More Than 60% Enterprises Net Profit Fell, Clothing Industry Local Brand Hard To Find The Way

As of November 1st, the three quarterly report of A share listed companies was officially closed.

Times weekly reporter combing the Oriental Wealth choice data found that under the Dongcai industry classification, a total of 41 garment industry A share companies disclosed the three quarterly report in 2019. Among them, operating income increased by 26 year-on-year, down from 15 year-on-year, while net profit grew by only 16, up 25 last year, and net profit fell by more than 60% over the same period.

Overall, the overall growth rate of the clothing industry has slowed down significantly, and the performance of local casual wear brands has been greatly affected. Some enterprises have been trapped in the "dilemma" of increasing profits without increasing profits.

In October 26th, 603877.SH released its third quarter report in 2019. Its first three quarters achieved operating income of 5 billion 3 million yuan, up 2.36% compared to the same period last year. Net profit attributable to shareholders of listed companies was 207 million yuan, down 26.78% over the same period last year.

In November 1st, a spokesman for the Pacific bird Association told reporters in an interview with the times weekly that the company's operating income increased over the first three quarters of the year, and that the net profit declined slightly due to the increase in the number of Direct stores and the increase in brand advertising input.

Under the overall downward trend of clothing industry, the difference among categories is even more significant. The outstanding subdivision industry still focuses on sports apparel, children's clothing and other fields.

Anta sports (02020.HK), a Hong Kong listed company, has a brilliant performance. In October 16th, the company announced the latest performance in the third quarter of 2019. According to the announcement, in the third quarter of 2019, the retail sales of Anta brand products increased by 10% - 20% compared with the same period last year. FILA brand products grew 50% - 55% compared with the same period last year, while other brands increased 30% - 35% over the same period last year.

"With the increase of per capita income and consumption concept in China, consumers have gradually shifted from the pursuit of fast, cheap, single season fashion to clothing design, practicality and functionality." In November 1st, Wang Wenhua, executive director of CIC consulting, told the times weekly reporter that the main development directions of the Chinese garment industry in the future are differentiation, individuation, entity experience and life style.

Mass leisure faces challenges

For local mass leisure clothing enterprises, 2019 is still a difficult year. Net profit decline is a common problem faced by many enterprises.

In October 30th, La Natsu Bell (603157.SH) released its third quarter 2019 earnings report. According to the financial report, La Natsu Bell's total business income in the first three quarters was 5 billion 757 million yuan, a decrease of 7.2% compared with the same period last year. The net profit attributable to shareholders of listed companies was -8.25 billion, down 444.7% from the same period last year.

La Natsu Bell said in the announcement that the reasons for the company's net profit losses include the company's operating income declined year-on-year, and the accelerated digestion of seasonal products led to a year-on-year decline in gross margin and a corresponding reduction in gross sales.

In October 29th, 002269.SZ disclosed three quarterly reports. The company achieved a total revenue of 4 billion 34 million yuan in the first three quarters of 2019, down 27.27% from the same period last year, and realized net profit of -2.38 billion, compared with 40 million 139 thousand and 500 yuan a year earlier.

On the same day, Semir apparel (002563.SZ) disclosed its operating conditions in the third quarter of 2019 and the first three quarters. In the first three quarters, Semir apparel realized business income of 13 billion 261 million yuan, an increase of 35.82% over the same period last year, and net profit of 1 billion 307 million yuan, an increase of 2.79% over the same period last year. However, the net profit in the third quarter was 585 million yuan, down 3.18% from the same period last year.

In fact, the growth of Semir's clothing is not due to the casual wear business.

Orient Securities Research Report Analysis, the third quarter of the overall apparel industry consumption is weak, and then superimpose the company on leisure clothing business wholesale shipping rhythm control (increase delivery frequency), dragged the single quarter income growth, excluding children's clothing brand Kidiliz and influence, expected in the third quarter of the company's original domestic business income was basically flat compared to the same period.

Wang Wenhua pointed out that China's garment industry experienced rapid growth around 2012, while the current Chinese clothing market has been gradually saturated, and the growth rate has slowed down accordingly. Similarly, mass leisure enterprises have been developing very fast in the past few years, but in the 2016 or so, there has been a phenomenon of weak market growth and declining net profits of enterprises.

Li Fu Research Center report shows that in 2016, the total sales volume of China's clothing sales reached the bottom and the growth rate was only 5.6%. In 2017, it began to pick up, and the growth rate was 6.5%; in 2018, the recovery trend continued to increase by 7.8% over the same period last year. But it is estimated that in 2019 and 2020, the total sales volume of China's clothing market will grow to 3.5% and 3.2% respectively.

"Fierce competition in the mass leisure market has led enterprises to maintain low prices, and ultimately have to further reduce the quality of products. In fashion and fashion, if they fall into the fashion of the public, the brand lacks obvious differentiation, and the embarrassment between quality and fashion will further deteriorate the brand's impression in the minds of consumers." Wang Wenhua bluntly said.

Urgent need for all-round innovation and upgrading

When 90 and 00 become the main force of consumption, their preferences and needs are undergoing new changes.

