Nike ADI UNIQLO Closes Retail Stores In Many Countries And Regions Around The World

As the new crown pandemic continues to curb consumer demand and investors worry about the global recession, European and American fashion retailers have recently taken steps to deal with sales shocks and inventory pressures. Some of them have chosen to cut orders for garment factories, and some have begun to offer discounts to reduce inventory pressure.

UNIQLO's fast retailing group recently announced that all 50 stores in the United States had been suspended since March 17th. A week ago, UNIQLO closed its only store in Italy and closed stores in Spain and France.

Similarly, in order to prevent the spread of the epidemic, Nike decided to close retail stores in many countries and regions including the United States, Canada, Western Europe, Australia and New Zealand.

Similarly, Adidas has joined the ranks of all direct outlets that will temporarily close Europe and North America.

More than half of Adidas's competitors, Puma, have been closed at Hua men's shop. It is expected that revenues and profits will be negatively affected in the first quarter. Puma admits that the new crown epidemic has a significant impact on China's business, closing stores and leading to a sharp decline in sales.

At present, Nike, Adidas and Puma three stores may need to last at least two weeks, especially after the European Cup postponed, the share price of three sports brands dropped by nearly 50%, and the market value was half lost.

But industry analysts believe that at present, there is uncertainty about the length of the pneumonia epidemic and how much negative impact it will have on the textile and garment industry, which remains to be seen. But in the short term, affected by the epidemic at home and abroad, downstream brand clothing and upstream textile manufacturing companies are facing pressure.

Taking the Shenzhou International, China's largest vertically integrated knitted garment manufacturer, as an example, UNIQLO, Nike, Adidas and Puma OEM, although the factory capacity has returned to 95% of its normal level by the end of February, due to the global economic growth and consumer demand caused by the outbreak of the "new crown" epidemic, and the sharp fluctuations of overseas financial markets, Shenzhou International Stock Price In recent years, a large adjustment has been made. For this reason, Ju Xinghai, an analyst at Guosheng securities, believes that the market panic has magnified the short-term impact of Shenzhou International Business, and the long-term competitiveness of Shenzhou International will become more prominent in the face of challenges.

In the view of Ju Xinghai, the short term epidemic situation tests supplier production capacity, and customer orders are expected to focus on Shenzhou international leading companies. At present, the brand chamber of Commerce chooses the stable supplier of the supply chain to ensure the procurement. The Shenzhou International Industry chain has a unique stability. This is because Shenzhou International has vertical production chain integrated with R & D design, weaving, dyeing and finishing, printing and embroidery, tailoring and sewing. It saves middle logistics transportation and order connection time, plus higher automation. In addition, Shenzhou International has five production bases in the world. The domestic capacity layout in Ningbo, Anqing, Quzhou and other places, overseas in Kampuchea and Vietnam, respectively, in the layout capacity, of which fabric production capacity is expected to be 55% in the domestic market, 45% overseas, and garment production capacity has more than 30% of the overseas layout. In the outbreak stage of the epidemic, Shenzhou International's overseas capacity has been carried out normally. At present, domestic capacity has also been restored to a large extent and the supply is stable.

In the short term, Ju Xinghai believes that Shenzhou International Business is still proceeding smoothly, and its impact is obviously smaller than market expectations. Observation, the market's concerns are mainly concentrated on several factors: first, Shenzhou's international production and capacity expansion is affected by the epidemic situation; two, the impact of the epidemic on the global consumer market has led to fluctuations in the company's orders, especially the change in the order of major customers, resulting in a decline in the utilization ratio of Shenzhou. From this perspective, based on the positive response of Shenzhou International to the epidemic situation and the close customer relationship between the integrated and stable supply chain system, the current market worries magnified the short-term impact of Shenzhou International Business.

Reporters learned from the financial reports that Shenzhou International mainly used OEM to produce knitted sporting goods, casual wear and underwear garments for its customers. The main customers include Nike, Adidas, Puma, UNIQLO and other international famous brand customers. The data show that the company's operating income structure is diversified. The main products are sportswear, casual wear, underwear and others. 2018 annual reports show that their share is 68.14%, 24.66%, 6.34%, 0.86%, respectively. Among them, the top four customers account for 77.50%, that is, Nike, Adidas, UNIQLO and Puma account for 29.87%, 19.04%, 18.47% and 10.11% respectively.

    Lv Ming, an open source Securities researcher, said that in 2018, Nike, Adidas, UNIQLO and Puma accounted for 30%, 19%, 14% and 10% of the company's revenue respectively. The four customers had their key sales markets and product racetracks. The company did not rely on a single brand and single market. Sales in various parts of the world were more balanced. In 2018, the company came from mainland China, Europe and Japan. Sales in the US and other countries accounted for 30%, 18%, 16%, 16% and 21% respectively. For example, in 2016, the US sports retailer SportsAuthority filed for bankruptcy, and the sports retail market was sluggish. In those days, Shen Zhou International's income from the US market went back 3%, but sales in the European market and the mainland of China increased by 45% and 23% respectively, which effectively hedged the decline of sales in the single area of the United States.

As of the first half of 2019, Nike was the largest customer, accounting for 31.7% of revenue, 18.9% of UNIQLO, 19.7% of Adidas and 11.22% of Puma. The company also provides production services for other brands, such as POLO, Anta, Lining, XTEP and so on. Compared with the top four brands, these small customers account for about 10-15%, the base is low, and the growth is fast. The diversified development of this product, customer and market effectively reduces the company's business risk and improves the overall competitiveness.

Ju Xinghai said that as of now, Shenzhou International Short term orders are stable. It is expected that there will not be a single order in the first half of the year. And important customers and companies have been working together for a long time. The order is expected to be further concentrated. The company is stable with the important customers PUMA, Nike, UNIQLO and Adidas. It is the most important supplier for the customers, and the product quality and delivery time are stable. The customers will not adjust the long-term orders with Shenzhou. In the stage of industry fluctuation, brand associations pay more attention to supplier quality and strengthen cooperation with quality suppliers. It is estimated that Shenzhou International accounts for 40%, 17-18% and 15% of clothing orders by PUMA, Nike and Adidas respectively, and the future proportion is expected to increase.