Clothing listed company inventory is in controllable range

"Inventory crisis" is a very hot focus of the apparel industry in 2012.

Following the media's successive disclosure of Li Ning, Metersbonwe and other domestic well-known clothing brand high stock prices, recently, there is news that "If all garment companies stop production, the stock clothing people can not wear three years." As soon as this statement was disclosed, the problem of inventory in the apparel industry immediately rose from the hot spot in the industry to the general concern of the domestic apparel industry.

Three years of inaccurate use of inventory clothing. "Inventory is the characteristics of the industry as a seasonal end product in the business process." Wang Wei, secretary general of the China Garment Association, told the "China Enterprise News" reporter.

He believes that at present, with the weakening consumption in the domestic market, some clothing brand inventories have increased, which does not affect the production and management of these brands, and it cannot be determined as such, which constitutes an inventory crisis in the apparel industry.

Statistics from the National Bureau of Statistics show that the enterprises in the apparel industry in China's garment industry above the designated size achieved 256.966 billion yuan in finished product inventory in the first three quarters of 2012. According to the calculation of the China Garment Association, in 2011, China’s domestic apparel sales amounted to 1.4 trillion yuan, and in 2012 it is expected to reach 1.7 trillion yuan.

"According to the data, it can be inferred that the lack of proper knowledge of the apparel industry is a serious irresponsibility for the argument that 'there are enough garments for the entire country for three years'.

CPI consultant Xiong Xiaokun, a light industry researcher, told reporters that at present, China's garment industry is still struggling. Clothing companies are mostly under pressure from high stocks. However, the statement that the apparel industry can sell for three years is somewhat exaggerated. The apparel industry is closely linked with the macroeconomic trend and it is necessary to look at the issue of apparel inventory with a dynamic perspective.

"As long as a company's cash flow is not broken, inventory is not a big problem. The media should not exaggerate the facts of the stock," said Ying Chunguang, general manager of Ningbo Boyang Clothing Co., Ltd. Tang Shiguang, told reporters.

According to Wang Xie’s analysis, unsatisfactory stocks that need to be dealt with belong to unsalable stocks, defective products, and surplus raw materials. In the current financial statements of listed companies, the “inventory” includes a wider range of areas, including the stocks of other industries covered by listed companies, and does not refer only to “backlogs and unsalable products” in the general concept of people.

Take Youngor as an example, according to its published data, the company’s inventory is currently close to 24 billion yuan, and its apparel inventory is 1.7 billion yuan, which is evenly distributed among its 2,600 sales outlets, each of which is about 650,000 yuan.

According to data disclosed by the China Garment Association, 33 listed companies reported that their total inventory was 49.473 billion yuan, which is basically the same as sales growth.

There is indeed a problem with the inventory According to data released by the China Garment Association recently, China’s export clothing has also decreased. According to customs statistics, the number of garment exports in China has been negative for 13 consecutive months. From January to September this year, the monthly decline was 6.44%, 11.4%, 3.65%, 5.28%, 3.79%, 3.60%, 4.53%, and 4.26% respectively. At 2.9%, the situation was declining.

At the same time, domestic sales are weak and the situation is more severe. From January to September of this year, figures from the National Bureau of Statistics show that the sales growth of garment enterprises above designated size was 17.8%, a decrease of 7% from the same period of last year.

The sales data of 3,000 retail companies monitored by the Ministry of Commerce showed that in September 2012, apparel sales increased by 6.8% year-on-year, a decrease of 16.5 percentage points from the same period of last year. The 100 large-scale retail enterprises of the China National Business Information Center monitored the sales volume of apparels from January to September this year to increase by 12.02% year-on-year, a decrease of 12.16 percentage points from the same period of last year.

According to industry analysts, inventory levels will affect the ordering and sales of distributors in the next sales cycle.

Not long ago, Peak issued news that at the second quarter 2013 sales meeting, its total orders fell by 20% to 30%. Subsequently, Anta and Xtep also announced the second quarter of the next year's fair, the data show that the two companies fell 15% -20% and 15% -25% year-on-year orders.

At an earlier time, Li Ning, which was under intense pressure from inventory, issued a mid-year report that in the first half of this year, Li Ning closed down 1,200 inefficient stores, and the proportion of stores closed was as high as 15%. Followed by Peak’s announcement, as of September 30, 2012, Peak Sports had 6,739 authorized retail outlets in China, a net decrease of 1067 compared to the end of 2011.

It is undeniable that due to the inaccurate expectations of the market, some apparel companies have been eager to open stores to increase sales, resulting in a decline in the efficiency of single stores and slow response of some companies. Some domestic branded apparel companies do have irrational growth in inventory.

"Overall, the inventory level of apparel listed companies is still in a controllable range, most companies, and even the entire industry, did not reach the point of 'crisis'." Wang Hao stressed.

De-stocking Xiong Xiaokun told reporters that inventory control plays an important role in apparel sales, which will affect the competitiveness of enterprises and the ultimate profitability.

He believes that, in general, the normal inventory of clothing classics is 30% of sales distribution, fashion models is 20%, below this limit business operations will be difficult to operate, above this limit companies will face greater pressure on the inventory, Clothing will gradually devalue in the warehouse. Enterprises should pay attention to inventory management and maintain inventory in a reasonable range.

Starting this year, apparel companies are also actively looking for and implementing measures to digest stocks. According to the data provided by the China Garment Association, with the advancement of destocking in 2012, the year-on-year growth of inventory in the first three quarters has gradually declined, being 8.04%, 6.00%, and 3.75%, respectively, which is lower than the sales growth rate.

“In fact, the inventory problem in the apparel industry has been there, but it is not so serious.” Zhang Jian, general manager of Shanghai Chenjin Consulting Co., Ltd. stated at a meeting of the China Apparel Conference held at the end of November. He believes that the main reason for inventory problems is that enterprise product development can not keep up.

"Only the deeper the embarrassment, the higher will be the jump." He Jun Consulting Group clothing division Li Jinliang told reporters. Therefore, related parties suggested that agents and distributors should lower their expectations at this time.

Due to the lack of reasonable expectations for apparel sales, and the amount of orders often exceeds the actual market demand, it is necessary to strengthen the information construction of the supply chain. The intensification of supply chain information will be beneficial to the company's control over the amount of orders.

Industry insiders also suggest that companies' inventory can be carried out through various means such as product planning and pricing control. For example, the most direct and effective way is to carry out promotions, while paying attention to strengthening promotional efforts and density, or adding discount points. At the same time, in the expansion of sales channels, we should actively try to e-commerce sales model. Not only that, companies should also strengthen internal management, improve informationization control, terminal sales capabilities, effective allocation of goods and other means.