Gap Group announced its first quarter 2017 financial report data last week. In the three months ended April 29, the group’s sales were basically the same as the same period last year at US$3.4 billion, and its net profit surged 12.6%. , but sales in Asia, including the Chinese market, recorded a large decline. H&M also announced the group’s April results in May. Sales increased by 7% year-on-year, but it was lower than the full-year growth target. The first half annual report of Uniqlo’s parent company for fiscal year 2017 shows that although sales performance only increased by 0.6%, pre-tax profits increased by nearly 80%, with particularly strong performance in mainland China and Southeast Asian markets. ZARA has not announced its new financial report for 2017, but its parent company’s 2016 financial report as of January 31 this year showed that its revenue and profits increased, but its gross profit margin fell to the lowest level in the past eight years.
The performance of the four major fast fashion brands is different
The first quarter financial report data released by Gap Group in 2017 showed that the group’s sales were basically the same as the same period last year at US$3.4 billion, and profits surged 12.6% to US$143 million. As a key retail indicator, same-store sales improved significantly from the 5% decline in the same period last year, recording a 2% increase. Looking at the entire group, sales in North America and Canada increased by 2.8% year-on-year. However, sales in Europe were affected by the weakening tourism industry caused by terrorist attacks, and sales fell by 13.3%. Sales in Asia, including the Chinese market, recorded a sharp decline, falling 20.5%.
The core financial data released by H&M in April showed that in local currency terms, the group’s tax-included sales in April 2017 increased by 7% compared with the same period last year. As of April 30, the number of H&M Group stores worldwide reached 4,474. Ten new stores were opened in mainland China, covering Ordos, Yinchuan, Dongguan, Yiwu, Xi’an, Dazhou, Weihai, Xianyang, Xuzhou and Yibin, bringing the total number of stores to 405. H&M’s full-year growth target is 10%-15%. Its CEO has previously stated that it is somewhat difficult to achieve this target based on current sales trends.
Uniqlo’s parent company previously announced its financial report for the first half of fiscal year 2017 from September 2016 to February 2017. The financial report shows that the company’s sales performance during the financial period increased by 0.6% compared with the same period last year, and the gross profit margin increased by 1.5% year-on-year. However, the company’s pre-tax profits have grown by leaps and bounds, with an increase of nearly 80% compared with the same period last year. The financial report specifically mentioned that the performance of the markets in mainland China and Southeast Asia was particularly strong. The financial report attributed the growth in China’s market performance to the increase in gross profit margin and the improvement in the proportion of sales and administrative expenses. Uniqlo pointed to rapid same-store sales growth in Greater China, but did not disclose specific figures. In addition, e-commerce sales have also grown by double digits.
Inditex SA, the parent company of Zara and the world’s largest clothing retailer, recently announced its core financial data for fiscal year 2016. Although sales performance was strong, gross profit margins fell to the lowest point in the past eight years. It fell to 57% from 57.8% last year. However, we can see from the figures that the gross profit margin has indeed declined compared with itself, but compared with the industry level, the performance is still good.
Uniqlo continues to be optimistic about its future performance in the Chinese market
“I personally think that Gap has shown a trend of decline.” Chen Ke, global partner of the international management consulting firm Roland Berger and vice president of Greater China, said in an interview with Nandu that Gap has long been associated with the economic recovery of the United States. A brand that is now somewhat aging. According to its brand strategy, Gap is positioned as mid-to-high-end, and its other brand Old Navy is positioned as mid-to-low-end to attract more consumers and generate more purchasing demands. “But the problem is that the Chinese market is no longer the American market in the early years. The image of Gap feels more like a brand that the post-70s generation loves to buy, but now the post-85s or post-90s generation are actually not willing to interact with the post-70s generation. Wearing the same style of clothing. In addition, the brand’s pricing is actually not low, and there is no advantage in horizontal comparison with other fast fashion brands. Generally speaking, there are no obvious highlights.”
Relatively speaking, Uniqlo’s performance in the Chinese market is remarkable, and even its future continued performance is optimistic by analysts. Chen Ke said that Uniqlo’s clothes are famous for their simple and basic styles, with good overall quality and high cost performance. And some design elements have been added to meet the fashion needs of some people. “Consumers are actually dependent on this kind of high-quality, cost-effective products, and they also have demand for basic models. Uniqlo has done very well in these two aspects. This is something that some Taobao brands and designer brands cannot replace ”
As for the decline in ZARA’s profit margin, Chen Ke thinks it is understandable. “The reason is that in the past few years, the brand has mainly relied on small quantities, multiple models, and quick response to win. However, with the development of e-commerce, some small brands and designer brands have emerged, resulting in ZA RA’s advantages in this regard are no longer so prominent. . Prompt it to increase discounts or increase promotional activities when the average tag price does not change significantly. “In addition, Chen Ke also said that the target consumer group of fast fashion is relatively young, and the young customer base is to a certain extent. I am accustomed to the e-commerce shopping method and am more price sensitive. In this kind of situation,Under such circumstances, it would be difficult for ZARA to stimulate consumer purchase demand without conducting some activities.
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