3 reasons for high inventory in the apparel industry

According to the analysis, Xiao Bian thinks that the increase in inventory of garment listed companies at this stage is affected by the following factors.

First, financial processing factors. Some apparel listed companies are involved in other industries, such as the Ordos cashmere shirt business cost accounted for only 9.19% of the total cost; red bean apparel business accounted for 54.42%; Youngor clothing business accounted for 31.98%; in the financial processing, other industries produced inventory is also It is recorded in the company's financial report, that is to say, not all of the stocks shown by the three quarterly newspapers of the clothing listed companies are inventories of apparel products.

Second, seasonal factors. The production and operation of the garment industry has obvious seasonality. Many surfaces and accessories needed for production need to be purchased in advance, especially some special products. For example, in the down apparel industry, cashmere is usually purchased six months to a year in advance. This part of the raw materials is reflected in the inventory of financial statements, which will lead to a higher inventory in the fall. This part of the "inventory" obviously does not belong to "backlog and slow-moving products."

Third, the rational stocking needs factors. In the sales process of a branded apparel company, it usually requires a certain amount of distribution and stocking, including products in the channel, products in transit, and new stocks for storage. These are all normal business needs. In financial accounting, inventory is usually counted, but these products are not backlogs and slow-moving products.

At the same time, we should see that through the analysis of the three quarterly reports of the 33 listed companies by the China Garment Association, the total inventory amounted to 49.473 billion yuan, which is basically the same as the sales growth rate, and the lowest level since 2008. With the advancement of corporate destocking in 2002, the year-on-year growth of inventories in the first three quarters decreased by quarters (8.04%, 6.0%, and 3.75%), and has now been significantly lower than the sales growth rate. Therefore, Xiao Bian believes that in the future, taking advantage of the economic environment, there are signs of bottoming out and the overall investment confidence of the apparel industry needs to enter a new round of recovery.