Apparel Firms Deeply Caught in Inventory Crisis

This is enough to make every garment industry owner jump-started: the 2012 spring and summer models and fall/winter 2011 models are normal inventory, and the remaining more than 1.5 billion yuan worth of clothes per depot in the warehouse means devaluation.

This is the status quo of Meibang clothing. Such clothes stay in the warehouse for one more day and the price will drop a little. This is not just the status quo faced by Smith Barney. Most of the apparel companies are facing a huge "stock war" at Vanke Eslite, Semir, and Haijun.

A few days ago, due to the popularity of the Internet, rumors, and even the explosion of warehouses, the reporter went to Pinghu City, Jiaxing City, famous for its garment processing. The survey found that there was no rumors in Pinghu, but from the financial statements of Haishu House, Smithsonian and other apparel companies, there were still traces of serious inventory.

Inventory in the warehouse Zhejiang Jiaxing, Pinghu Xin Cangzhen Rome Garment Factory's shop door, stopped a lot of cars from Shanghai, these defective products from the workshop are discounted at the factory store.

If you are lucky, you may be able to find some of the Japanese street fashion cards, an ordinary T-shirt, but the price is only 30 to 50 yuan. These defects are basically difficult to identify with the naked eye.

This is a common scene in Jiangsu and Zhejiang. In fact, such scenes can often be seen in Zhangjiagang in Jiangsu, Huzhou and Ningbo in Zhejiang.

Here, it is the origin of this “stockstorm storm”. It is widely reported on the Internet that the information on the stocks of Smith Barney and Van Gogh is true? "In Pinghu, the entire warehouse of Smith Barney's garments, the entire warehouse where passenger pants! Factory warehouse warehouse explosion!"

Such rumors may be too sensational.

In a factory near Ningbo’s Lianfeng overpass, which mainly makes OEM in Japan, a lot of clothes are stuffed in the entire warehouse. Most of these are defective products, and some of them are backlogs. Because of customer’s requirements, many Trademarks have been cut off, and these clothes are generally twenty or thirty yuan.

“Ningbo textile and apparel industry has maintained an external orientation of over 50%. Many factories are doing OEM. The export market is mainly in Japan, the European Union, the United States, ASEAN, Latin America and other regions.” Zhang Xiaofeng, president of the Ningbo Clothing Association, said, Many factories can see "sell".

The reporters saw in Quanhu Town and Xincang Town of Pinghu that there are many clothing companies here, and basically all of them are OEMs. There are some stocks in the factories of these companies, but they did not see similar “explosive positions”. The scenes, such as in the warehouse of the largest garment company in the new warehouse town, Jae Weaving, can see some inventory, but the quantity is not large.

In fact, even if the largest local company in Pinghu does processing for Smith Barney, it is difficult to find a large amount of inventory. This company named Pinghu City Mengmenda Garment Co., Ltd. is one of the larger foundries of Smithsdale, apart from Smith Barney also does a small amount of processing for “every guest”.

The factory's warehouse and most of Pinghu's garment factories are no different. There are only a few boxes of clothes. "If there are many stocks, some factories will choose to sell them in the factory shop." Mengmengda Garment Xia Weijie, the general manager of the company, told this reporter that they almost did not have stocks, and that Smith Barney was usually shipped directly under a good order.

“In the warehouse of 'Blue Sky', there are some goods of Smith Barney, this is the total warehouse in the Jiaxing area, but in general, the volume is not large, generally only tens of millions of dollars of goods.” Xia Weijie said , They mainly to help the brand processing, Smith Baron's payment speed is still relatively fast, generally is the first to pay 20%, get the goods and then pay Sancheng, get the balance within one month after getting the goods.

Throughout Pinghu, our reporter found that only one or two factories have their own factory stores. The scale of these factory stores is not large. There are only one or two facades. Even if it is the largest clothing wholesale market in Pinghu, it is also very It is difficult to find the clothes of Smith Barney or Vanke.

Where does the amount of inventory rumors come from? Maybe hidden in the data. According to Haishuzhijia Clothing Co., Ltd. on March 8 on the website of the China Securities Regulatory Commission, its initial public offering prospectus (draft), the end of 2009, the end of 2010, and the end of 2011, the book value of the inventory of the Haishu House They were 1.305 billion yuan, 1.693 billion yuan, and 3.863 billion yuan respectively, accounting for 50.21%, 44.41%, and 56.82% of the total assets for the year.

These days of inventory can be found in these reports.

Flush statistics show that in 2011, the total inventory of 84 listed companies in the textile, clothing and fur industries reached 70.832 billion yuan, an increase of 25% from the 56.742 billion yuan in 2010.

Taking the vancson product involved in this “inventory crisis” as an example, according to the listing documents submitted by Vanke Eslite, Vanke expects to lose RMB 1 billion from July to June of this year, and up to RMB 1.445 billion. in stock.

The quarterly report of a number of listed apparel companies showed that high stocks are still inexplicable. Among them, Semitra stocks are 1.3 billion yuan, up 30% from the end of 2011; Smith Barney's stock is 2.3 billion yuan, and the first quarter revenue is 2.6 billion yuan; Seven wolves and Jiumuwang stocks are 5 100 million yuan and 600 million yuan.

