Wholesale Prices of Fall and Winter Clothing Expected to Increase 10 -15 Percent

It is learned recently that many domestic apparel brands have lifted up the sword of "price increase" aiming to ease cost pressures this year. Current retail prices of brand clothes in shops have generally risen by 10-15 percent. Some clothing companies say that they will continue to raise prices in the second half, insiders expect wholesale prices of fall and winter clothing this year will be up 10 -15 percent.

Price increase has become the mainstream of apparel industry this year.　The latest financial and quarterly reports of listed companies show that many apparel brands have increased their selling prices this year.

In the field of sports apparel, Xstep (01368.HK) released its semi-annual report yesterday, showing the average price of footwear products increased by 6.6 percent, average selling price of apparel products increased 13.9 percent. After price increase, the average price of Xtep's footwear was 85.7 Yuan; the average price of clothing products was 52.5 Yuan.

The other two brands Li Ning and Anta (02020.HK) also raised their product prices in the first half of this year.

Anta's financial reports indicated that the average selling price (wholesale prices) of ANTA footwear rose 2.0 percent to 96.9 Yuan in the first half, clothing product price rose by 7.1 percent to 49.6 Yuan.

Li Ning Company also announced in June this year, its average retail price of footwear products increased by 7.8 percent and apparel retail price increased 17.9 percent in the fourth quarter.

In leisure apparel sector, research data from Hai Tong Securities also showed that the average prices of new products introduced by Younger in January to May this year raised by 15-16 percent, resulting in 4-5 percent sales gains of its apparel business, and about 20 percent growth of sales amount, and more than 50 percent of its gross margin.

"Price increase" has provided a guarantee for major apparel companies to maintain performance.

Xtep said its overall revenue rose 22 percent year on year to 20 billion Yuan in the first half, gross margin increased by 2.1 percentage points to 40.7 percent, operating margin rose 2.4 percentage points to 22.2 percent, due to the double impact of sales increase and price increase.

Anta's semiannual report also showed that the company's turnover increased 22.6 percent to 3.453 billion Yuan in the first half, net profit rose 25 percent to 760 million Yuan,
gross margin rose 2.2 percentage points to 43.7 percent. Anta explained that one of the main reasons for its revenue growth was the increase of average selling prices and sales volume.