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China down garment makers facing another lean year

China down garment makers facing another lean year Source:
Date: 26-12-2013
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The increasing cost of down and declining retail sales have brought a hard winter to down jacket producers in 2013, market insiders said.

Apparel industry experts said expanding sales channels, especially at online platforms and designs that better cater for consumers' needs, are solutions to regain profitability.

Bosideng International Holdings Ltd, one of the world's largest producers of down jackets, said it eked out a 3.1 percent rise in net profit in the six months to Sept 30.

Net profit rose to 326.1 million Yuan ($54 million) on a decline in tax rates at a subsidiary and "effective cash management", the interim report said.

Revenue fell 8.8 percent year-on-year due to poor domestic and global economic conditions and the industry downturn, the apparel producer said.

Sales of down apparel products, which accounted for 63 percent of its business at the time of the report, fell 4.7 percent year-on-year. The company's Hong Kong-traded shares have lost nearly one-third of their value in the past 12 months.

According to Bosideng's report, overall apparel sales in China rose by 6.1 percent in the first nine months of the year, but that was still better than in 2012, which saw the lowest annual gains for the entire apparel industry in the past 10 years.

"Reducing inventory has become a buzzword for apparel makers in recent years, and one solution is to build up effective sales channels," said Huang Xiaojian, Shanghai-based retail researcher with Fulun Consultancy.

Qi Xiaozhai, dean of the Shanghai Commercial Economic Research Center, said that e-commerce platforms have been having an increasing impact on sales at brick-and-mortar channels, but enterprises can also take advantage of building up their own e-commerce platforms.

"For brick-and-mortar shops, service and a nice shopping experience may lure consumers back," said Qi.

Bosideng closed 344 retail stores between March 31 and Sept 30, reducing its total to 12,665. Its e-commerce platform set a record of 110 million yuan in sales revenue on Nov 11, a major Internet shopping day in China.

Analysts said that the price of down climbed fast after many ducks and geese were killed during the avian flu outbreak in May 2013, and the cost of materials for down jacket producers may rocket in 2014.

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