Can The Performance Of Red Dragonfly Continue?

According to the world clothing and shoe net, after two consecutive years of decline in performance,

(603116.SH) in the first quarter of 2017, the performance reversed, and its operating income increased by 8.04% over the same period, and net profit increased by 16.88% over the same period last year.

Unlike the red dragonfly, its performance is currently on the market.

Companies are mostly trapped in the mire of performance, and companies are cross border mergers and acquisitions to break through. In this context, can the performance of Red Dragonfly continue?

Earnings growth

Red Dragonfly main camp

The sale and sale of leather goods and children's articles were successfully landed at the Shanghai Stock Exchange in June 2015.

Despite being one of the famous brands in the leather industry, the Red Dragonfly's performance has not been ideal since its launch.

Financial data show that in 2015 and 2016, red dragonfly business income fell 5.15% and 3.19% respectively, and net profit fell 8.43% and 7.03% respectively.

However, after a continuous decline, the Red Dragonfly appeared to recover in the first quarter of 2017.

In 2017 1-3, the Red Dragonfly achieved operating income of 804 million yuan, an increase of 8.04% over the same period last year, and realized a net profit of 88 million 730 thousand yuan, up 16.88% over the same period last year.

In a quarterly report, red dragonfly said that during the reporting period, the company launched holiday special funds and a series of promotional activities with holiday characteristics, and achieved good sales results.

Unlike the red dragonfly, the performance of leading companies such as Daphne and AOKANG International (603001.SH) has shown a downward trend in recent years.

According to relevant information, BELLE, 1880.HK, Daphne International (0210.HK), AOKANG international, Saturday (002291.SZ) and 1028.HK are engaged in the production and sale of leather shoes.

According to the annual report, in 2016, Daphne international achieved 6 billion 556 million yuan in operating income, down 22.04% compared to the same period last year, and realized net profit of -8.19 billion yuan, down 116% compared with the same period last year.

In the same period, AOKANG international and Saturday achieved operating income of 3 billion 250 million yuan and 1 billion 484 million yuan respectively, down 2.07% and 9.61% respectively, and realized net profit of about 305 million yuan and 20 million 840 thousand yuan respectively, down 21.79% and 7.52% respectively.

In fact, due to the influence of channel change factors, in recent years, the overall business environment of footwear industry has not been significantly improved, and the overall performance of the leather footwear industry is still in the doldrums.

According to the National Bureau of statistics, in 2016, clothing shoes and hats and needle textiles increased by 7% over the same period, down 2.8 percentage points from the previous year's growth rate, which has declined for sixth consecutive years since 2011.

In the first quarter of 2017, the amount of revenue earned by AOKANG international was about 882 million yuan, down 0.81% compared to the same period last year, achieving a net profit of 114 million yuan, an increase of 1.02% over the same period. In the same period, the business income of 396 million yuan on the same period last year increased by 7.55% compared to the same period last year, achieving a net profit of 11 million 540 thousand yuan, an increase of 25.01% over the same period of 2017.

In a quarterly report, it said on Saturday that in addition to the low performance base of the company, fashion forward and Beijing Xin Xin merged into the scope of the company's consolidated statements, which played a positive role in improving the company's business performance.

According to public information, on July 5, 2016, a notice was announced on Saturday that it intends to acquire 100% equity interest in stylish fast forward and Beijing Xin Xin with 394 million yuan in cash.

As early as in 2015, Hamm Reis spent nearly 1 billion 200 million yuan to acquire Hamleys, a famous British toy store, and set foot in the toy industry. AOKANG international was involved in the pformation of cross-border electric business in Lanting Pavilion with 77 million US dollars.

It can be seen that most of the other companies in the industry have been pformed to help themselves.

Can performance growth continue?

It is noteworthy that when the dragonfly performance is getting warmer, the former shoe giant is fading away from investors' perspective.

In April 28, 2017, BELLE International announced the announcement of the privatization offer.

According to the announcement, a joint offer made by BELLE international executive director Wu, Sheng Fang and Gao Ling capital and CDH investment will purchase all the shares issued by BELLE international at the price of HK $6.3.

After the completion of this paction, the high Ling group will hold 56.81% of the company's shares and become the largest shareholder of BELLE international. CDH investment will hold 12.06% of the company's shares, including the participation and recommendation management team, which will hold the remaining 31.13% shares.

This means that once privatization is successfully completed, BELLE international will temporarily withdraw from the list of listed companies.

With the "integration" business mode, BELLE international has built a whole industrial chain structure from design, production, logistics to terminal sales, and has become the largest female shoe retailer in China with the largest sales volume.

In 2007, BELLE international successfully listed in Hongkong, China.

Since then, the scale of the company's sales outlets has been expanding rapidly.

Data show that in 2013, the total number of BELLE international outlets reached 2.07, covering more than 2000 department stores, with a total workforce of more than 120 thousand.

The company's operating income increased from 11 billion 682 million yuan at the beginning of the listing to 36 billion 283 million yuan in 2013, and net profit increased from 1 billion 979 million yuan to 4 billion 492 million yuan.

