(Yicai Global) July 15 – Profits plunged at many major Chinese casual wear brands in the first half due to the resurgence of Covid-19 in China. Metersbonwe Fashion & Accessories, one of the biggest in the country, expects to have plunged into the red again.
Metersbonwe’s net loss in the six months to June 30 was likely more than CNY600 million ($88 million), the Shanghai-based company said yesterday. Its loss the previous year was 39 million yuan.
The company’s Shenzhen-listed shares [SHE: 002269] plunged 8.2% today to close at 1.69 CNY (25 US cents), bringing the stock’s decline to 35% so far this year.
Metersbonwe closed physical stores during the period, including its flagship store on Nanjing East Road in Shanghai, which weighed on profits and pushed up costs. Additionally, its logistics center in the city’s Pudong area was unable to deliver goods normally for about two months due to Covid-19 restrictions, which also affected the company’s results.
But Metersbonwe was not the only fashion retailer to see profits suffer. Peacebird Fashion’s net profit plunged 98% to just CNY5 million ($739,000) in the first half from a year ago, according to its recent financial publication. The decline was due to the impact of Covid-19 outbreaks, as well as high fixed costs for store rents and salaries, the Ningbo-based fir said.
Semir Garment, a leading producer of casual wear, expects its first-half net profit to have fallen more than 80% from a year earlier. The Wenzhou-based company said rising commodity prices also impacted results.
Explaining the situation, Guosheng Securities analyst Ju Xinghai pointed out that popular clothing brands have a wide range of low-loyal customers and their sales rely relatively more on mass consumption.
Brands have been stuck under Covid-19 restrictions since March. Ju predicted that with the recent epidemics better controlled and the resumption of attendance, the situation will improve. But medium-term growth momentum has yet to be restored as the pandemic weighs on consumer confidence, he noted.
Editors: Shi Yi, Peter Thomas