In 2022, the word “difficulty” is the consensus of almost all apparel industries, especially established local apparel companies. Meibang Apparel achieved operating income of 1.439 billion yuan last year, a year-on-year decrease of 45.45%; net profit attributable to the parent company was -823 million yuan, a year-on-year decrease of 104.9%.
Meibang Apparel is not an exception. In the past annual reporting season, many well-established local apparel listed companies have reported double decreases in revenue and net profit.
At the same time, there are also established apparel companies in the industry such as Anta Sports and Li Ning, which have maintained growth momentum in the cold winter of the industry by relying on the transformation of national trends.
The industry is stalling, demand is declining, and performance is divergent… the situation of the apparel industry in 2022 will be very different. A large number of statistics are connected with each other to record the industry’s 2022. Behind the numbers are the ordinary lives of millions of stores, tens of millions of employees, and hundreds of millions of consumers.
Industry stalls again
After a brief recovery in 2021, the apparel industry will stall again in 2022.
According to data from the National Bureau of Statistics, in 2022, the retail sales of clothing products by units above designated size in my country totaled 922.26 billion yuan, a year-on-year decrease of 7.7%, and the growth rate dropped by 21.9 percentage points from the same period in 2021.
Specifically, in 2022, the loss ratio of enterprises above designated size in the garment industry will reach 19.37%, an increase of 2.52 percentage points from the same period in 2021, and the loss of loss-making enterprises will increase by 12.46% year-on-year; the turnover rate of finished goods, accounts receivable turnover rate and total assets The turnover rate decreased by 4.87%, 4.50% and 3.62% respectively year-on-year.
The engines driving the growth of the trillion-dollar clothing consumer market have become weak in the past year: time and space, money and goods, stores and customers… Various elements in the industry chain were temporarily blocked by force majeure, and the cold air spread to the entire industry.
Life is also difficult for local established clothing brands. In the past year, the revenue of many A-share listed apparel-related companies has declined, and some have even turned from profits to losses.
In addition to “sold less”, each company’s products are more or less “sold slowly”. Based on the 2022 annual reports of various companies, almost all local established apparel companies are facing the problem of rising inventory turnover days.
The financial report shows that Meibang Apparel’s inventory turnover days will increase from 289 days in 2021 to 324 days in 2022. In other words, it takes Smith Barney almost 11 months on average to sell a piece of clothing. Heilan Home’s inventory turnover days in 2022 are also as long as 298 days, an increase of 65 days compared with the same period last year.
Consumer willingness affects recovery process
In the apparel industry, products “sold slowly” and “sold less” are not positive signals. This is affected to some extent by consumers’ willingness to consume.
Heilan House “confessed” in its 2022 financial report: residents’ consumer demand and consumer confidence have declined, social consumption continues to be under pressure, clothing, shoes and hats, as optional consumer goods, have been more obviously affected, and the operating pressure of enterprises in the clothing industry has further increased. big.
Data from the National Bureau of Statistics also show that in 2022, the per capita consumption expenditure of national residents was 24,538 yuan, a nominal increase of 1.8%. After deducting price factors, the actual decrease was 0.2%; the per capita consumption expenditure of clothing nationwide fell by 3.8% year-on-year.
Consumer attitudes influence the direction of the industry. From luxury goods to small brands, almost all related companies are affected.
The “2022 China Luxury Goods Report” pointed out that in 2022, the global luxury goods market will further recover. However, affected by factors such as unstable consumer confidence, China’s domestic luxury goods market will experience a negative growth of 15% for the first time in 2022, with sales of only 547.5 billion. The yuan has given up its position as the world’s largest luxury goods consumer market.
As for emerging small brands, their lives are even more bleak. In the past year, Qin Yu has witnessed the demise of many niche brands.
Generally speaking, the apparel industry places orders in spring, summer and autumn and winter. A brand will often set a theme for the quarter first, and then provide 70 to 80 SKUs (minimum stock keeping units) around the theme. The R&D cost for a season is at least about 500,000, and it will definitely burn 1 million a year.
