Textile and garment industry looks back and looks forward to the future

Outlook for Textile and Apparel 2016: Grasping the Three Main Lines

Year-to-date, the cumulative gains in the textile and apparel sector are among the highest, nearly 70 percentage points outperforming the broader market. What are the causes of the top spot in the textile and apparel sector? Has the demand side improved? What are the investment opportunities and ideas for next year? 2015 East Analyst Guo Haiyan, the analyst of the wealth and fortune list of China National Gold Corporation, told reporters recently that there are two main reasons for this year's increase in textile and apparel sector. The first one is related to the entire macroeconomic background. , The diversification of channel expansion brought about the competition for brand resources; second, there were some structural changes in the entire brand apparel sector; the third was the downturn in the main business of the plate, but the cash flow was good, the market value was small, and the market was The plate has the expectation of restructuring and restructuring.

In addition, Guo Haiyan stated that the structural changes in the demand side of the textile and apparel industry are very obvious, and companies that take advantage of structural changes will have good performance. Guo Haiyan pointed out that for the textile and apparel segment next year, it will be able to grasp the three main lines, the sports consumption brought about by changes in the demographic structure, her economic and business transformation. However, Guo Haiyan reminds investors that they need to pay attention to two major risks, the impact of cotton prices and the long-term impact of the TPP agreement.

Two major reasons prompted the textile and apparel sector to rise

The reasons for this year's rise in textile and apparel sector rankings among the top, the first is the entire macroeconomic background, a major domestic trend is the extensive expansion of channels is very serious, we not only have department stores but also shopping centers, the supply of offline channels itself is excess; At the same time, there are many competitive e-commerce platforms on the line. Therefore, under this circumstance, we deeply feel that brand is king in the process of channel expansion, that is to say, a brand may be competed by multiple channels online, offline, and its overall profit and performance will be relatively better. .

Second, there have been some structural changes in the middle of our entire brand apparel segment. For example, from the perspective of the whole world, sports like Nike, Adidas, and many “fast fashion” brands are very popular. There are also some leading brands in mainland China that have achieved greater success compared to traditional brands. Their typical characteristics are: inventory turnover is very fast, and the rate of increase is low. The markup rate is an important indicator for us, equivalent to the retail price divided by its production cost. Well, in this multiple, traditional brands need to turn around for two or three hundred days and then increase the price by 5-8 times. But the leading brands operating in the new model, their inventory turnover may be within 100 days, and its markup The rate is only 2.5-3 times, say 100 yuan in production costs, it is only sold to consumers with 250-300 yuan. Judging from the global consumer trends, young people are more interested in brands that are cost-effective, fast-fashion, and more casual.

After years of adjustment, if we talk about demand, it is structural change. In the past, China experienced such a stage, especially in 2004 and 2005, when the department store industry was especially prosperous. At that time, if a suit was priced at RMB 999, it would be difficult to sell it. Adding two or three in front of it immediately sold it. Even historically, there are companies selling suits for several tens of thousands of yuan. At that time, the clothing consumer preference was “not expensive or not” because there was no soft consumer electronics such as smart phones, and soft consumption such as travel fitness and entertainment. Has not risen yet, so many people feel that wearing beautiful, expensive to wear is the embodiment of self-worth. But now, the real transformation of the entire demand side is that young people want to spend more money to wear more styles of clothes. Young people will make purchase decisions in three areas: First, prices, prices must be low, and second, quality is better. These two factors add up to cost-effectiveness, and one factor is fashion. It must be said that the apparel consumer demand has increased substantially. This is not the case, but its structural changes are very obvious. Firms that take advantage of structural changes have good performance.