Due to the macroeconomic downturn, the change of consumer philosophy and the impact of e-commerce, the apparel industry has become increasingly difficult in recent years. However, the apparel industry has recently begun to show signs of recovery.
It is understood that after three consecutive years of decline, in the fiscal year 2017, Bosideng's revenue resumed growth, profits increased by 40%, and the performance of China's Lilang listed in Hong Kong also improved significantly. In the first quarter of this year, the total profit of clothing companies listed on the A-share market rose by as much as 15%, far exceeding the same period of the previous year.
The international affordable fast-moving clothing giant continues to maintain its expansion in China. In the case of most domestic brands, the number of UNIQLO stores has expanded against the trend. In the past five years, the number of UNIQLO overseas stores has more than doubled.
Bosideng out of the trough? Profits rose nearly 40%
According to the performance report released by Bosideng recently, the total revenue for the fiscal year 2017 (as of the end of March 2017) was 6.825 billion yuan, a year-on-year increase of 17.6%, and the net profit was 392 million, a year-on-year increase of 39.48%. This reversed the previous avalanche-style decline. From 2013 to 2016, Bosideng's revenue decreased from 9.338 billion to 5.808 billion, a drop of 37.81%; net profit fell by 73%. The picture below shows the total revenue and net profit of Bosideng for the past years based on the financial report:
Even in the current bull market of Hong Kong stocks, the market value of Bosideng fell from HK$13 billion in mid-2013 to HK$6.5 billion in early June, shrinking by nearly half. After the latest results were announced, Bosideng's share price rose for several consecutive days.
In the clothing industry, due to overcapacity, brand competitiveness decline, new trends in electronic sales, and changes in consumer habits, the apparel industry has experienced a violent turn-off in the past few years. The situation in Bosideng is particularly severe, with the number of stores decreasing from 13,009 in fiscal 2013 to the current 4,292. Even in FY2017, the number of stores has decreased by 979.
Bosideng said in the earnings report that in the past few years, it has moved from a traditional business model that relies on opening stores to focusing on wholesale business to a retail model that is closer to the market and consumers. From the perspective of financial indicators, Bosideng's transformation seems to have achieved certain results.
In the 2017 fiscal year, Bosideng's revenue in the context of nearly 1,000 stores has not only declined, but has risen. Take its main business down jacket as an example. In the fiscal year, its brand down apparel business revenue was 4.579 billion, up 15.1% year-on-year. More noteworthy is the rare increase in gross margin of Bosideng's sales, which increased its gross margin by 1.3 percentage points to 46.4% in FY2017.
The recovery of the apparel industry: the collective performance of apparel companies is improving
Not only Bosideng, but the performance of many clothing companies listed on the Hong Kong stock market is improving. For example, in China Lilang, which is listed in Hong Kong, its revenue and profits have fallen by more than 10% in 2016. However, in the 2016 annual report, Wang Lixing, chairman of China Lilang, said that the order amount of the 2017 autumn order fair recorded a high unit. The number has increased, and it is happy to see an improvement in the order situation. In the recently released performance report, the total number of orders for China Lilang's 2017 winter trade fairs recorded double-digit growth. As of the end of May this year, its distributors' same-store sales also recorded a single-digit growth.
In addition, the performance of apparel companies listed on the A-share market is also improving. In the 17 apparel companies listed on the A-share market (listed before 2014), the total revenue for the first quarter of 2017 was 14.304 billion, up 5.97% year-on-year; the net profit was 1.849 billion, up 15.56% year-on-year. The figure is only 5.76%. The following picture shows the total revenue and net profit of A-share clothing listed companies (listed before 2014) based on Wind data:
In fact, the overall textile and apparel industry in China has seen a recovery. According to the National Bureau of Statistics, as of the end of May this year, China’s textile and apparel and apparel business income was 922.5 billion, up 7.7% year-on-year; total profit was 52.23 billion, up 9.4% year-on-year; revenue and profit growth was significantly higher than last year. The same period. The picture below shows the year-on-year growth rate of China's textile and apparel revenue based on the data of the National Bureau of Statistics of China.
The recovery of the apparel industry is spurring a new wave of apparel companies to go public. In the short half year since the end of December 2016, there have been six apparel companies listed on the A-share market, and in the previous four years, only five garments The company is listed.
The giant is more fierce: UNIQLO overseas stores doubled in five years
When domestic apparel companies are still warm and cold, and finally look forward to the long-awaited recovery growth, overseas fast-moving giants continue to be more aggressive offensive.
In fact, even in the past few years, when domestic apparel companies closed their stores sharply, the giants are still expanding their physical stores, even in the Chinese market, such as Uniqlo.
Zhongtai Securities Research reported that between 2013 and 2015, the number of most domestic brand stores decreased by more than 15%. However, the number of stores in Uniqlo has continued to increase over the past few years. According to the financial report, as of the end of February this year, the number of Uniqku overseas stores was 1,029, an increase of 139 compared with the same period last year. In fact, in the past five years, the number of UNIQLO overseas stores has increased by 737, an increase of 2.52 times. The picture below shows the trend of the number of overseas Uniqlo stores based on the financial report:
The rapid expansion of Uniqlo's overseas stores is closely related to the rapid growth of performance in Greater China, especially in the mainland. Uniqlo parent company Fast Retail did not list the number of stores in Greater China in the financial report, but the revenue data shown showed that the revenue of Overseas Uniqlo in Greater China in fiscal year 2016 was 332.8 billion yen, accounting for the proportion of overseas Uniqlo. Up to 50.77%.
Although UNIQU had a profit decline in FY2016 due to exchange rate reasons and price strategy. However, in the long run, Uniqlo's performance growth is far better than domestic apparel companies. In the mid-2013 fiscal year - mid-2017, UNIQLO's parent company's fast-track revenue increased by 65.65% and net profit increased by 48.56%.
In addition to Uniqlo, the luxury brand – Coach's performance in the past few years is also growing against the trend. In FY2016 (as of the end of June 2016), its net profit increased by 14.44%. In the first three quarters of 2017 (as of the end of March 2017), its net profit was US$439 million, up again by 15.91%. According to the CIC Research Report, the performance of Coach has grown against the trend and has a great relationship with the performance of China. In fiscal 2016, Coach has opened 14 stores in China, and a series of measures such as category expansion have kept Coach. The status of the leader in the domestic luxury market brand.
The overall recovery of the industry has brought a little warmth to the troubled apparel companies, but under the aggressive expansion of overseas brands, the challenges facing domestic apparel brands are still grim.
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