Sportswear is in deep trouble

Recently, Hosa International announced that its management falsified the report's revenue and profitability to defraud creditors and minority shareholders' investment. The news caused Hosa International's share price to fall by nearly 90%. More than a domestic clothing company in Hosa, which is plagued by cash flow, experts say that the Zaful Coupons current sportswear brand industry faces multiple challenges. If the company does not have an advantage in R&D and brand, it is easy to be eliminated.

Insiders revealed to the China Business Daily that the performance of Hosa International exposed a fatal problem, that is, the cash flow crisis. When the pledge stocks are on the verge of liquidation, the securities company will often notify the shareholders of the listed company to recover the deposit or supplement the pledge. Only when the shareholders are unable to perform, the securities company will choose to force the sale. Securities companies actually sold only 10.666 million shares, accounting for about 0.64% of the company's total share capital. In other words, Hosa International is unable to obtain sufficient funds to recover the pledge bond at least in the first time, which directly proves that the Hosa cash flow has a fatal problem.

Another sportswear brand, the noble bird (603555), is not "taiping". Since August this year, the noble birds have sold 37% of the shares of Kangxisi Sports, 37% of Kangxisi Consulting and 13.66% of Hupu Sports respectively for 143 million yuan and 273 million yuan. The reason for the sale is also because the cash flow is highly under pressure.

Judging from the 2017 annual report, the account receivables of the VIP bird accounted for 92.6% of the main business income, and the company's recovery of accounts receivable was inefficient. The book value of inventory goods was 426 million yuan, accounting for 86.60% of the inventory. The high inventory caused the cost to increase. The bird's internal capital turnover is slow, and the funds for returning are small, which has exerted certain pressure on the company's capital chain.

At the same time as the cash flow “internal worry”, the continuous export of investment activities has further aggravated the financial pressure of enterprises. In 2017, investment activities such as VIP fixed assets reached 2.056 billion yuan, and the investment income of joint ventures and joint ventures was -11.12 million yuan. The asset-liability ratio of noble birds also increased from 60.6% in 2016 to 65.4%.

As of the end of the first quarter of this year, the cash on the books of the noble birds was only 891 million yuan, and the asset-liability ratio was as high as 71.2%. On August 3, the rating of the company was downgraded to B2, and the refinancing risk was intensified. The funds were insufficient to cover the short-term borrowings and short-term notes of RMB 2.2 billion that will expire in the next 12 months.

Yang Deyong, dean of the School of Economics of Beijing Technology and Business University, said in an interview with China Business Daily that if the overall net cash flow reduction of enterprises is mainly caused by fixed assets, intangible assets or other long-term assets, or mainly due to foreign investment, this is generally This is because the company's equipment update or expansion of production capacity or investment to open up the market, this net reduction in cash flow does not mean that the company's operating capacity is not good, it may be that the company has greater cash inflows in the future. However, under the conditions of market economy, the cash flow of enterprises largely determines the survival and development capabilities of enterprises. Even if the enterprise has profitability, if the cash dispatch is not working, it will seriously affect the normal production and operation of the enterprise. The weakening of the solvency will directly affect the reputation of the enterprise and ultimately affect the survival of the enterprise.

Like most sportswear brands, the noble bird has said that in the big environment, the sports shoes and apparel industry is in a downturn and the industry is intensifying. From the perspective of its own business, the main business income comes from independent brand products, and the dealer model adopted is over-reliant on large customers.

In response to the decline in the main income, these sports brands began to operate capital. For example, the VIP bird frequently outreached the acquisition of strategic goals for diversification. According to its 2017 annual report, the merger of sports brand Jiezhi and the famous shoe library led to an increase in cost, financial expenses and management expenses. In addition, some sports industry investment layouts have not yet achieved stable returns, and the comprehensive factors have led to the net profit attributable to shareholders of listed companies. Non-net profit was declining year-on-year. In 2017 alone, the company closed 879 retail terminals and closed 376 nets, equivalent to closing a store on average less than one day.

Since 2016, Peak has withdrawn from the market, Xidelong has gone bankrupt, and Delhui has closed down. "The dilemma of these companies in the capital market is only a microcosm of sports brands." Guo Hesheng, secretary-general of the China Light Industry Association's Enterprise Management Association, told the China Business Daily that the current sports brands are undergoing intense industry reshuffle and the industry concentration is getting higher and higher. It also faces multiple challenges such as e-commerce channels, overseas brands, technology research and development, and brand DressLily Promo Code building. With the continuous breakdown of the demand for sporting goods, if these companies do not have an advantage in R&D and branding, they are easily eliminated.

In addition, Guo Hesheng believes that sports brands can consider adjusting their layout according to policies and markets, and increase investment in markets such as children and women. This may be a new opportunity for transformation. However, if you want to develop for a long time, the brand value of the main business and the coupling effect of expansion and integration will be the key factors to measure whether it can gain a foothold in the industry. It can be said that opportunities and challenges coexist.