Clothing, Textile And Retail Polarization, Stock Levels Are Still High.

In the "double 11" and price increases stimulated, in November, China's retail industry showed a 5 month high. In the consumption category, clothing sales are still weak, indicating that this category is oversupplied, and the market is divided into two levels. It is mainly reflected in the gap between the high-end brand and the middle and low end, and the high-end brand does not drift with the current, but the consumption reflux is obvious. At the same time, inventory data increased from 821.02 in the first three quarters of 2018 to 85 billion 418 million yuan in the first three quarters of 2019. Clothing is essentially a product of constant upgrading. In the process of upgrading, clothing inevitably produces inventory. These inventories will actually bite the clothing retailers.

Polarization of clothing, textile and retail

Under the "double 11" and price increases, the performance of China's retail industry in November reached a 5 month high, up 8% to 38094 billion yuan in nominal terms compared to the previous year, exceeding the 7.6% increase expected by the market, far exceeding the 7.2% increase in October. However, after deducting the price factor, the retail industry in November increased by 4.9% in real terms and in October. The CPI data released by the Statistics Bureau showed that consumer prices rose 4.5% in November, a record high of nearly seven years since January 2012.

In the consumption category, clothing sales are still weak, indicating that this category is oversupplied, and the market is divided into two levels. In November, sales of clothing, shoes and hats and needles and textile products above the limit were 142 billion 700 million yuan, an increase of 4.6% over the same period last year. However, considering the "double 11" effect, the sales in October decreased by 0.8%. The performance in the two months was still inferior to the overall 3% increase in the previous eleven months.

"Polarization" is mainly reflected in the gap between the high-end brands and the low and middle end brands. Luxury brands speed up their entry into the domestic electricity supplier platform. CITIC research shows that although the overall retail sales in China did not show a marked rebound in the 1-4 quarter of this year than in the second half of last year, the stability of the company was obvious. Most luxury brands continued to achieve good growth in the first quarter. Accelerating the entry of electricity providers is one of the best performances of China's high-end consumption.

Inventory levels remain high.

Along with the end of the three quarterly report in 2019, the textile and apparel listed business income and profit side had a slight pressure on the year-on-year growth rate under the influence of the cold winter high base. The first textile network monitoring data showed that, as of the first three quarters of 2019, 83 textile and garment companies of A shares achieved 191 billion 600 million yuan in business receipts, nearly 192 billion 158 million less than the 192 billion 158 million yuan a year earlier, and the net profit attributable to the parent company totaled 11 billion 868 million yuan, a decrease of 2 billion 800 million yuan compared with 14 billion 681 million yuan in the same period last year.

Pacific Securities analyst Guo Bin said that in the three quarter of 2019, due to the loss of some parts of the leisure wear sector and some of the leading companies' performance was lower than expected, they were greatly dragged down in terms of revenue and net profit. Due to the cold winter effect of the fourth quarter of 2017, the overall base level of 18H1 is relatively high. Based on the current time outlook, the basic data of the garment industry in the second half of the year is expected to be relatively optimistic. From the seasonal factors, the base of winter in the fourth quarter of 2018 is relatively low. With the decline of the cardinal effect in the future, the industry will have marginal improvement in the year-on-year data. In the future, with the weakening of the high cardinal effect and the stability of the consumption environment, some sub sectors and companies will improve.

Clothing is essentially a product of constant upgrading. In the process of upgrading, clothing inevitably produces inventory. These inventories will actually bite the clothing retailers and bring heavy cost burden to the enterprises.

However, data from the National Bureau of statistics show that the year-on-year growth rate of clothing industry has been declining since 2013, and reached the lowest -0.30% in many years in the first three quarters of 2019. The proportion of stocks in current assets decreased from 28.12% in 2013 to 26.9% in August 2019, a decrease of 1.2 percentage points. On the other hand, the industry downturn and the increasingly stringent requirements for production and environmental protection have forced small businesses and small workshops operating poorly in the industry to withdraw from the market, and the industry's survival of the fittest has been accelerated.

The downstream market has improved slightly, but there is still a gap with the peak season.

Recently, the China cotton trade coordination research group visited some textile and garment markets and some industrial clusters in Guangdong, Zhejiang, Henan and Shandong. Guangzhou's major textile and garment market research shows that the downstream market has improved somewhat than last month, but there is still a clear gap compared with the peak season.

The wholesale market of clothing in Guangzhou and Zhongshan used to be hot. This phenomenon is caused by the decline in demand resulting from the economic downturn, as well as the transformation of business models and government regulation and control. During the peak season, the printing and dyeing plants are stacked with warehouses and arranged for a long time. But at present, most of the research enterprises reflect that the printing rate of Guangdong printing and dyeing mill is less than 60%, which is still under many circumstances of environmental protection and shutting down many enterprises.

For intermediate products such as colored yarn, colored cloth, shirt cloth and so on, during the peak season, there will be successive explosions based on clothing styles and fabric needs. This year, traders and processing plants say that there are only one or two explosions at the stage, and some traders even say they do not see any explosion.

In addition, the research enterprises believe that the inventory of their respective industrial chains is very large, whether the import yarn of the port, or the stock of colored yarn, grey cloth and clothing are all at a high level in history.

The downstream is pessimistic about the market as a whole. The survey industry called the industry the worst year. At the same time, most believe that there will be no improvement in the trend. The reason is that the global economy is down and demand continues to decrease. In particular, the US manufacturing PMI set a new low, the long and short debt yield upside down, and the sharp appreciation of gold all showed strong investor risk aversion. Coupled with the Federal Reserve's rate cut, it shows its pessimistic expectations of the US economy.