Another Big Retailer In The United States Is Facing Bankruptcy, And Adinike Can'T Bear It

The impact of the epidemic on the global retail industry continues. Recently, another large retailer in the United States said that it was considering applying for bankruptcy protection. In Europe, Zara's parent company recently announced a large-scale store closure plan. In the face of the crisis, the global retail industry began to make efforts to sell online, hoping to withstand the cold winter of the industry. At the same time, it is worth noting that in order to cope with the crisis, many retailers began to adjust their business and sales structure and cut down product categories.

Nike reported its first quarterly loss in two years

Tailored brands, the latest U.S. retailer exposed to bankruptcy, owns some of the largest men's wear brands in the United States. The company recently said it may have to file for bankruptcy protection if the epidemic continues to depress sales. At present, the company has only opened half of its stores in North America.

Under the double blow of the new crown epidemic and the United States' protests, Nike, the US sports brand giant, also suffered a quarterly loss for the first time in two years, with sales falling nearly 40% in the previous quarter. In the financial report, Nike said that due to the impact of the epidemic, most of Nike's self owned and dealer stores in North America, Europe, the Middle East and Africa, Asia Pacific and Latin America were closed, partially offsetting the growth trend in Greater China.

Shooting: Zhongfu

CNBC reported that on the same day Nike announced its dismal results, its chief executive John Donahoe sent an email warning to employees that layoffs were coming.

Coresight research, an industry organization, predicts that the total number of stores announced to be closed in the United States this year may reach a record high of 20000-25000 due to the epidemic. About 55% - 60% of them are located in American shopping malls.

The U.S. Department of Commerce released U.S. retail sales data for may on June 16. Statistics show that, after a continuous decline of 8.3% and 14.7% month on month in March and April, with the re opening of Commerce, the US retail business has stabilized and rebounded, with a 17.7% month on month increase in May, but still a year-on-year decrease of 6.1%.

The rebound in May came at a time when the economy is likely to start a slow and long-term recovery. In May, US employers added 2.5 million jobs, an unexpected increase, indicating that the job market has bottomed out. So far, some people have warned of the severe impact of the government's aid on the economic recovery and the potential impact of the expansion.

The retail crisis is not only in the United States. In Europe, INDITEX, the parent company of Zara, the world's largest clothing retailer, has announced plans to close 1000 to 1200 stores by 2021. The company reported a net loss of 409 million euros from February to April this year, compared with a profit of 734 million euros in the same period last year.

On April 27, Adidas, a German sports giant, released its first quarter performance of fiscal year 2020, which showed that 70% of its stores in the world were still closed due to the impact of new crown pneumonia on European and American markets.

In the first quarter, adidas' global sales fell 19% to 4.75 billion euro, operating profit dropped 93% to 65 million euro, and net profit fell 96% to 26 million euro. Adidas's discount rate fell from 53.3% in the same period last year to 49.6% in the same period of last year. Adidas warned that sales in the second quarter will suffer a greater decline, and is expected to decline by more than 40% year-on-year, and operating profit may be negative.

The average number of goods decreased by 7.3% in 4 weeks

A noteworthy phenomenon is that during the outbreak of new crown pneumonia, the economy of the United States stopped, economic activities dropped sharply, and the consumer goods market changed suddenly. Many American retail companies, food and catering companies are accelerating their strategic adjustment, and shrinking and streamlining have become the direction of development. They began to adjust the structure of business and sales, cut down product categories, streamline menus, suspend new product research and development, and even intend to give up some kinds of consumer goods permanently.

Personal consumption accounts for about 70% of the total U.S. economy, and is the main cornerstone of U.S. economic growth. However, many companies that have been trying to satisfy all consumers and enrich their products over the past few decades have begun to change their strategies. Since the outbreak disrupted the supply chain and lured consumers to buy familiar brands, retailers of commodities, automobiles, meals and other products have been reducing the scope of supply. Worried about the pressure from factories and stores, some U.S. industry executives even said they planned to continue to reduce product categories after the outbreak subsided.

For example, according to the Wall Street Journal on June 27, IgA, a large supermarket chain, sold 40 kinds of toilet paper in 1100 stores in the United States before the outbreak of the new crown epidemic. Now, some IgA supermarkets offer consumers only four choices, and the type of toilet paper products is reduced by 90%.

On the retail side of food and commodities, Morgan SABERT, head of analysis at Nielsen, a market research firm, said that at retail stores, the average number of different goods (categories) fell by 7.3% in the four weeks to June 13. During the outbreak, some categories of products, such as baby care products, bread and meat, fell by 30% earlier.

In the face of the industry crisis brought by the impact of the epidemic, many retailers in Europe and the United States have to deal with it by launching online sales. For example, INDITEX, while announcing its store closure plan, said it would invest about $3 billion to promote the online operation of its chain brands, hoping to increase the proportion of online sales from 14% in 2019 to 25% in 2022.

To some extent, the epidemic may be like a catalyst, accelerating the development of online sales of European and American retailers. However, it is difficult for the retail industry to completely return to normal by relying on online alone. What we need to wait and see is whether the consumer confidence and consumer demand can accelerate the recovery, which is particularly important for the repair of the whole industry.