"Young consumers are changing rapidly, new demand for customers is constantly emerging, technological and business models are emerging constantly, and industry companies need continuous innovation to upgrade their business models in order to adapt to increasingly fierce competition in the context of economic growth and downfall, and have potential for sustainable development." The above Taiping bird secretaries official confessed to the times weekly reporter.

Today, La Natsu Bell, who has fallen into the "mire" of losses, is largely partly because he has not kept pace with the market adjustment.

In August 27th of this year, on the eve of the company's semi annual report, La Natsu Bell, chairman of the board of directors, Xing Jiaxing accepted an interview with the times weekly reporter. He admitted that there were external causes and internal causes for losses. "The internal reason is that we have not kept pace with the adjustment of the garment industry, and this year we have closed many shops, and a considerable portion of the losses generated are amortization costs."

In November 4th, La Natsu Bell, director of the public relations department, told the times weekly reporter that the fourth quarter will sort out the positioning of brand differentiation, focus on the development of resources, focus on women's clothing brand, around the needs of the target consumer changes, optimize the integration of supply chain resources, and strive to improve the quality of products and services.

The above Taiping bird related personage also told the times weekly reporter that Taiping bird will continue to enhance the product design and development capabilities, do well in commodity planning, and constantly advance in the cross-border joint names that consumers love to see. In addition, adhere to direct + franchise + electric business of the whole network collaborative retail mode, multi-channel three-dimensional touch consumers, create "cloud warehouse" digital commodity management system.

Taiping bird three quarterly report shows that Taiping bird money fund decreased by 42.07% year-on-year at the end of this report, mainly to pay dividends, year-end awards, research and development center project. In addition, the progress of research and development center project has also increased.

Semir apparel three quarterly report shows that the end balance of the company's R & D expenses is 224 million yuan, an increase of 39.71% over the same period last year, mainly due to the introduction of R & D personnel in this phase, the increase in R & D investment and the merger of French KIDILIZ group in the current period.

Although local fashion enterprises, the main leisure brands, are trying to carry out all-round innovation and upgrading through R & D, but in the context of changing consumer environment and increasingly fierce competition in the industry, there is bound to be a long way to go.

Strong performance in sports market

The mass leisure brand is hit by the consumption iteration, while the sports brand that can seize the opportunity of change is strong.

In October 21st, Lining (02331.HK) announced that it had calculated the sales point of Lining (excluding Lining YOUNG) which had been put into operation at the beginning of the same quarter last year. In the third quarter of 2019, the same store sales of the whole platform increased by 10% to 20% over the same period last year, while e-commerce channels maintained a high growth rate, an increase of 50%-60% compared with the same period last year.

Anta also recorded a good sales growth in the third quarter. In the third quarter of 2019, the retail sales of Anta brand products increased by 10%-20% compared with the same period last year. The FILA brand products grew by 50%-55% compared with the same period last year, while the other brands increased by 30%-35% over the same period last year.

In addition, sports brands such as XTEP International (01368.HK) and 01361.HK (360 degree) have performed well.

The three quarterly report of 002832.SZ, the high-end sports brand, showed that during the reporting period, the company achieved operating income of 1 billion 323 million yuan, an increase of 24.95% over the same period last year, and realized a net profit of 311 million yuan to the parent company, an increase of 51.09% over the same period last year.

In Wang Wenhua's view, China's per capita income and consumption concept have been promoted, and the transformation has been focused on clothing design, practicality and functionality. This is good for Lining, Anta and high-end clothing.

According to the consulting firm, Rui International Statistics show that in 2018, the scale of China's sportswear market exceeded 40 billion US dollars, reaching US $40 billion 100 million, or about 275 billion 600 million yuan, an increase of 19.5% over the same period last year, the highest growth rate in the past 7 years. It is estimated that the compound growth rate of China's sports apparel industry will exceed 10% in the next five years.

In addition to the boost of the overall environment, a large part of the outstanding sports brands come from being able to keep pace with changes in the consumer environment and innovate.

In February 2018, Lining organized a "Tmall China Japan" event through Centrino fashion, Tmall and the American Fashion Designers Association. It was "red hot" at the fashion week show in New York. At that time, Lining's brand image has brought about great changes. Lining has benefited greatly from the transformation of "younger" and "trend oriented".

In the days after the end of fashion week, Lining's share price rose nearly 10%, and Tmall flagship store also ushered in traffic peak.

Lining's official website predicts Paris fashion week 2020

In November 4th, according to the information released by Anta brand center to times weekly reporter, Anta brand has been playing the "young" brand since 2019. Brand positioning is a professional sports brand that "leads the extreme value by science and technology". It focuses on investment in R & D, quality improvement, retail experience upgrading, new channel layout and efficient store.

In addition, in the first half of 2019, Anta group's online self operated retail channel exceeded 40%. The group electric business is dedicated to young people's favorite products, making topics through IP and designers, and through big data applications, to enhance product search function and consumer insight and demand forecast. Improve shopping experience through marketing innovation.

"From the data of relevant garment enterprises, sports and high-end clothing are the two main directions of development, but they do not lead to the development of the garment industry. Consumers' demand for clothing is still diversified. In the future, the main development directions of China's garment industry are differentiation, individuation, entity experience and daily life. Wang Wenhua told the times weekly reporter.