As countries gradually lift their lockdowns, sports brand stores such as Nike and Adidas have also reopened. In addition, the NBA announced the resumption of games on July 31, and the third quarter is the traditional peak season for the shoemaking industry. The market is looking forward to the recovery of the shoemaking industry. soon.
However, in fact, brand customers have recently continued to observe inventory and sales conditions and make adjustments. Shoe manufacturers have not yet received a clearer atmosphere from customers. The three major shoe manufacturers: Baocheng, Fengtai, and Yuqi are optimistic about the third quarter. The outlook is still conservative. The market predicts that the footwear industry will recover, and it will not be until the fourth quarter of this year at the earliest.
has a longer manufacturing process, so brand order adjustments mostly fall in Q2 and Q3
Looking at the revenue performance of Sanxiong Shoemaking, except for Baocheng Q1, it was mainly affected by the closure of the channel business "Baosheng International" store, which affected the revenue momentum and reduced the operating revenue. In addition to the year-on-year decrease in revenue, including Fengtai and Yuqi-KY, the revenue in the first quarter was still growing. Chen Zhaoji, president of
Fengtai, revealed that at the beginning of the epidemic, although the brand's stores were closed and sales were not good, the impact on the foundry had not yet occurred because the orders had already been received. Even if there were a small number of customers, there would be The order was canceled, but the action was not very big. Chen Zhaoji believes that it is the brand's next move (cutting off orders) that will expand, and there will be a period of time between the brand's recovery and the OEM orders.
legal person analysis, from the perspective of Nike, the order adjustment is expected to increase in intensity from June. It is estimated that the order cut rate for suppliers in the third quarter will reach 30% to 40%, while Adidas’ order cut situation is slightly better than Nike. But it is still sluggish; and other outdoor sports brands such as Columbia, The North Face, Decathlon, etc. also require a long time for the production process, so it is expected that the real order adjustment time will mostly fall in the second and third quarters.
Recently, brand customers have continued to observe inventory and sales conditions and make adjustments. Shoe manufacturers have not yet received a clearer atmosphere from customers. The market believes that even after a brand places an order, it will take about 2 to 3 months for the foundry to produce goods. The company has limited sales and recognized revenue, so the perception of shoemaking will not recover until the fourth quarter of operations at the earliest.
Baocheng actively reduces expenses, shoemaking continues to adjust, and sales channels recover first
Baocheng's shoemaking business continues to adjust in the second quarter. The legal person estimates that the shipment volume of finished shoes in the second quarter will decline by 20~ 30%, and will continue to adjust into the third quarter; however, in terms of channels, as stores reopen in April and May, operations are expected to pick up quarter by quarter.
In response to the impact of the epidemic, Baocheng has actively taken measures to save expenses, including successively implementing salary cuts of 10% to 30% for senior managers. Starting from June, more than 5,000 Taiwanese employees and overseas Taiwanese officials have taken turns to take unpaid leave. In addition, the Hubei factory in China has laid off 4,000 employees, and the Vietnam factory is also reported to have a manpower adjustment plan in the hope of reducing the group's cost burden. The legal person of
also believes that Pou Cheng's channel business is expected to turn losses into profits in the second quarter. This year's channel business will be about the same or slightly lower than last year. As for the shoemaking business, after the brand's inventory adjustments in the second and third quarters, the momentum of purchasing goods has a chance to pick up in the fourth quarter, and the recession is expected to narrow.
Fontai is the core factory of the brand and has the strongest momentum after the recovery of the economy.
Fontai's operating performance dropped in April, with revenue down by more than 10% year-on-year. Mainly affected by the shutdown of the Indian factory, revenue rebounded slightly in May, but still It fell 8% from the same period last year. The legal person expects that as customer orders increase adjustments, the annual revenue decline in June and July may expand to double digits. The annual revenue decline in the second half of the year is expected to be larger than that in the first half. . The
boom has yet to see any significant recovery momentum, which has caused Fengtai to put a brake on this year's factory expansion plan. The total production capacity will remain at 124 million pairs last year, and this year's capital expenditure is expected to shrink significantly from last year's more than 3 billion yuan. Preserve cash first to get through the cold winter.
However, according to legal analysis, Fengtai is the core supplier of major sports brand customers. After the brand inventory adjustment is completed and the economy recovers, it is expected to be the first to receive orders for body care. The company also believes that if the epidemic does not expand and worsen, the fastest There is a chance to see operations pick up in the fourth quarter.
Yuqi: The Q4 economy is relatively clear, and production will continue to increase this year, but at a slower pace
Yuqi’s revenue surged in May, rising to more than 1 billion yuan, nearly three times the month, according to legal analysis, part of it was in April Revenue will be recognized when orders are shipped in May. Revenue in June is estimated to have fallen back to 700-800 million yuan, and the third quarter is currently expected to be about the same or slightly lower than the second quarter.
Looking forward to the market outlook, Yuqi also believes that due to the rapid deterioration of the COVID-19 epidemic, brand customers' attitudes have become more conservative and they currently treat autumn and winter shoe orders conservatively (the shipping period is from April to September, with June and July being the peak). The second and third quarters are still viewed conservatively, but as the epidemic slows down and countries gradually unblock, the fourth quarter is expected to be relatively clear.
Yuqi originally planned to expand production by 15-20% this year. The company stated that it will still increase production capacity this year, but the speed and extent will be slowed down, depending on subsequent market changes.
