The Market Is Demanding Higher Fashion, And War Is Getting Worse.

Performance overview

Inditex group's first quarter turnover reached 4 billion 880 million euros, an increase of 12% over the same period.

In the first quarter ended in April 30th, Inditex net profit rose to 554 million euros from 521 million euros in the same period last year, an increase of 6.3% over the same period.

Gross profit margin was 58.1% lower than 59.4% in the same period last year, and net interest rate was 11.3%.

In 2016, Q1 opened new stores in 31 markets and increased operating costs by 10%, mainly due to the cost of new shops and new network channels.

As of 2016.4.30, the group has 7085 shops, including ZARA2020 shops.

Net sales of SEK 46 billion 874 million, an increase of 2.2% over the same period;

The group's net profit of SEK 5 billion 357 million was 3.24 kronor per share, down 16.9% from the same period last year.

Net interest rate 11.4%.

Gross profit was 26 billion 980 million SEK, gross margin 57.6%, lower than 59.4% in the same period last year.

The group explained that the decrease in net profit was mainly due to the strong rise in the US dollar, the continuing rise in the cost of purchase, the increase in price promotions, the impact of long-term investments and the effects of cold weather in 3.4.

At present, H&M has 4077 stores in 62 global markets. China is the fifth largest market of H&M (fifth in performance). Currently, there are 385 stores, and it is expected to continue to open 32 stores in 2016.

Over the past 5 years, the number of H&M stores has maintained a growth rate of 10~15%, and the total ~2015 in 2011 was 2472, 2776, 3132, 3511 and 3924 respectively.

The group plans to add about 425 in fiscal year 2016, with emphasis on China and the United States.

Compared with store performance, H&M is more pleased with the performance of the electricity supplier. Although it has not given concrete results, CEO also said that it would be one of the key points in the future.

Since the launch of online shopping in 1998, HM has added 9 online markets in the first half of 2016.

But in the earnings report, we saw that HM had an increase of 6% in the second quarter of sales management expenses. In the first half of the year's report, the growth rate of 8% yuan was mainly due to the expansion of the stores and long-term investment.

At the same time, inventory costs are also increasing, an increase of 29% over the previous year, mainly because sales are much lower than previous sales expectations.

The continuous increase in the cost of sales and inventory, if not in keeping with the repositioning of the product and reshaping the image of the store operation management, will have more negative impact on the future group profits.

UNIQLO parent company sells fast

Sales figures for the first three quarters (9-5 months) ending in late May were 1 trillion and 430 billion yen (91 billion 100 million yuan), up 6.4% over the same period last year.

Operating profit fell 23% to 145 billion 800 million yen (9 billion 260 million yuan), and the parent company's profit fell 46.4% to 71 billion yen (about 4 billion 500 million yuan) in the current quarter.

In the third quarter (from March to May), sales volume was 420 billion yen, up 7.7% over the same period last year, and its parent company's operating profit was 23 billion 900 million yen, down 13.4% from the same period last year.

Gross profit is 51.9% higher than 51.4% in the same period last year, and net interest rate is 5.97%.

Gap's first quarter sales fell 5% year-on-year, and net sales in the first quarter amounted to $3 billion 440 million, compared with net sales in the same period last year at $3 billion 660 million.

Gross profit margin was 35.2%, down from 37.8% in the same period last year, and net interest rate was 3.7%.

In April, sales fell by 7%, ending in April 30th, and net sales in April amounted to $1 billion 120 million, compared with $12.1 in the same period last year.

The company's brand Gap fell 3% in the first quarter, down 10% in the same period last year, and Banana Republic sales fell 11%, sales fell 8% last year, while Old Navy sales fell 6%, compared with 3% in the same period last year.

Its brand Gap sales fell 4% in April, down 15% in the same period last year, and Banana Republic sales fell 7%, sales fell 15% last year, while Old Navy sales fell 10%, compared with 6% in the same period last year.

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Comprehensive assessment

Fast fashion wars are intensifying

Judging from the 2016 quarter results of the four mainstream fast fashion brands, ZARA is relatively strong at the gross margin level, and has a competitive advantage over other fast fashion brands. GAP is deeply competitive in the industry, and needs to grow in product homogenization and brand image.

Fast fashion is facing great competition pressure from the market today in the face of consumption upgrading, market structure change and personalized demand. ZARA and HM have only 11.3% to 11.4% net interest rate in this season, 5.97% of UNIQLO, while GAP is only 3.7%. Fast fashion companies are faced with the market test of how to maintain sustained competitive advantage and differentiated competitive advantage.

The market puts forward higher requirements for fast fashion.

Fast fashion brand itself has been under pressure from consumption upgrading, mobile Internet and electricity supplier in the past one or two years, so as to change the impression of fast fashion in the minds of consumers. Fast fashion is constantly turning around and adjusting product strategy.

Compared with the various cross-border cooperation and brand upgrading of UNIQLO, the continuous discount of HM has caused more negative impression to the brand, the decline of net profit, the continuous discount sale, the reduction of gross profit and the improvement of scale efficiency, resulting in the further collapse of the brand image, and the vicious cycle will only accumulate and break out in the market.

Whether HM can re-examine the strategic adjustment in the four dimensions of brand, product, shop and channel has become the main driving force for the development of the group.

According to UNIQLO, from the earnings report, the total liabilities of fast selling group climbed from 388 billion 900 million yen last year to 579 billion 100 million yen, an increase of 48.9%, mainly caused by a large increase in derivative financial liabilities and non floating financial liabilities.

The 25 billion 500 million yuan surged to 273 billion 400 million yuan in 2016, an increase of 972%, and the asset liability ratio rose from 45.5% in 2014 to 33.4% in 2015, increasing to more than 45.5% of normal 40%-45%. The data show that the sales revenue of XXX group was 14346 billion yen (an increase over the same period last year), and the net profit of its parent company was Japan yen (down from last year), and the profit growth rate was far less than the asset negative debt rate. Such a structure did not bring positive benefits to enterprises. At the same time, the large amount of debt raised by enterprises did not bring higher net cash inflow to enterprises, which means that enterprises in the short term did not bring positive benefits to the enterprises, or faced with a continuous test of solvency. Derivative financial liabilities soared from 100 million yen in 2015 to 6 billion 200 million yen in 2016, an increase of 6100%; non current financial liabilities from 2015.

The latest news also saw that the price of Hongkong's depositary Securities for fast selling was cut in a year.

Why is there such a large increase in illiquidity liabilities and debt ratio? The reason is that the yen appreciation has led to a decrease in the yen equivalent of long-term assets held in fast selling, and continued expansion of shops.

The number of stores in UNIQLO increased by 2 to 846, while the number of UNIQLO stores outside Japan increased by 161 to 928.

UNIQLO has become a leader in the global apparel industry through continuous expansion. It has great risks. It has put forward higher requirements for the management of stores, the ability to repay debts, the continuous differentiation competitiveness of brands, and the influence of marketing.

In the future, fast fashion will continue to face the test from the market, and the advantage of continuous profit is no longer in the market. Today, who will adapt to the changes of consumption structure and win the market?