Gap Sub Brand Will Be Withdrawn From China. How Can Fast Fashion Brands Rush Out Of The Red Sea?

Following Forever 21 and New Look, the sub brand Old Navy of American Apparel Brand Gap will also disappear in the Chinese market.

Recently, Cape announced that its Old Navy will be withdrawn from the Chinese market from 2020 after its independent spin off, and will focus its efforts on the North American market in the future to maximize its efficiency. The report shows that the company is facing a decline in sales and profits.

01 Gap group's third quarter profit fell by nearly half.

According to media reports, Cape group recently announced that the Old Navy sub brand will be evacuated from China in 2020, focusing on the development of the North American market. It is reported that the sub brand was founded in 1994 and landed in China in 2014. In March of this year, he announced that the Old Navy brand would be split into an independent listed company. It is expected that the splitting transaction will be completed by the end of next year. In addition, the GAAP group will close about 230 stores in 2 years. At the same time, the latest performance data disclosed by the Cape group is not satisfactory. In the third quarter of this year, the overall sales of Cape group decreased by 2.2% to 3 billion 998 million US dollars, compared with 4 billion 89 million US dollars in the same period last year, and net profit was 140 million US dollars, down 47% compared to the same period last year. The same store sales of sub brands Old Navy and Banana Republic are all negative. Old Navy's decision to quit China has also made some consumers feel unprepared. "This brand is located in the prominent position of several shopping malls in Beijing, and feels that its price performance is higher. quality It's not bad. I didn't expect to leave suddenly. " Ms. Lee told reporters at the new China Jingwei that in recent years, many fast fashion brands around the world are facing the risk of closing stores or retaining customers in discounted promotions. She feels that her choice is becoming less and less. At present, Old Navy China official website has not yet displayed information about withdrawing from the shop or withdrawing from the Chinese market. Xinhua news reporter from the Old Navy staff office was informed that the current display of the official website of the brand merchandise can also be purchased normally. In the Tmall flagship store, the highest priced single item is a T-shirt priced at 99 yuan, which shows less than 2000 monthly sales, while the second month sales volume is only more than 800. The sales volume of Tmall's flagship store is the highest, and the monthly sales volume is more than 15 thousand.

02 insiders: fast fashion faces the challenge of running out of the Red Sea.

The fast fashion brand from China is more than Old Navy. In May this year, the US Volkswagen brand Forever 21 began to withdraw from stores nationwide and has withdrawn from the Chinese market. In September, Forever 21 declared bankruptcy protection and stopped operating in 40 countries and shutting down most of its stores. In December 2018, the British clothing brand New Look, which had been stationed in China for 4 years and threatened to open 500 branches, also officially withdrew from the Chinese market. Its 2018 annual report shows that the group's annual operating income is 1 billion 348 million pounds, the lowest value in five years, and the basic operating profit also has a loss of up to 74 million 300 thousand pounds. For some fast fashion brands, the prospect is not optimistic even though there has been no loss. According to the semi annual report disclosed by Zara parent Inditex group, sales in the first half of this year increased 7% to 12 billion 820 million euros, net profit increased 10% to 1 billion 550 million euros, gross margin increased 7%, less than analysts expected. Previously, the group's net profit growth in 2018 was only 2%. Some analysts pointed out that in the early days of traditional fast fashion giants, Zara has been unable to cope with more mistakes. La Natsu Bell (5.250, 0.48, 10.06%), known as the "Chinese version of Zara", is in a more difficult position recently. Financial reports show that La Natsu Bell's net profit in the first three quarters of this year was -8.25 billion yuan, down 444.7% compared to the same period last year. A few days ago, Rahim bell issued a notice that the company holding subsidiary Jack Walker (Shanghai) Clothing Co., Ltd. continued losses, intends to apply for bankruptcy liquidation court. From the beginning of this year to the end of June, the number of retail outlets in La Natsu Bell has decreased by 2470, with an average of 13 outlets a day.

In recent years, the current situation of fast fashion brands has repeatedly been shut down. According to insiders, the industry has been developing blowout in the Chinese market with the advantages of following the trend, paying close attention to the price and being quick and quick. However, when the market is in a state of saturation, enterprises need to reduce their scale, improve their quality, upgrade their brand's updating and changing speed, and attract consumers with new images and products. Ma Gang, an apparel industry expert, told Chinese New Jingwei (jwview) that at present, the fast fashion industry is facing the challenge of how to rush out of the Red Sea, including how to better product localization and the stratification of consumers. "Because of the difference between the market environment and consumers, some brands do not agree with each other. Brands need to match different products and marketing strategies for consumers in different channels and regions. " Ma Gang emphasizes.