After investing millions of dollars in costs, under last year’s market conditions, some independent designer brands could only harvest about 100,000 yuan in order revenue. It’s okay to sell 100,000 yuan. Many brands really can’t order a single piece of clothing, which is equivalent to wasting that season.
There are various reasons for the decline of independent designer brands. Force majeure factors are on the one hand, and lack of “reverence” for the industry is another. “Many brands seem to have some interest when they first come out, but they seem to fall apart after two seasons.
In recent years, designer brands have sprung up like mushrooms after a rain. Among them, there are also lucky ones that can “go through multiple seasons” and successfully go on the market, such as Jiangnan Buyi, but they still cannot survive alone in the general environment.
The interim results released by Jiangnan Buyi as of December 31, 2022 show that the company achieved revenue of 2.36 billion yuan in the second half of 2022, a year-on-year decrease of 5%; the profit attributable to the company’s shareholders was 370 million yuan, a year-on-year decrease of 16.2%. This is the first time that Jiangnan Buyi has experienced a double decline in revenue and net profit in its interim results since its listing.
Sports track keeps growing
The hottest dividend period has passed, this is the early stage for the apparel industry��The consensus reached a few years ago can also be seen in the annual reports of local brands.
Since 2015, Semir Apparel has begun to point out in its annual report: The reshuffle of various market segments in the apparel industry has intensified, and the apparel industry has changed from opportunity-oriented to capability-oriented. Local brands face challenges such as rapid changes in consumption, changes in retail channels, the rise of Internet consumption, and intensifying global competition.
These few sentences in Semir’s financial report cover the period from 2015 to 2022, becoming the narration of the industry’s development in the past seven years. Local established apparel companies have transformed at their own pace, with their performance ups and downs. Established apparel companies that were once placed on the same stage for comparison have gradually experienced divergence in performance and have taken different paths.
However, in 2022, some established apparel companies will still achieve growth, especially sports brands.
Li Ning’s 2022 annual report shows that the company’s annual revenue was 25.803 billion yuan, a year-on-year increase of 14.3%; net profit rose slightly to 4.064 billion yuan, a year-on-year increase of 1.32%. During the same period, Xtep International’s revenue hit a record high, up 29.1% year-on-year to 12.93 billion yuan, and net profit attributable to the parent increased 1.5% to 920 million yuan. Anta Sports’ 2022 performance report also shows that the company achieved revenue of 53.651 billion yuan during the period, a year-on-year increase of 8.8%.
Judging from the financial reports, the main driver of revenue growth for Li Ning and Xtep is the footwear business. The financial report shows that in 2022, Li Ning’s shoe product revenue will increase significantly by 42% to 13.5 billion yuan; Xtep’s current footwear revenue will reach 7.760 billion yuan, a year-on-year increase of approximately 30.9%; Anta’s footwear business will achieve revenue of 22.471 billion yuan in 2022 , a year-on-year increase of 17.4%.
The business operations of several sports brands outline an interesting phenomenon – what you wear on your body is not as good as what you wear on your feet.
Huali Group, which manufactures footwear products for Adidas, Nike, Puma and other brands, pointed out the reason behind this in its financial report: “During the reporting period, consumer demand for sports shoes continued to grow steadily.”
Huali Group’s 2022 financial report shows that during the reporting period, the company sold 221 million pairs of sports shoes, a year-on-year increase of 4.65%; it achieved operating income of 20.569 billion yuan, a year-on-year increase of 17.74%; it achieved net profit attributable to the parent company of 3.228 billion yuan, a year-on-year increase of 16.63% .
However, the popularity of footwear products on the sports track cannot be easily transferred to other tracks.
The 2022 financial report of Tianchuang Fashion, which also operates the footwear business, shows that the fashion footwear and apparel segment achieved a main business income of 1.191 billion yuan for the current period, a year-on-year decrease of 30.36%; the net profit attributable to shareholders of the listed company after deducting non-recurring gains and losses was a loss 187 million yuan, the fashion footwear and apparel sector suffered a performance loss for the first time.
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