Some Domestic Sports Clothes Are In Deep Trouble. The Industry Faces Multiple Challenges.

Recently, HOSA International announced that its management forged earnings and profitability of the report to defraud creditors and minority shareholders. The news led to a nearly 90% decline in HOSA international share price.

The cash flow problem is not only a domestic garment enterprise of HOSA, but experts say that the current sports clothing brand industry is facing multiple challenges. If the enterprise does not have an advantage in R & D and brand, it is easy to be eliminated.

Insiders told the China Commercial Daily reporter that the performance of HOSA international has exposed a fatal problem, that is, the cash flow crisis.

When the hypothecated stock is close to the closing line, the securities company often notifies the shareholders of the listed company to recover the margin or supplementary pledge, and only when the shareholder fails to perform, will the securities company choose to sell it forcibly.

The securities company actually sold only 10 million 766 thousand shares, accounting for about 0.64% of the total share capital of the company.

That is to say, at least for the first time, HOSA international can not get enough funds to recover the pledge deposit, which directly proves the fatal problem of HOSA cash flow.

Another sportswear brand, "noble bird" (603555), is not "peaceful".

Since August of this year, the precious birds sold 143 million of Kang Paisi sports 37% stake, the 37% stake of Kangpai consulting and the 13.66% stake of tiger sports, with a price of $143 million and $273 million respectively.

The reason for the sale is also due to the high pressure of cash flow.

According to the annual report 2017, the proportion of accounts receivable accounts for up to 92.6% of the main business income, and the company's efficiency in recovering accounts receivable is low.

The book value of inventory goods is 426 million yuan, which accounts for 86.60% of the inventory. The high inventory cost leads to increased cost.

The slow turnover of internal capital and the lack of funds in the company caused some pressure on the company's capital chain.

While cash flow is "internal worry", the continuous investment activities further aggravate the financial pressure of enterprises.

In 2017, investment activities such as expensive birds and fixed assets amounted to 2 billion 56 million yuan, and the investment income of joint ventures and joint ventures was -1112 million yuan. The asset liability ratio of the precious birds increased from 60.6% in 2016 to 65.4%.

Up to the end of the first quarter of this year, the amount of cash paid by expensive birds was only 891 million yuan, and the asset liability ratio was as high as 71.2%.

In August 3rd, the rating of the company was lowered to B2, and the risk of refinancing increased. The funds were not enough to cover 2 billion 200 million yuan of short-term and short-term bills that would expire in the next 12 months.

Yang Deyong, Dean of the school of economics, Beijing Technology and Business University, told the China Daily News reporter that if the net decrease in cash flow is mainly caused by fixed assets, intangible assets or other long-term assets, or mainly caused by foreign investment, this is usually done by upgrading equipment or expanding production capacity or investing in developing the market. This net decrease in cash flow does not mean that the business capacity of the enterprise is not good, or that it may have greater cash inflow in the future.

But under the condition of market economy, the cash flow of enterprises determines to a large extent the ability of existence and development of enterprises.

Even if the enterprise is profitable, if the cash scheduling fails, it will seriously affect the normal production and operation of enterprises. The weakening of solvency will directly affect the credibility of the enterprise, and ultimately will affect the survival of the enterprise.

Like most sportswear brands, the great bird has said that the market of sports shoes and clothing industry is low and industry competition is intensified.

From the point of view of its own business, the main business revenue comes from its own brand products, and the distributor mode adopted relies heavily on large customers.

In order to cope with the decline in the main income, these sports brands began to carry out capital operation.

For example, the precious birds frequently extend their acquisitions to achieve the strategic goal of diversified pformation.

According to its 2017 annual report, the merger of sports brand Jay and shoes store led to a rise in costs, financial costs and management fees, and some sports industry investment layout has not yet achieved stable returns. The comprehensive factors led to a decline in net profit attributable to shareholders of listed companies and non net profit deduction.

In 2017 alone, the company closed 879 retail outlets and closed 376 homes, equivalent to closing a store in less than a day.

Since 2016, PEAK has been delisted, Hyde has gone bankrupt and Delhi has closed down.

"The plight of these companies in the capital market is just a microcosm of the sports brand."

Guo Hesheng, Secretary General of the China Light Industry Association Business Management Association, told the China Daily News that the current sports brand is experiencing a sharp reshuffle in the industry, and the industry concentration is getting higher and higher. It also faces multiple challenges such as e-commerce channels, overseas brands, technology research and development, brand building and so on.

With the continuous subdivision of sporting goods demand, if these enterprises do not have an advantage in R & D and brand, they will be easily eliminated.

In addition, Guo Hesheng believes that sports brands can consider adjusting the layout according to policies and markets, and increasing investment in children, women and other markets. This may be a new opportunity for pformation.

But if we want to sustain development, the brand value and the coupling effect of expansion and integration will be the key elements to measure whether it can gain a foothold in the industry.