Shoe Companies Are Selling Cheap: Business Is Hard To Do, And 500 Pairs Are 6 Yuan A Pair.

"100 pairs of 10 yuan, one pair, 300 pairs of 8 yuan, one pair, 500 pairs of 6 yuan a pair!" Zhang Qiang, a shoemaking factory, is crying out on social platforms every day.

In April 28th, Zhang Qiang told the times weekly reporter that the shoes produced could not be released, and the bank loans were not yet available. "Now I want to deal with the backlog of hundreds of thousands of shoes lost."

Zhang Qiang, who struggled on the brink of bankruptcy, was not alone. In April 27th, Yang Jie, a pseudonym in the fifteen century shoe factory in Tianjin, also told the times weekly reporter: "for four months, it can be said that there is no single connection."

Not only is the foundry shoe factory, but the whole shoe industry has seen a decline in sales in the first quarter of this year.

According to the National Bureau of statistics, sales of shoes and clothing in the first quarter were 225 billion 200 million yuan, down 32.2% compared to the same period last year. Sales of shoes and clothing in March were 68 billion 900 million yuan, down 34.8% compared with the same period last year. From the point of view of household expenditure, the expenditure on footwear and clothing in urban and rural areas decreased by 20.1% and 11.5% respectively in the first quarter.

This is not a labor pains. The ripple effect brought by the epidemic is just beginning.

"From this year's point of view, a whole year's impact has existed, and the chain reaction has been transmitted from the consumer side to the production and supply side. The reduction and cancellation of orders at home and abroad, and the pressure of inventory pressure have increased, resulting in greater pressure on production and supply side than any time." In April 28th, Cheng Weixiong, founder of textile and clothing brand management and Shanghai Liang Qi Brand Management Co., Ltd., told the times weekly reporter.

Based on this, shoe companies have invested in online channels, but little effect has been made. How to stimulate consumption, how to digest inventory and other issues urgently need shoe enterprises to think and answer.

　　 First quarter results slide

According to convention, Yang Jie looks at the factory every day, but every time she gets cold. "The workers have gone almost the same, from the very beginning of the more than 500 employees, there are now only a few dozen people left."

Yang Jie said that workers did not take the initiative to lay off workers. "Because everyone is counting the wages, there is no order, and the employees have almost no salary, so they have to go."

Prior to this, Yang Jie's OEM shoe factory, though not large, had a steady stream of orders, and it was no problem to feed hundreds of workers. But now there are not only new orders, but also a series of withdrawal orders. "Many orders have been cancelled by European and American customers or other national customers. They say retail stores have not been opened and do not want this." Yang Jie, who had cancelled the order six or seven times, spoke of the matter and revealed numbness in his tone.

"It's a day to hold on for a day. If it doesn't work, it will go bankrupt." Yang Jie sighed continuously.

The larger foundry shoe factories also failed to escape the storm. Footwear industry OEM giant Taiwan Fengtai enterprise's relevant person in charge on April 27 to the times weekly reporter admitted that at present the domestic factory has started, but in India's production business by the local government request to stop work, also can only cooperate to stop work.

In fact, it is difficult for the foundry factory to receive orders from consumers, which can be seen in the first quarter of this year.

Wind data statistics, Saturday (002291.SZ), AOKANG International (603001.SH), red dragonfly (603116.SH) and Tian Chong fashion (603608.SH) in the first quarter of this year, net profit fell to the same extent. Among them, the biggest drop on Saturday, down 330.15%, while the remaining three old shoe enterprises net profit decline accounted for 96.77%, 75.8%, 114.77%.

On Saturday, April 28th, He Jianfeng, executive director of the board, explained to the weekly Times reporter the reasons for the decline in performance: "basically there was no business in February, and gradually resumed shop in March, but in fact, the situation was not particularly satisfactory. In April, it was slightly better, but it did not stabilize over the same period."

"Stores must be closed under uncontrollable conditions, but the cost of fixed expenses will not change. The rent will be paid as usual, while AOKANG's operating income will drop sharply." On the same day, the head of AOKANG international propaganda and planning department told the times weekly reporter.

