client, Beijing, July 2 (Xie Yiguan) "Wei Mi will permanently close 250 stores" "Nike has a huge loss of 5 billion in a single season"... Recently, news of the loss of clothing giants and closure of stores have been repeated Hot search. Under the spread of the global epidemic, the retail industry staged a tide of closing stores, and clothing brand giants have also handed over bleak transcripts.

On March 18 local time, the Yorkdale shopping mall in Toronto, Canada, was deserted, and most of the shops in the mall were closed. China News Service reporter Yu Ruidong

No worst, only worse

  On June 26th, sports brand giant Nike released its fourth quarter fiscal year 2020 financial report (terms from March to May), achieving revenue of US$6.313 billion, lower than the expected US$7.38 billion, a year-on-year decrease of 38.14%; a net loss of 790 million The US dollar (about 5.6 billion yuan), a year-on-year decline of 179.88%.

  In the past 8 years, Nike's performance fell short of earnings expectations only twice. As soon as the financial report came out, Nike's stock price fell sharply, closing 7.62% on the day, and the market value shrank by about 12 billion US dollars, which was equivalent to directly dropping the market value of 1.5 Li Ning companies.

  Regarding the decline in performance, Nike explained that during the epidemic, offline stores were closed in large numbers, and products shipped by wholesale customers decreased by 50%.

  Adidas, another sports brand giant, has had a hard time.

  As in the Nike situation, due to forced closure of stores in the Asia-Pacific region during the epidemic and closure of stores in other regions of the world due to numerous blockade measures in the first quarter, Adidas’ sales in the first quarter fell by approximately 19% to 4.75 billion euros. Net profit was 31 million euros, a 95% decrease from the 632 million euros in the same period last year.

  In addition, professional sports brand Anderma’s third-quarter fiscal year 2020 revenue was US$930 million, a year-on-year decrease of 34.92%; net profit attributable to the parent company’s common stock shareholders was US$590 million, a year-on-year decrease of 676.34%.

  Underma CEO Patrick Frisco said that since mid-March, the rapid spread of the epidemic in Europe and the United States has closed a large number of retail stores; since April, about 80% of the business of Underma has been shut down, resulting in the brand in all regional markets around the world. Both are facing sales decline.

  It is found that not only sports brands, but also the international apparel brands ZARA, H&M, Uniqlo, Gap, GUESS, Wei Mi and other international apparel brands, which have suffered losses due to the closure of offline stores in the epidemic, have even suffered losses for the first time in history.

  For example, ZARA parent company Inditex Group's sales in the first quarter of fiscal year 2020 fell 44% year-on-year to 3.3 billion euros, and the first net loss in history was 409 million euros. Amancio Ortega, the founder of ZARA, who has reached the top of the world's richest people several times, may now only be able to sigh: The landlord's family has no more food.

  As another example, H&M Group also suffered a quarterly loss for the first time in 10 years, with a pre-tax loss of 6.48 billion Swedish francs (approximately $700 million) in the second fiscal quarter as of the end of May.

  Even Uniqlo’s parent company, Fast Retailing, whose profit has reached a record high for three consecutive years, cannot withstand the impact of the epidemic. Its net profit in the first half of fiscal year 2020 (August 2019-February 2020) was 100.4 billion yen, down 11.9% year-on-year. Liu Jingzheng, founder and president of the Fast Retailing Group, admitted that it is currently "the greatest crisis of humanity after World War II."

Data Map: A GAP store in Xicheng District, Beijing. Photo by Xie Yiguan

  In the first quarter, the net loss was as high as US$932 million, and even Gapu even experienced a financial crisis. According to its announcement, Gap Group's short-term debt increased by US$500 million, and its long-term debt reached US$1.25 billion. As of the end of the first fiscal quarter of 2020, the group had only $1.1 billion in cash, cash equivalents, and short-term investments.

  To make matters worse, Simon Property Group, the largest US shopping mall operator, recently filed a lawsuit against Gap Group, alleging that Gap Group owed three months of rent and other expenses from April to June during the epidemic, totaling $66 million.

Close stores, lay off employees, promote sales, and ensure cash flow

  Closing stores, layoffs, and promoting cash flow guarantees, making use of online channels has become the choice of apparel giants.

  According to a CNBC report on June 26, on the same day Nike announced its dismal performance, its CEO, John Donahoe, reminded employees by email that layoffs are coming.

  Guess has also adopted a series of cost reduction measures, including temporarily allowing all European and American retail store employees and most office employees to take unpaid leave, as well as layoffs at the headquarters.

  Inditex Group has proposed the largest store closure plan in history. It will close up to 1,200 stores in 2021, mainly targeting small stores such as Zara, Massimo Dutti and Pull&Bear, as well as stores with a profitability of less than 260,000 euros.

  The epidemic also promoted the online trend of brands. While closing stores, Inditex, which had an increase in online sales of 50% in the first fiscal quarter compared to the same period last year, accelerated its efforts in online channels.

  According to Pablo Isla, Executive Chairman of Inditex Group, 2020-2022 will invest 1 billion euros to support the development of online business, and will further invest 1.7 billion euros to upgrade the integrated online and offline integrated store platform. It is planned that by 2022, the online channel sales of all brands under the Inditex Group will account for more than 25% of total sales, compared with 14% in fiscal 2019.

  The strategy is exactly the same as ZARA. H&M Group expects to close about 170 stores and reduce planned stores. Helena Helmersson, CEO of H&M Group, emphasized that in order to adapt to the rapid changes in customer consumption behavior, the Group is accelerating digital transformation, optimizing the store mix, and further integrating online and offline channels.

Screenshot from Adidas flagship store.

  Nike, Adidas, etc. use e-commerce and other channels to discount sales and clear inventory. It is worth mentioning that Nike's turnover on the first day of Tmall "618" broke 100 million yuan in just 2 minutes and 59 seconds. Nike CEO John Donahoe said that Nike will put the online business at the center of all the company's business, and will invest in opening more small shops so that customers can complete online orders in these stores.

Will the clothing giants be able to carry it in the future?

  Under the continuous influence of the epidemic, even the clothing giants can hardly answer this question.

  Gap Group said that the company’s performance reflects the significant impact of public health events, including loss of sales and the corresponding reduction in the profitability of commodities caused by the closure of temporary stores. Due to the uncertainty of the current environment, the company cannot give guidance for the second quarter or full year performance.

  "Because the epidemic has brought uncertainty to the market prospects, we do not provide guidance for future performance expectations," Nike also said, but it is expected that inventory levels will return to a good state in the second quarter of fiscal 2021.

  The Fast Retailing Group also pointed out that it is currently difficult to reasonably estimate the financial situation, operating performance, cash flow and their impact after the end of the first half of the financial year because the specific scope of the rapid expansion of the epidemic in the world is temporarily uncertain.

  Adidas directly warned that since more than 70% of its brand stores have been closed, the company will be hit by a greater epidemic in the second fiscal quarter, and sales are expected to fall by more than 40% year-on-year.

  However, as many countries have restarted their economies, the giants' stores have resumed operations one after another. Opening means hope. As of June 8th, Inditex Group's 7412 stores worldwide had 5743 stores open; as of June 25th, approximately 90% of Nike stores worldwide have resumed business.

  What brand of clothes have you bought recently, at a discount? (Finish)