Inventories in the textile and apparel industry increased by 32 consecutive years in 32 listed companies

In the case that listed companies in the textile and clothing industry have experienced high inventory levels, some companies have begun to vigorously control their inventory. However, some companies still face the problem of destocking.

According to data compiled by flushing, as of April 5, 2016, during the five years from 2011 to 2015, listed companies in the textile and clothing industry had increased their inventory levels year by year, totaling 18.588 billion yuan and 19.939 billion yuan respectively. 202.59 billion yuan, 21.015 billion yuan and 22.209 billion yuan. If we calculate the inventory growth rate from 2011 to 2015, the total inventory of 22.609 billion yuan in 2015 will be 19% higher than the 18.588 billion yuan in 2011.

“Inventory growth in the textile and apparel industry is related to the continuing sluggish demand environment.” According to industry analysts, mental consumption and pursuing cost-effectiveness have become consumer trends, while the popularity of the Internet and e-commerce and new business models have given consumers more. Information and choices have greatly squeezed the living space of the traditional clothing industry and enhanced the competition in the apparel industry.

90% of the company's inventory is over RMB 100 million

Flush statistics show that the 32 listed companies in the textile and apparel industry have 28 companies with over 100 million inventories, accounting for nearly 90% of the total.

Among them, the inventory of seven wolves increased for four consecutive years. Statistics show that during the four years from 2012 to 2015, the company's inventory was 566 million yuan, 657 million yuan, 743 million yuan, and 843 million yuan. If we calculate the inventory growth rate from 2012 to 2015, the company’s 2015 inventory of 843 million yuan will increase by 49% compared with 2012's 566 million yuan.

According to the Seven Wolf Annual Reports, the company's inventory at the end of 2015 had a total book balance of 1.325 billion yuan, and provision for depreciation was a total of 482 million yuan, with a book value of 843 million yuan. Among them, among the huge inventories, the highest proportion is the inventory of seven wolves, and its book balance at the end of the period was 936 million yuan, and the provision for falling prices was nearly 400 million yuan.

According to analysts in the industry, the biggest cause of impairment of Seven Worm Assets is the slow sales of inventory.

Seven wolf said that in 2015, while facing a weak external economic environment, the company also faced rapid changes in the retail consumption situation, requiring the company to continue its transformation reforms and seek breakthroughs in adjustments. However, although the main business model of the company is in urgent need of change, it cannot be accomplished overnight.

The industry believes that the reason why seven wolves have merchandise slow-moving goods is that online channels have been affected by e-commerce brands. On the other hand, merchandise is repeatedly detected as unqualified.

Export volume increase is the key to inventory

The industry analysts analyzed the increase in the inventory of textile and garment industry because the domestic demand market is relatively low and it is the most fundamental unresolved demand issue.

In this regard, the researcher said: "If the international economy grows slowly or is trapped in the economic quagmire, textile and apparel inventory will be difficult to return to normal." Zhu Qinglian believes that China's textile and garment industry is more dependent on exports, and export volume is to ease textiles. The key to high apparel inventory.

Take Lutai A, the main exporter of products, as an example, the inventory of the company in the past two years has also risen by nearly RMB 100 million. In its 2015 annual report, the company pointed out that “In 2015, the external environment faced by the textile industry was complex. The prominent factors were the sluggish market demand, the continuous increase in the cost of production factors, and the drastic reduction in cotton import quotas. These adverse factors led to the The further increase in production costs of enterprises, the weakening of export competitiveness of products, and the rapid rise of textiles and garment processing in Southeast Asia have made the company feel the dual pressure of demand and cost.”

Lu Tai A annual report shows that in 2015, the company achieved operating revenue of 6.173 billion yuan, an increase of 0.06%; operating profit of 841 million yuan, a year-on-year decrease of 19.09%; attributable to shareholders of listed companies net profit of 712 million yuan, a year-on-year decrease of 25.71%; The net profit after deducting non-recurring gains and losses was RMB 718 million, a year-on-year decrease of 18.02%.

Facing the pressure of demand and costs, Luthai A said that “promoting the construction of Southeast Asian production bases”, in 2015, the Luthai (Cambodia) second phase project and Luthai (Myanmar) project were successfully put into production. At the same time, the company also established Luthai (Vietnam). ) Textile Co., Ltd. and Vietnam Garment Factory Project.

The company stated that with the increasing cost of domestic production factors, the trend of the processing trade of textiles and garments, especially the transfer of garment processing industry to Southeast Asian countries, has been established, and it is inevitable that advantageous enterprises “go out”.

Supply-side reforms facilitate destocking

In the face of weak demand and cost pressures, how should textile and garment companies resolve?

CPPCC member Li Yining once proposed that supply-side structural reforms should study product individuation, service humanization, brand internationalization, and leave customers' needs in the country. For the textile and clothing industry, there are many tasks that can be done at each stage. The textile machinery industry is big but not strong, which can't stop large numbers of companies from taking pride in imported equipment. The terminal industry is big and the ring is lacking, and the brand lacks the power to attract people. The industry's short board is the goal of supply-side reform, and finding a short board is a discovery. Improve the direction of effective supply; use innovative thinking to explore new needs and lead the way to new demand is a rich ore for the textile and garment industry to dig deeper and efficiently.

The introduction of supply-side reforms will have an important impact on the de-stocking and capacity reduction of the textile and apparel industry. First, the supply-side reform advocates effective investment, which will prompt companies to formulate capacity plans according to market demand, avoid blind development, and cause waste of resources. Second, the reform policy indicates that the level of standardization must be comprehensively improved and the quality supervision system must be perfected. This eliminates backwardness. Capacity and promotion of industrial upgrading are of great help. Third, policy also emphasizes innovation. Innovation is an important way for companies to go to inventory. ”

According to industry insiders, the reason for the fierce competition in the textile and clothing industry is mainly due to the serious homogeneity of products.

In this regard, in the exchange with a number of listed companies in textile and clothing, we learned that many companies are increasing investment in R&D of products, and in order to meet the needs of consumers, there are listed companies that have begun to launch personalized orders to satisfy consumers. High demand. According to the person in charge of the relevant department of the apparel listed company, the company is preparing to develop a smart factory while consumers' demands are getting higher and higher, and has begun to accept individual orders from consumers in some regions.

The competition in the market will shift from price to quality and innovation. Large and medium-sized textile and apparel companies will be more competitive in terms of quality and innovation. “After the country proposes supply-side reforms, large and medium-sized clothing and textile companies will benefit from this, because many backward production capacity will be eliminated in the future.”