Sports brands that have always performed well have also failed to avoid the black swan.

In April 27th, Adidas, a sports brand leader, released a quarterly report. The report shows that more than 70% of Adidas's global stores are still closed, with net income from continuing operations falling by 97% to 20 million euros (about 150 million yuan).

However, several sports brands in China also have different degrees of performance decline. Retail sales of Lining (excluding Lining YOUNG) showed a drop of 10% - 20%, while XTEP and 31st retail sales fell 20% - 30% compared to the same period last year, and Anta's retail sales in the first quarter fell 20% - 25% over the same period.

On Saturday, He Jianfeng, a constable general, admitted that after the sharp reduction in sales in February and March, there would be some inventory pressure on the products.

Accelerated shuffle

In order to reduce inventory, shoe companies have "made moves".

Adidas said in the first quarter earnings that Adidas's inventory was overloaded by more than 1/3, and its value reached 4 billion 330 million euros.

In addition, Adidas plans to reuse some of its unsold stocks for sale in 2021. Harm ohlmeyer, chief financial officer of Adidas, said publicly that it is expected that the whole industry will be on a large scale promotion in the second half of the year.

Domestic shoe enterprises also actively "touch the net", through online channels and live broadcasts.

For example, the chairman of AOKANG international and red dragonfly went to live directly. Anta and other sports brands are also promoting full retail sales, on-line WeChat mall and other ways to bring offline traffic into online channels.

"Now we keep on saving ourselves, and the live broadcast is also in progress." The director of AOKANG international propaganda and planning department told the times weekly reporter that apart from our director's help in the live broadcast, AOKANG also organized more than 100 employees into a live "female group", allowing them to go to specialized MCN institutions for training.

But on the whole, the effect of online channel sales is not satisfactory.

Public data statistics, Tmall sports shoes statistics in March, in addition to the two major international giants Nike and Adidas sports shoes sales increased by 29.4% and 2.1%, other domestic sports brand sales have declined. Sales of Anta brand sneakers dropped 27.1% compared to the same period last year, while sales of Lining's sneakers dropped by 30.1%. The sale of two other domestic brands, XTEP and 331, is down by more than 40%.

According to the data released by AOKANG international in a quarterly report, AOKANG International's sales fell by 10.32% during the reporting period.

In April 29th, Mr. Li, who was close to the shoe and clothing industry, told the times weekly reporter that under the influence of logistics disruption and road blockade, sales in the short term were not good enough.

"In the long run, sports brands have better digestion and inventory capabilities." Mr. Li said frankly.

Guosheng securities released a research report on April 23rd that the inventory problem mainly came from short-term external shocks, and from 2016 to 2019, the sports shoes and clothing industry had a high degree of prosperity, and the stocks of all brands were in good health. For example, Lining's inventory in the end of 2019 was only 4.2 months, and the Anta brand store sales ratio was between 4 and 5 months, so the inventory problem was controllable.

And most of the old shoe enterprises have been facing high inventory difficulties before the outbreak. This attack will undoubtedly increase the difficulty of inventory.

Take AOKANG international and Tian Chong fashion as an example. According to the latest annual report, in 2019, AOKANG's international stock grew by 8.47% over the same period, up to 6 million 859 thousand and 200 pairs, while the inventories of Tian Chong fashion were slightly lower, but it also reached 2 million 351 thousand and 500 pairs, up 0.96% over the same period last year.

Not only that, whether the product is attractive or indirectly determines the effectiveness of inventory.

"At present, young consumer groups are constantly building up. These young consumer markets will provide more opportunities for individualized, creative products and brands, and the trend of individuation will increase considerably in 5 to 10 years." In April 28th, Yang Dayun, a famous fashion industry investor and fashion finance critic, said.

Yang said that if the old shoe companies do not carry out product innovation, their market will shrink further.

Cheng Weixiong also believes that factors such as brand strength, product strength and channel (store strength) are indispensable for new and old customers. With the help of the epidemic, the traditional brands will be accelerated to be transformed and eliminated, and the brand away from the market and users will be further marginalized.