Garment Industry Suffered Heavy Losses In The First Quarter, And Upstream And Downstream Enterprises Will Encounter Cash Flow Dilemma.

In the first quarter of 2020, a paragraph was broken. The epidemic affected the global industrial chain, and all walks of life were enveloped in black breath.

Recently, major garment enterprises released the latest financial statements for the first quarter of 2020.

Anta: in the first quarter of 2020, the retail sales of Anta brand products (calculated by retail value) compared with the same period in 2019, recorded a negative growth of 20-25%.
Lining: Lining sales point (excluding Lining YOUNG) recorded a high 10%-20% decline on the whole platform's annual retail sales. Offline 20%-30% (including retail and wholesale) recorded a low segment of the decline, of which the retail channel recorded a decline in the middle of 30%-40% and a decline in the 10%-20% segment in the wholesale channel.
Semir: affected by the new crown pneumonia epidemic at home and abroad, the company's first quarter revenue is expected to be reduced by more than 30% over the same period last year, while domestic business profits have declined and French Kidiliz group has increased its losses.

Luo Lai life: in the first quarter of 2020, Luo Lai's life is expected to earn 57 million 842 thousand and 800 yuan -7230.35 million yuan, down 60%-50% compared to the same period.

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The clothing industry has suffered heavy losses this year under the impact of the epidemic. As the downstream of the industrial chain, the quality of its market also affects every aspect of the upstream. The demand side has shrunk seriously, and the market has been transferring each other from one market to another.

Raw materials for the first quarter

The price drop is over 2000 yuan, and the profit has shrunk by over 100%.

Since the beginning of this year, the price of raw materials has been dropping more than ever. As of 26 days, the prices of polyester filament products decreased to varying degrees compared with the beginning of the year, and the degree of decline was more than 25%. Specifically, the price of polyester filament FDY 150D is about 5350 yuan / ton, which is 2250 yuan / ton lower than the beginning of the year. The price of polyester filament POY 150D is about 4720 yuan / ton, which is 2380 yuan / ton lower than that of the beginning of the year, and the price of polyester filament DTY 150D is about 6600 yuan / ton, which has dropped 2250 yuan / ton compared with the beginning of the year.

The price is slumping and profits are also not optimistic. As of 26 days, the profit of polyester filament FDY 150D products was around 1 yuan / ton, compared with the beginning of the year, it dropped by 186 yuan / ton, or nearly 100%; the polyester filament POY 150D product profit was about -229 yuan / ton, compared with the beginning of the year, it dropped by 229 yuan / ton, or over 360%; polyester filament DTY 150D product profit was about -49 yuan / ton, compared with the beginning of this year, it decreased by 186 yuan / ton, or over 135%.

Grey cloth for the first quarter

Prices are serious and inventories are high.

In 2019, due to the repeated trade between China and the United States, the market continued to be poor. There was no obvious improvement in the market until 2020. In January, the new crown epidemic began to spread in China, causing the textile market to return to work again and again after a year's delay, compared with the previous year's delay of about a month. The epidemic caused widespread concern worldwide, both domestic and foreign demand, and many orders were cancelled and delayed. The shortage of textile manufacturers' new orders has led to continuous accumulation of grey fabric inventory. According to the statistics of China's silk net, the inventory of grey fabric in Shengze has risen to near 43-44 days, exceeding the highest inventory level last year.

The most direct result of insufficient demand and high inventory prices is that the price of grey cloth has been continuously compressed, especially for conventional products, with low production threshold, large daily output, serious homogenization competition, and the worse the market, the more chaotic the price will be. Take 210 polyester taff as an example. Recently, because it can make protective clothing, it is hot in the market and become a "net red" in low-end products. The market demand increases, driving its price to rise. But on the whole, there is still a certain gap compared with the price at the beginning of the year. And if the machine that is stopped before it is reopened, its price is expected to return to its lows.

The price of grey cloth fluctuates daily, which is only reference price.

Whether raw material or grey cloth, the situation has been worse since the first quarter. The most important reason is that the demand for terminal garment market can not rise.

Clothing for the first quarter

Demand for clothing has declined sharply, and enterprises are facing cash flow crisis.

In fact, in recent years, the clothing market has been sluggish and is in a state of being tired. In 2019, affected by warm winter, inventory of down garments and cotton clothing was piled up. In 2020, it was affected by epidemic situation. The flow of people in shopping malls and stores decreased sharply.

According to the statistics of the General Administration of customs, the total export volume of textiles and clothing in the first quarter of this year was 45 billion 264 million US dollars, down 17.7% compared with the same period last year (15.9% yuan in the same period last year). Among them, the total exports of textiles amounted to 22 billion 694 million US dollars, down 14.6% from the same period last year (12.7% in the year before RMB), and the total export volume of clothing was 22 billion 570 million US dollars, down 20.6% compared with the same period last year (18.9% in the year before RMB).

The most recent news is that the US clothing giant GAP can not afford to lose. Since February, it has lost 7 billion yuan. It is estimated that only 5 billion yuan will be left in the cash flow next week. The company is in a precarious position and will suspend wages to more than 80 thousand employees, and the stock market value will evaporate 6.

More than GAP, the vast majority of garment enterprises have similar experiences. Vietnam's largest state-owned garment enterprise Vietnam National Textile and Garment Group also said that affected by the epidemic, overseas orders significantly reduced, plans to allow 50 thousand employees to take temporary leave. For the global garment enterprises like ZARA, they will face the severe risk of the basic collapse of the supply chain.

From the raw materials to the clothing, the answers handed down in the first quarter were miserable. The whole industry chain of textile and garment industry is in the vicious circle of weak demand and overcapacity. The market wants to get better. It depends on the demand of clothing industry. But the real problem is that the global epidemic is still spreading, especially in Europe and the United States, where the epidemic is serious, reemployment is difficult, income is reduced, and consumption is on the rise for a long time. Further transmission to the domestic industry chain is equally uncertain.

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