Shops Rent Prices Rise, Clothing Brand Expansion Road Is Difficult To Continue

In the first half of this year, the performance of clothing brand listed companies is not optimistic.

Volkswagen casual brand Semir apparel's net profit in the first half of 2012 is expected to decline by 35%~45%; the high-end men's clothing has also lowered its performance expectations, and net profit growth is expected to drop from 20%~50% to 0~20%.

The worry of declining performance has begun to permeate the entire garment industry.

Reporters found that since last year, the quality of shops rents rose steadily, the domestic apparel brand operation capacity has been greatly tested.

There is even a saying in the industry that "the rising cost of shops will become the last straw to crush the clothing brand."

Such worries may be gradually becoming reality.

In explaining the downgrade of performance, Hinur said that the expansion of the terminal of the company's marketing network was accelerated, and the cost of store leasing, depreciation and salesman's wages increased. Meanwhile, the new marketing network terminal was still in cultivation stage.

It is easy to see that the nightmare of terminal rental rents has begun to affect the performance of two listed companies, and this rent alert will be heard throughout the industry.

An insider from Semir costumes explained to reporters that the pressure of rents since last year has already begun to affect corporate profits.

Hinur, a securities worker, also said that the pressure of rent increases on brand is increasing year by year.

Premium shops rose more than 30% last year.

How much is the pressure on rents? According to the latest survey results of China shopping center industry information center, in 2011, 2812 shopping centers in 106 cities nationwide, including premium shops rents increased by 30% over the past year.

"This data is not exaggerated," a person in charge of the Shanghai friendship Department Investment Promotion Department told reporters. The central business district of the first tier cities is constantly upgrading. With the foreign high-end brands gradually entering the first tier cities in China, the domestic quality shops are more scarce.

"At present, domestic quality shops are still in short supply."

As rents continue to engulf the profits of listed companies, the large-scale expansion mode that brands have been adopting has been difficult to sustain.

Taking American Apparel as an example, it has maintained the extension speed of 20%~30% after 2009. However, since last year, the company has begun its own pformation.

According to data from state securities, the number of stores increased by 1134 in 2011, with a growth rate of 30.99%.

Qu Zhihang, an analyst with Huachang securities, believes that the US bond market needs to shift from quantity to quality and focus on meticulous management. The high growth rate of over 20% of store size is obviously unsustainable. Therefore, the expansion of future channels may slow down to 5%~10%.

Most people in the industry believe that the development of the retail industry in the future will pform from quantity expansion to quality benefit.

In addition, in order to resist the pressure brought by the rent increase, listed companies have opened the road of self purchase strategy pformation.

Seven wolves recently announced that the company intends to issue additional non public stocks, raising about 1 billion 800 million yuan of funds, all for investment and construction of "marketing network optimization project".

Between 2007 and 2011, seven wolves bought 29 shops throughout the country.