In February 2013, BELLE International's total market value exceeded 150 billion Hong Kong dollars, hitting a 6 year high.

However, due to the influence of retail channel pattern changes, BELLE International's past effective management mode has been severely damaged in recent years, and the success factors of the company have gradually become a disadvantage, and the business performance of the company has also been declining.

According to BELLE international annual report, in the 2015/2016 fiscal year, BELLE international achieved operating income of 40 billion 831 million yuan, an increase of 1.95% over the same period, of which the footwear business realized 21 billion 74 million yuan, down 8.5% compared with the same period last year. During the same period, the company achieved a net profit of 2 billion 934 million yuan, down 38% over the same period.

In the 2016/2017 fiscal year, BELLE international realized revenue of 41 billion 707 million yuan, an increase of 2.21% over the same period, including footwear business income of 1 million 896 thousand yuan, down 10% compared with the same period last year. During the same period, the company achieved net profit of 2 billion 403 million yuan, down 18.10% over the same period.

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In the annual report, BELLE international concluded that in recent years, the footwear business of the company has encountered unprecedented challenges. Under the impact of the electricity supplier and the new shopping center, the customer flow and the consumer style preferences of the retail channel have undergone tremendous changes. The sales volume of the main sales channels, Department stores and shopping malls has been sharply reduced due to the diversion of electricity providers and other emerging retail channels, and the department stores are declining.

At the same time, the huge number of stores and staff makes the company's store rents and staff costs keep rising. In addition, the company's channel strategy adjustment is not in place, new marketing methods are missing, brand image is aging, product renewal cycle is too long, design sense is not enough, cost performance is low and so on, so that the same store sales have declined for 13 consecutive quarters, and sales and profits of the company have declined sharply.

The sluggish performance has also become the main incentive for BELLE's international valuation to shrink.

According to the announcement of the offer, the overall valuation of BELLE international is only HK $53 billion 135 million in the privatization process. Although the offer price has already been 19.5% higher than the pre suspension price, BELLE International Valuation still shrank by nearly HK $100 billion compared with the peak value.

In fact, the privatization valuation is not even as good as the market value of BELLE when it was launched in 2007.

Statistics show that in May 23, 2007, BELLE's market value was HK $67 billion on the first day of listing.

What the market is concerned about is that the "shoe king" BELLE will soon be hidden. Can the performance of Red Dragonfly continue?

According to relevant information, BELLE international operates mainly in direct store mode. Daphne, Saturday and 1000 are mainly direct stores and some franchised stores, while red dragonflies and AOKANG shoes are mainly operated by franchised stores.

Due to the obvious difference between the direct mode and the franchise mode, there are also some differences in financial indicators including gross margin, inventory turnover and accounts receivable turnover.

Among them, franchisee mode asset is relatively light, sales cost is low, inventory turnover rate is fast, but the gross profit margin and accounts receivable turnover rate of the company are generally inferior to the direct battalion mode.

Financial data show that in 2012-2016 years, the Red Dragonfly gross margin always fluctuated around 35%.

In the same period, BELLE international gross margin reached 56%.

Compared with BELLE international, 2013-2015 years, the Red Dragonfly stock turnover rate is relatively high.

According to financial data, in 2013-2015 years, BELLE international stock turnover rate was 1.17 times / year, 1.23 times / year and 1.28 times / year respectively. During the same period, the Red Dragonfly inventory turnover rate was 3.21 times / year, 3.04 times / year and 2.84 times / year respectively.

But a problem that can not be ignored is that in recent years, the stock turnover rate of red dragonflies has declined rapidly, and the number of outlets has been decreasing.

The latest annual report shows that in 2016, the Red Dragonfly stock turnover rate had dropped to 2.19 times / year, and the company's stock amount increased from 717 million yuan in 2015 to 958 million yuan, up 33.62% compared with the same period last year. During the same period, the net cash flow generated by the company's business activities decreased from 362 million yuan to 108 million yuan, down 70.03% compared with the same period last year, and the increase in the stock of the company obviously occupied the capital.

Meanwhile, the annual data also showed that in the 2012-2014 years, the number of Red Dragonfly outlets was 639, 595 and 502 respectively, and the number of franchisees was 3819, 3833 and 3819 respectively.

By the end of 2015 and the end of 2016, the number of Red Dragonfly outlets was 445 and 410 respectively, and the number of franchised stores was 3695 and 3706 respectively.

Since 2012, red dragonfly has closed 229 stores and 113 franchises.

In the annual report, red dragonfly said that in 2016, the company's stock growth was mainly due to advance stock preparation and pilot promotion of consignment joint venture mode. Consignment joint business can play the respective advantages of franchisees and companies, realize the separation of product ownership and management rights; franchisees are responsible for investment in the shop, pay rent and daily expenses, and the company is responsible for supervising operation and goods allocation. After joining the buyout system, the franchisee sells products from the buyout system to a consignment joint venture system, and the company assumes corresponding inventory, resulting in an increase in the total inventory amount at the end of the reporting period.

It is worth noting that when the franchisee's competitive advantage of digestion is not in existence, can red dragonfly grow smoothly?

More interesting reports, please pay attention to the world clothing shoes and hats net.