Sub Brands Will Be Withdrawn From The Chinese Market.

On the night of November 26th, the Old Navy, the Gap brand of the US fast fashion brand, withdrew from the Chinese market and boarded micro-blog's hot search. According to Reuters, Cape group said it plans to split the Old Navy with better performance and withdraw from the Chinese market in early 2020. In the face of a series of negative news, such as persistent downturn in performance, CEO turnover and product quality being questioned, how can the Cape group help itself?

Public information shows that the Old Navy brand was founded in 1994, is an important brand of the Cape group, and is the only sub brand that the group achieved last year's growth. The brand entered the Chinese market in 2014. Up to now, there are 1 million 560 thousand fans in the old Tmall flagship store.

In March this year, Cape group announced that it would split the Old Navy brand into an independent listed company, and plan to expand its target of $10 billion by market expansion. The split plan will be completed next year. Meanwhile, the Cape group will close 230 stores in the next two years.

In an interview with the China Commercial Daily, the relevant experts of the China clothing association said that in recent years, the profitability of the brand has fallen, and the closure of the old brand of the navy can also reduce the operation pressure to a certain extent, and the future Old Navy brand may become the main brand of the cover Pu Group.

As for the plan that the Old Navy brand is about to withdraw from the Chinese market, the experts say that the fast fashion brands are entering the period of operation adjustment. The Old Navy's withdrawal from the Chinese market may be the result of the relocation of the brand.

In fact, compared with Zara and H&M, the crisis faced by the Cape group may be even more serious. In November 19th, Cape (Shanghai) Commercial Co., Ltd. submitted a recall plan to China's State Administration of market supervision and administration to recall some imported infant T-shirts. It is reported that the product has a problem of excessive chemical content. Previously, in July and August last year, China's General Administration of Customs issued safety information on imports of industrial products, showing that there were quality problems in the total number of 12 batches of garments and tens of thousands of baby garments in Shanghai.

The China Commercial Daily reporter interviewed many consumers and found that most consumers questioned the quality of the product. Some consumers said that the brand of children's clothing safety problems will be pulled into the shopping blacklist.

In addition to product quality being criticized by consumers, the sharp decline in profits has further aggravated the operation crisis of Cape group. As of November 2nd, the overall sales of Cape group in the third quarter decreased by 2.2% to 4 billion US dollars, gross profit margin was 39%, and profits fell 47% to 140 million US dollars. Among them, the sales of Cape brand declined by 9.7%, while the sales of Old Navy brands dropped by 4%, while the sales of other sub brands declined.

At the same time, in early November, the company suddenly announced the dismissal of chief executive Art Peck (Art Peck) and lowered its expected performance this year. It is speculated that att Peck was sacked mainly because of the continued decline in group performance during his four years in office and the pressure on the company to increase its business pressure.

Affected by its performance, its price dropped and its market value continued to shrink. It is reported that in 2000, the price of Cape group exceeded $40 / share, and its market value reached $40 billion. Now, the price of Cape group fluctuated only at 17 US dollars / share, leaving only about 6 billion US dollars in market capitalization.

The above experts told the China Commercial Daily reporter that the fast fashion brands were all operating difficulties due to the change of consumption demand, but Zara, H&M and other brands had taken effective measures to save them. However, the rescue operations of the Cape group are more tardy, or the brand's business recovery period is even longer.