Bershka, Pull&Bear and Stradivarius owned by Inditex, the parent company of ZARA, will withdraw from the Chinese market.
Recently, the three e-commerce flagship stores of Bershka, Pull&Bear and Stradivarius, owned by ZARA parent company Inditex, issued store closure announcements. From July 31, 2022, online stores will cease sales. It is worth noting that Bershka, Stradivairus and Pull&Bear were the first batch of fast fashion brands to land on Tmall, with 7.82 million, 4.26 million and 6.48 million fans respectively. The sales of these three brands last year were 2.177 billion, 1.824 billion and 1.876 billion respectively. billion euros, accounting for 7.8%, 6.5% and 6.7% of the group’s total revenue respectively.
At the beginning of last year, the above three brands announced the complete closure of offline stores in the Chinese market and would complete all store closures by the end of 2021.
On June 8, Inditex announced its first quarter financial report for fiscal year 2022, which showed that the company’s first quarter revenue was approximately 6.7 billion euros, and its net profit reached 760 million euros, a year-on-year increase of 80%, exceeding analyst expectations. However, the main reason behind the increase in performance is the continuous increase in starting prices. According to data provided by UBS, since this year, Zara’s starting prices have increased by more than 10% every month compared with the same period last year. In the past April, the increase was as high as 18.5%. In fact, similar fast fashion brands such as H&M have increased their prices.
The main reason is that the styles of these three brands are still difficult to get rid of the predicament of homogeneous clothing. The main consumer groups of these three brands are students aged around 16-25, and their styles are mostly sports and leisure, and the prices are mostly between 29 and 29. Between 199 yuan. Secondly, the quality of clothing has been criticized by consumers. “Clothing industry expert Cheng Weixiong analyzed.
Cheng Weixiong pointed out that in recent years, clothing brands targeting young people have sprung up, giving consumers more choices. This also brings great challenges to Bershka, Pull & Bear and Stradivarius. The stores of Bershka, Pull & Bear, and Stradivarius lack outstanding styles, and their “cabbage prices” alone can no longer attract increasingly picky consumers, and the three brands themselves are relatively homogeneous.
In addition to ZARA, other fast fashion brands are also closing stores, and the American clothing brand American Eagle has also announced its withdrawal from the Chinese market.
On June 22, H&M closed its first mainland store on Huaihai Middle Road in Shanghai. Since the second half of last year, H&M has been closing stores intensively in the Chinese market. The financial report shows that as of the end of 2021, H&M has closed 60 stores in China, accounting for 12% of the total stores. At the same time, H&M also proposed that in 2022, it plans to open approximately 95 new stores and close approximately 240 stores, resulting in a net reduction of approximately 145 stores.
In addition, in June 2022, the American clothing brand American Eagle officially withdrew from the Chinese market. The brand’s online Tmall store has been closed, and its offline stores in China have been closed in 2019. In the first quarter ended April 30, American Eagle sales fell 6% to $686 million. Like most of its peers, it has been unable to escape the impact of inflation on demand and the risk of supply chain crises and hedging costs pushing up inventories. Its CEO has said that the environment in the first quarter was extremely challenging, with demand well below expectations and putting pressure on operations. In addition, stimulus policies during the same period pushed up the base, inflation, and demand shifted to other experience and occasion-based discretionary consumer goods, proving that the company’s previous expectations were too optimistic, and the company therefore adjusted its expectations based on inventory and demand.
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