Quality Companies In Textile Industry Deserve Long-Term Attention

Last week, the Shen Wan textile and garment industry index fell 6.71%, the Shanghai Composite Index fell 4.57%, and the brand clothing companies in the early stage declined significantly. However, the weekly decline in the number of brands such as Luo Lai home textile, long Zi stock, Mei Bang dress, news bird, nine herd King, seven wolves, and card slave road were between 5-9%.

Influenced by factors such as the peak of the lifting of the ban on GEM and the weak macroeconomic data, the market has accelerated its exploration, especially the small and medium sized board and the growth enterprise market, which obviously exceed the Shanghai Composite Index. In the short term, the downward trend of the valuation level and the pressure of lifting the ban will continue to be the main factor to continue to suppress the rebound.

Growth of international fast wave giants

European economic downturn leads to international

Brand growth declines, while the Swedish brand H&M expects revenue in August to fall by 4%, lower than expected. But H&M is trying to stop the decline in the mainland market. The brand name "Monki" of young consumers has already been listed in Hongkong, and plans to open stores in Shenzhen, Chengdu and Nanjing this year.

Inditex, Spain's largest textile and apparel group, owns ZARA and other brands. Its first half year results were: operating income of 7 billion 239 million euros, an increase of 17% over the previous year, net profit of 944 million euros, an increase of 32% compared with the same period last year, and gross margin increased by 1.2 percentage points. The sales of Asian markets, including China, increased from 12% in 2010 to 20% at present, while the share in Spanish local market decreased from 30% to 22%.

In the context of the global economic slowdown, Inditex has achieved impressive results. On the one hand, the mature supply chain ensures the leading edge. On the other hand, the Asia Pacific market, represented by China, has made tremendous achievements. In turn, it shows that the survival space of local brands has been continuously compressed in recent years.

Reaching the trend of stage ceiling channel optimization

Brand clothing this year to cope with the decline of the market boom, take the initiative to take measures to reduce costs, in order to ensure the sustainable development of shops, greater profits, control the size of the channel of joining the trend will be more obvious.

Sports brands hit 8000 stores and may reach a climax. In the first half of this year, Lining closed 1200 stores and will continue to shrink in the second half of the year.

In the first half of the year, the United States accounted for 50.8% of the direct business, and the growth of the 192 outlets exceeded the increment of 154 stores.

After the number of stores reached 5500, Daphne continued to reduce the number of franchisees, and the strategy of developing direct outlets was more resolute.

The good performance of the profit and turnover level under the international brand direct mode has set a benchmark, which will be the direction of the local brand development in the long run.

Investment suggestion

In August, the number of retail sales of 100 key large enterprises increased by 8.41% over the same period last year, of which the retail sales of clothing increased by 16.72% over the same period last year, up 5.2 percentage points from the previous month. The concentrated discount sales promotion of each brand was significant. Judging from the price of the autumn listing, the new clothing prices in the first tier cities showed a year-on-year decline or a marked increase in the growth rate. The active price reduction of the international brand competition for the market share of the peak season will further lower the terminal price.

Although the overall growth rate of consumption is declining, we have no doubt that China has the status as the most active consumer market in the world. In recent two years, Brand Company has achieved a good growth rate, such as outdoor products, high-end men's wear, women's wear, and so on, which gives us confidence in investing in the future.

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The continuous adjustment of the home textile sector can bring the opportunity of "falling out" for the next stage of layout, and quality companies deserve long-term attention.