MP Apparel High Inventory Nightmare: Inventory Doubled When To Digest

It is not convincing that the high inventory of American barn clothing originated from warm winter. Under the strong impact of ZARA and H&M brand, strengthening the fast response capability of supply chain is the king's way.

Will it be another warm winter in 2011? The winter climate of 2010 is abnormal. Smith Barney Costume (002269.SZ) Stock As of September 30, 2011, its stock amounted to 2 billion 982 million yuan, accounting for more than 83% of net assets.

With the high inventory, the revenues and profits of the American Apparel show a high growth trend. Although the cash flow in the third quarter of 2011 has changed for the first time since the third quarter of 2010, the slowdown in the company's revenues and profits is an indisputable fact.

Doubling of inventories

In August 22, 2011, the 2011 China Daily released by the US state clothing showed that the company's Do business Revenue grew by 49% over the same period in 2010, gross profit margin increased 4% to 47% compared to the same period last year, and net profit increased 833% to 376 million yuan over the same period last year.

But in the surge of perfect performance, the United States and the rise of clothing inventory. As of June 30, 2011, Smith Barney clothing inventories grew 220% to 2 billion 890 million yuan, compared with the same period in 2010.

The amount is only 903 million yuan, the net assets in the reporting period are only 3 billion 200 million yuan, and the inventory accounts for 90% of the net assets of the same period. In the same period, the proportion of the same type of clothing enterprises accounted for 20% of net assets.

In fact, the high growth of American barrack clothing inventory has appeared since 2010. The company's inventory value in 2010 was 2 billion 548 million yuan, up 183% over the same period last year, accounting for 77% of net assets. Same with this

The net cash flow generated by business activities was negative at 1 billion 54 million yuan, down 223.03% from the same period last year. In 2011, a quarterly report showed that the number of inventories has increased from 706 million yuan at the end of the first quarter of 2010.

It reached 3 billion 162 million yuan in the first quarter of this year. In just one year, inventories increased by 347.88%.

It is worth noting that the increase in the number of American barrack apparel also brings out a series of problems: in the middle of 2011, the accounts receivable increased by 310% in the same period, 106% in the same period in short-term loans, 53% in cash, and 555 million yuan in the end of operating cash flow reporting.

Zhou Chengjian, chairman of the American Apparel, micro-blog (micro-blog) blamed the high storage in 2010 for a relatively short winter, but late in 2011, and sales were affected. The company will sell it at a lower discount in the form of a special store. The discount of these products is higher than the cost price, which will not lead to loss of apparel.

Tang Shuangshuang, an analyst with the textile and garment industry of Huachang securities, told correspondents that the reason for the weather did have a crucial impact on American Apparel. At the same time, it also showed that American Apparel had no judgement on the demand of that year, and the rapid response capability of the supply chain needs to be strengthened. In order to eliminate inventory, the sale of Smith barrack clothing will lead to a 2-3 percentage point drop in gross profit margin in 2012.

When to digest into doubt

In the third quarter of 2011, the growth of revenue and net profit slowed down in the first half of the year. The net operating cash flow was 270 million yuan, the first time since the three quarter of 2010. Mei Bang clothing said that the third quarter of 2011 digestion inventory is good.

However, for the question of the company's stock life, the United States people's clothing and securities department did not give a positive answer, only for "2011 China Daily's inventory depreciation preparation and accounts receivable bad debt preparation is zero".

The following explanation is given: "our company adopts the cost plus pricing method. Because the rate of addition is higher, the actual selling price of the goods in season is generally much higher than that of the cost. The net realizable value of the new stock in the current period does not generally have any impairment.

Elephant. However, according to our accounting policy, "on the balance sheet date, the company shall measure the inventory in terms of the cost and net realizable value, and make provision for the depreciation of the stock at a cost higher than the net realizable value".

At the end of the year, the company carried out the impairment test on the inventory. According to the calculation results, the final inventory depreciation was consistent with the actual situation, so there is no need to adjust the inventory allowance.

Those who also said, "since the third quarter of 2011, inventory digestion is relatively smooth. The scale of inventory is expected to decline further in 2012.

By the end of 2010, there were 3659 stores in the United States, including 690 outlets and 2969 stores.

Cheng Yuan, an analyst with Huatai Securities and textile and garment industry, said that the flat effect of the United States direct dress store increased by nearly 30% in the first half of 2011, and is expected to continue to improve in 2012. With ZARA,

Compared with H&M and other brands, there is still a lot of room for improvement. The leveling effect of ZARA and H&M is about 50 thousand -6 yuan, while the Ping Bang effect of Mei Bang dress is only 18 thousand -1.9 yuan.

But Tang Shuang Shuang said that the improvement of flat effect was mainly due to the slowdown in the volume expansion of the apparel stores in the United States. Under the strong attack of ZARA and H&M brand, the low-end brand products of the mall will be impacted.

Tang Shuang Shuang also said that although the Me&City brand of Smith Barney wore its losses in 2011, but because of the more frequent strategic adjustment of the company, the fast fashion supply chain capability is still lacking. With the increasing competition in the public leisure apparel industry, the future of American Apparel is not optimistic.