Shanshan Garment Business Landslide Reflects Diversification Trap?

A few days ago, Shanshan shares and the recently released semi annual report of men's wear enterprises in the first half of the performance is very different.

Throughout Clothing textile In the industry, the men's clothing sub industry is generally favored by industry insiders. Then, in the first half of the year, the clothing business of Shanshan was not satisfactory, while the net profit of the same period of focus on men's clothing was 246 million yuan, an increase of 41.72% year on year.

"On the one hand, it is related to the general background of the industry, on the other hand, Shanshan may have encountered relatively big problems in product sales," said Wang Qianjin, chief editor of First Textile Network. Some insiders also believe that the diversification of Shanshan in recent years has dissipated its energy, so as to lead to today's situation of clothing business.

Low gross profit due to franchise mode

Compared with the leisure and sports sub industries, men's wear has matured late and its development is relatively stable.

According to the semi annual report, Shanshan's clothing business income in the first half of the year was 789 million yuan, up 16.57% year on year; The operating profit margin was 25.92%, a year-on-year decrease of 3.21 percentage points; The net profit of clothing business was 4.06 million yuan, down 73.06% from 15.07 million yuan in the same period last year.

Also as a men's wear enterprise, the main business income of the seven wolves clothing industry in the first half of the year was 1.371 billion yuan, an increase of 26.22% year on year; The gross profit rate was 44.53%, up 2.54% year on year; The net profit was 246 million yuan, up 41.72% year on year.

From this point of view, the two men's wear enterprises have a great disparity in business conditions.

According to the announcement of Shanshan Shares, the prosperity of the clothing industry continues to be depressed due to the continuous economic downturn at home and abroad. And its clothes

The decline in net profit of clothing was mainly caused by the large decline in net profit of Ningbo Shanshan Fashion Clothing Brand Management Co., Ltd.

Later, the reporter called Shanshan on this issue, and a staff member of the company's securities office told the reporter that the sharp drop in net profit was mainly due to the integration of the company's clothing sector, so the cost was relatively high during the period, which had a great impact on short-term profits.

The staff member said that Ningbo Shanshan Fashion Clothing brand In addition to managing its own brand of Shanshan Suit, the Management Co., Ltd. also manages some joint venture and agency brands. "It used to be that each company managed its own brand, but now one company manages the following brands in a unified way. With the mode change, the human resources and teams are still integrating, and the costs in all aspects are relatively high."

Xiong Xiaokun, a researcher in the light industry of CIC Consulting, told the reporter that the seven wolves used the "one-stop" model in the sales model, producing and selling their own products, which greatly increased profits. At the same time, the seven wolves also had certain advantages in the development of e-commerce. Shanshan shares are mainly franchised, and sales are realized through franchisees, so the gross profit margin naturally decreases.

Therefore, compared with the rise in net profit of Seven Wolves, the sharp decline in the performance of Shanshan Shares may also be expected. However, its 73.06% decline in net profit has made the industry people call it "relatively high".

The sales situation directly affects the net profit. At present, the clothing industry has to face the fact that the inventory is generally high. In this case, many enterprises have to take discount promotion measures, which will certainly affect the sales profit.

Like many enterprises, Shanshan has not escaped the trend of the industry, and its inventory increased by 6.23% compared with 815 million yuan last year. Wang Qianjin said that after the increase of inventory, enterprises will have greater pressure to deal with inventory, and price reduction and promotion will inevitably have an impact on profits.

Chen Ping, representative of the securities department of Septwolve, told reporters that the company's e-commerce business has made a great contribution to inventory control. In the first half of the year, the online sales of Pitwolf E-commerce reached about 76 million yuan, an increase of 137.50% over the same period last year.

Shanshan has almost no involvement in e-commerce. The above staff said that there is no e-commerce business at present, mainly because of the price. "There are advantages in being an e-commerce company at a low price."

With the expansion of lithium battery business and investment business, Shanshan has become a diversified clothing enterprise in the eyes of investors. In this case, an industry personage told the reporter of the Daily Economic News that it is difficult to compare Shanshan with ordinary garment enterprises now.

Diversification trap?

Zhang Bin of Guojin Securities told reporters that for traditional consumer enterprises, the more important thing is the net cash flow generated by business activities. From the perspective of industry insiders, the net cash amount of operating activities can be approximately regarded as the cash income statement. The increase in net cash flow from operating activities indicates that the enterprise is more dynamic.

According to the data, the net cash flow from operating activities of Shanshan Shares was 11.82 million yuan, a year-on-year decrease of 58.60%. However, the other day, Septwolves announced its semi annual report. The net cash flow from operating activities in the first half of the year was 134 million yuan, up 227.61% year on year. In this view, the operating condition of Shanshan Shares is really unsatisfactory.

"The cash flow of Shanshan has shrunk significantly, and the sales of its products may have encountered relatively big problems," said Wang Qianjin.

Like many garment enterprises, Shanshan has expanded its lithium battery business and become a member of the diversified development army under the bad situation of its main business.

However, the reality is that many enterprises have encountered bottlenecks in diversification. The diversification of the textile and clothing industry is basically concentrated in the real estate, finance and emerging industries, but the situation of the real estate and financial industries is generally not good at present, while the risks of emerging industries are generally large, and the operating conditions are mostly failures. "Relatively speaking, diversified enterprises generally slow down their growth or suffer losses, while the main business is relatively stable," said Wang Qianjin.

Youngor, the clothing company that was the first to engage in diversified development of real estate business, has disclosed data showing a serious mismatch between its investment in real estate and its return. Last month, although the company did not announce the news, many media have announced that Youngor will return to the main business of traditional clothing, and the real estate business will be strictly restricted.

As for Hongdou Shares, which is also involved in the real estate business, the previously released semi annual report showed that its real estate business revenue in the first half of the year decreased by 46.28% year on year, and its operating profit margin decreased by 10.18 percentage points. In the first half of the year, its net cash flow from operating activities was -73.93 million yuan.

In the first half of the year, the net profit of Shanshan's lithium battery business decreased by 9.14% to 47.02 million yuan compared with the same period last year. The company explained that it was mainly due to the large decrease in the net profit of cathode material precursor business. The decline in the net profit of this business is, as analysts have said before, a risk that diversification cannot escape.

In the same industry of men's wear, Cunninghamia lanceolata In sharp contrast to the performance gap of the seven wolves, it is also related to the brand positioning to a large extent. "Relatively speaking, the development of men's casual wear will be faster, while sales growth of men's casual wear like Youngor and Shanshan is not very fast." Wang Qianjin said that Shanshan is a suit maker, but it does not have too much advantage in the business of making suits, and the seven wolves are clearly the leader in men's casual wear.

When asked about the future development of Shanshan, Xiong Xiaokun said that Shanshan began to promote the integration of the clothing industry in the second half of the year. It is expected that the company will mainly close some branches with depressed turnover, and at the same time will expand the promotion model and further establish its own brand image.

The above staff of Shanshan said that the management was not bad at evaluating the future of the company, but still optimistic about the layout of the company.

Returning to the whole industry, the pressure is still great, and the economic indicators have not yet improved. Ma Gang, an independent clothing commentator, told the reporter that the influence of the economic environment on the sub industry of men's clothing is not obvious. "But it does not mean that there is no problem in the industry. The performance may decline in the second half of this year or next year due to the impact of the whole industry."