory problem: "what is most needed is effective inventory management, that is, to open up the hub between the supply chain and terminal retail." They refer to a special term bullwhip effect, one of the basic principles of supply chain management, which refers to the amplification of demand variability in the supply chain.

Domestic garment manufacturers rely more on traditional management mode. Flush researchers believe that the bullwhip effect is mainly reflected in the retailer's managed inventory Retailer Managed Inventory mode, that is, self ordering, replenishment, digestion of inventory, the traditional RMI mode is destined for its high inventory rate.

They believe that at present, most garment enterprises plan to determine the quantity of production, or the order will be determined. This mode, because of relying on channel providers to provide information rather than consumers, often leads to lower sales of clothing than expected, resulting in backlog of inventory.

Examples are derived from data. According to the data collected by flush August 1st, there were two orders in the autumn and winter growth rate of more than 50% in the year 2012, respectively, which were 61% of the year-on-year growth rate and a year-on-year increase of 50% over 002503.SZ. In the spring and summer 2012, the growth rate of the two companies increased by 66% compared to the previous year, which was found at 50%-60%.

Correspondingly, their inventory growth. The inventories of the Pathfinder and search inventories increased by 99.46% and 142.2% in 2011.

In addition, there is a problem that enterprises can not immediately turn around.

Flush researchers believe that clothing from design to market cycle is too long. Most garments take about 6-9 months from design to rack, while the same series of products sold in the store only 2-3 months. international Fashion leisure Clothing brands such as Zara and H&M can achieve an average period of 20-30 days from design to merchandise sales, while Chinese fashion casual wear brands still stay in the cycle of around 150 days, and the gap is very large.

The other factor is logistics. They believe that the headquarters of most garment enterprises in China deliver goods to the branch on an average of 15-20 days / times, and the frequency of delivery to the channel outlets is 3-5 days per time. This not only reduces the speed of new product listing, but also leads to the backlog of stock at headquarters and branches.