According to the China Gold Report, the new inventory of Midea in the spring and summer of 2012 is about 250 million yuan, and the inventory of autumn and winter 2011 is 700 million yuan, and the stock of spring and summer 2011 is 800 million to 900 million yuan, and the stock of autumn and winter 2010 is 500 million. To 600 million yuan, the rest is even earlier. According to industry practice, the new products for the spring and summer of 2012 and the fall/winter season for 2011 are normal operating stocks, but the remaining goods exceeding RMB 1.5 billion are seasonal products.

Although Pinghu did not see the excess inventory of Smith Barney, according to director and deputy general manager of Quanbang Wang Quangeng in 2008, the first public offering of A-share online roadshow in Smith Barney was introduced to investors. Smithsonian’s logistics warehousing was its own distribution center. With the combination of third-party logistics, Smithfield products are mainly transported by the third-party logistics companies to the headquarters of the company, the company's distribution centers and lease warehouses. Combined with the financial report data, it can be concluded that the inventory of US$2.3 billion may be mostly distributed. Center and lease warehouse.

For apparel companies, these off-season goods are devaluing. Zheng Chen'ai, president of the Wenzhou Garment Merchants Association, said that the garment industry is not the same as other industries. It is easy for garments to go off season and it is difficult to achieve “zero inventory” in other industries. Because of this, inventory is the biggest problem for garment companies. Not easy, cash flow is easily overwhelmed.

Previously, there was an IPO that failed to pass through the apparel industry. The presumption was that the inventory turnover rate was too low and the sales risk and financial risk were sharply enlarged.

“The survival risk of apparel companies has always been great, especially women's clothing, many domestic companies are learning ZARA's speed of shipment, the rapid response to fashion is the domestic clothing companies have been imitating.” Zhang Xiaofeng told this reporter.

Previously, the chairman of Meibang Zhou Chengjian stated to the outside that the design of the brand ME&CITY brand clothing, trial assembly, finalization, prototype production, volume statistics, large cargo production, and logistics and distribution links require a total of 70 days of turnaround time.

The average number of goods turnover days for Chinese clothing is 185 days, and ZARA and H&M are approximately 15 to 50 days.

This 70-day period is considered to be the fastest pace of domestic garment enterprises after ZARA. "We are pursuing speed and we have not learned anything in design or other aspects of the channel. This will cause a lot of inventory." Insiders told this reporter According to the disclosure, the major reason for the majority of domestic companies’ inventory is the existence of “major defects” in channels and design.

Where is the way? Mr. Zhang, a county-level agent of Metersbonwe, told this reporter that he had a specialty store and a special counter. He became an agent of Smith Bark three years ago. “But these years have not earned anything. Money, because I don't have many stores to join, and the initial fee is not particularly high, so the discount for getting goods is 57%."

Excluding labor costs and storefront costs, his profitability is very limited. “In addition, the two-year discount campaign is very powerful. So as long as Smith Barney's direct-operated stores start to be discounted, I will basically not make any money.”

Mr. Zhang revealed that such a situation led to frequent returns during the season, and in fact, not only did one agency face a similar situation, but discounts often occurred between outlets and agents. This is also The important reason for the increase in returns in recent years.

“This is also a problem we have been worrying about. For factories, once the company’s inventory pressure is too great, it will directly affect the payment situation.” The person in charge of the Jiaxing factory, who did not want to be named, told this reporter that he was in Anhui. There are 6 processing plants in Jiangsu and Jiangsu. Jiaxing's factory is now more similar to the “headquarters economy” and mainly accepts orders. Since the beginning of this year, many factories have refused to accept orders. “The payment is too slow.” , and there has been default."

For them, behind the increased risk, there is even greater consideration. Once the inventory keeps increasing, there will always be the last straw that pressures itself. “This is an industry that has strict requirements on time for garment companies. For example, three years ago, the goods have basically been 'floor prices', this is the industry's most ruthless place." The above-mentioned person in charge disclosed that many brands have been blacklisted because he did not pay due time. "This is the only way."

In August last year, Smith Barney revealed on the interactive platform of the investor relations of the Shenzhen Stock Exchange that the inventory backlog in the first quarter of last year was caused by three reasons: First, the expansion of sales scale and rich style design; Second, late winter in 2010, and the sales cycle of winter clothes was delayed. The third is to arrange for the storage of goods in 2011 in response to the impact of the labor shortage at the beginning of the year on the supply chain.

According to the normal operation of the industry, 10% to 20% of the range is regarded as safety stock, which means that 10,000 pieces of clothes are produced, among which 1000 items to 2,000 items are inventories, which is also within the controllable range of clothing enterprises. within.

If only using discounts to resolve inventory, for example, Li Ning said in the annual report that it is necessary to accelerate the establishment of clearing channels. In 2011, the number of Li Ning's factory stores and discount stores reached 269 and 358, respectively, almost double the number of 133 and 180 in 2010.

Zhang Zhiyong, CEO and President of Li Ning, publicly stated that in 2012, the discount rate of retail stores will reach 24% to 25%, and the discount rate for factory stores and discount stores will be 50% to 53%. This is almost a nightmare for franchisees. Once the inventory crisis has spread, everything is indeed possible.

In fact, of these fast-selling apparel sellers, only ZARA, H&M, Uniqlo and several other companies have been able to effectively control inventory. There are many places where domestic companies need to learn in the refinement of processes.

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