The performance of listed companies in textile and clothing in the first half of 2010 is not bad (below)
The textile and apparel industry is showing signs of economic recovery, driven by increased exports and a stronger domestic market. This has led to improved performance across the sector, with many companies reporting significant growth in profits. According to recent data, out of 69 listed companies in the industry, 60% of key players have seen net profit growth exceeding 30%. Analysts suggest that this rapid recovery is partly due to a "low base" effect from the previous year, when the industry struggled due to the financial crisis. As conditions improved, demand from both domestic and international markets surged, leading to better results.
To gain deeper insights, we examined several key players in the industry. Lutai Textile, for instance, reported strong mid-year results, with revenue reaching 2.247 billion yuan, up 21.95%, and net profit rising 39.2% to 367 million yuan. Analyst Guo Haiyan from CICC noted that the company’s performance was largely attributed to higher product prices amid rising cotton costs, as well as efficient cost management through its strong cotton reserves. The launch of a new high-end fabric project also contributed to a 24% increase in shirt fabric revenue and a 7.5 percentage point improvement in gross margin.
In contrast, Youngor experienced a decline in overall revenue, with a 7% drop in the first half of the year. However, the domestic apparel segment showed positive growth, with revenue and net profit increasing by 7% and 21%, respectively. Despite this, the export segment saw a decrease, and the gross margin declined, indicating challenges in maintaining profitability. Analysts at CITIC Securities pointed out that while the domestic market performed well, external pressures remained significant.
Meanwhile, Seven Wolves reported solid growth, with operating income rising 10.7% and operating profit surging 40.7% year-on-year. The company also expanded its retail presence, adding 79 direct-operated stores during the period. However, with rising store rents and increased competition, the company has shifted focus toward improving the profitability of individual stores rather than aggressive expansion.
Metersbonwe, a major player in the casual wear segment, faced a sharp decline in profits in the first half of the year, with net profit dropping 83%. However, the second quarter showed improvement, with operating income up 39% year-on-year. The company's direct-operated stores played a key role in driving sales, with a 53% increase in revenue from these channels. While franchise sales also grew, the expansion of direct stores led to higher sales expenses, impacting overall efficiency.
Another notable company is The Pathfinder, which listed on the GEM last year. The company recorded a 34% increase in revenue, with outdoor apparel accounting for 62% of total sales. It also opened 71 new stores during the period, including 27 directly operated and 44 franchised locations. These efforts reflect the industry's ongoing shift towards diversification and market expansion.
Overall, while the textile and apparel industry is recovering, it continues to face challenges such as rising costs, competitive pressures, and fluctuating demand. Companies are adapting by focusing on brand development, optimizing operations, and enhancing profitability at the store level. As the market evolves, the ability to innovate and maintain efficiency will be crucial for sustained success.
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