Is the collective performance of men’s clothing brands declining? The clothing business of many men’s clothing brands is taking a back seat
According to the third quarter report data, the performance of men’s clothing brands such as Youngor, Jiumuwang, and Septwolves all experienced varying degrees of decline.
It is worth noting that reporters from Beijing Business Daily found that the clothing business that supported the brand’s title of “men’s wardrobe” in the past is taking a back seat, and side businesses such as real estate and equity investment have become an important part or focus of the performance of each men’s clothing brand. direction. Is side hustle really reliable? Companies seem to be considering this issue as well.
In the context of high risks and high uncertainty in side businesses, whether to focus on the main business or continue to expand the side business may become a multiple-choice question faced by menswear brands.
Collective decline in performance
Up to now, A-share men’s clothing companies have released three quarterly reports. Judging from the third quarter financial data, men’s clothing companies as a whole have shown a decline in performance. Among them, Youngor’s net profit in the third quarter was 2.138 billion yuan, a year-on-year decrease of 21.05%. The former menswear hegemon Septwolves also did not escape the fate of sharp decline. Financial report data shows that Septwolves’ net profit in the third quarter was 5.91 million yuan, a year-on-year decrease of 83.38%.
King Jiumu and Shinur, which had been renamed, suffered direct losses. Financial report data shows that Jiumuwang lost 69.95 million yuan in the third quarter, a year-on-year decrease of 199.8%; Shinur lost 2.06 million yuan in the third quarter, a year-on-year decrease of 172.17%.
Regarding this related issue, reporters from Beijing Business Daily interviewed Youngor and Septwolves respectively, but did not receive a reply as of press time.
Wu Daiqi, CEO of Shenzhen Siqisheng Company, said that in recent years, the overall clothing industry has been on a downward trend. Coupled with the impact of the epidemic, men’s clothing brands such as Youngor and Septwolves that mainly rely on offline channels will have some impact on their performance. . In addition, the positioning of men’s clothing is relatively narrow, and companies will have some restrictions in terms of transformation and design. “Once business men’s clothing is positioned, its coverage will be relatively small. In addition, the design changes of men’s clothing are far lower than those of women’s clothing, and consumers’ repurchase rate and frequency may be low. This is also the case for established men’s clothing. Clothing brands will develop bottlenecks when they reach a certain stage. When more high-end customized clothing begins to appear and develop to a certain extent, some of the market for original business men’s clothing brands will be cannibalized,” Wu Daiqi said.
After sorting through the financial report information of the past two years, the performance of the above-mentioned men’s clothing companies is hardly optimistic. Data shows that from 2019 to 2020, Sinurka’s non-net profit fell by 22.53% and 318.75% respectively. Jiumu Wangke’s non-net profits fell by 47.24% and 44.05% respectively. In addition, Septwolves’ non-net profit increased slightly by 9.24% in 2019, which was slower than the 17.3% growth in 2018 and fell by 57.94% in 2020. Youngor’s non-net profit in 2019 increased by 15.88%, which was slower than the 876.8% growth in 2018, and fell by 12.44% in 2020.
According to Bao Yuezhong, a new retail expert in the FMCG industry, men’s clothing brands have faced homogeneity problems in many aspects such as products, brands, marketing, channels, etc. for many years. These problems have not been effectively solved, resulting in the overall appearance of multiple brands. A situation of sluggish performance.
Is clothing taking a back seat?
With the overall situation showing a sluggish trend and facing multiple problems such as products and channels, it has become a unanimous strategy for men’s clothing brands to simply do side business and find another way out.
After sorting through the financial report information of various companies, a reporter from Beijing Business Daily noticed that the clothing business of many men’s clothing brands is taking a back seat. Youngor’s total revenue in the first three quarters of 2021 was 10.042 billion yuan, and its net profit was 3.779 billion yuan. Among them, the real estate business revenue was 5.233 billion yuan, the net profit was 1.757 billion yuan, and the investment business net profit was 1.274 billion yuan. On the other hand, the fashion sector, which mainly focuses on clothing business, has revenue of only 4.656 billion yuan and net profit of 735 million yuan.
At the same time, Youngor attributed the company’s substantial revenue growth in the first three quarters to the development of real estate. Data show that Youngor has continuously expanded its layout in the real estate field in recent years. In October this year, Youngor spent 1.756 billion yuan to acquire an ordinary residential land in Lingang, Shanghai.
Unlike Younger who continues to increase its side businesses, Shinur directly sells subsidiaries and divests its clothing business. In December 2020, Shinur transferred 100% of the equity of its subsidiary Shandong Shinur for 508 million yuan and no longer held clothing assets. Later, Shinur also changed its name to Cedar Development. The financial report shows that in the first half of 2021, Shinur’s clothing business revenue has dropped to 10.58%, a year-on-year decrease of 73.12%; the supply chain has become its main source of revenue, with revenue accounting for 81.82%, a year-on-year increase of 278.59%. .
The relevant person in charge of Cedar Development told a Beijing Business Daily reporter that with the development of new marketing models such as new retail, e-commerce, and live broadcast, the company’s traditional clothing sales business has been greatly affected. A big impact, the wholly-owned subsidiary Shandong Shinur suffered losses of 2.29 million yuan and 6 million yuan in 2018 and 2019 respectively. The transfer and sale is based on the company’s strategic planning and business development needs, which is conducive to the company’s integration of resources and enhancement of the company’s sustainable development. capabilities and profitability. After this sale, although the company has some long-term clothing sales contracts that are being fulfilled, it will account for a relatively small share of the company’s business revenue in the future.
At the same time, the established men’s clothing brand Septwolves has also started a side business model of investment. According to the March 2021The balance sheet of the latest financial report shows that the amount of Septwolves’ long-term equity investment and investment real estate exceeds 1 billion yuan, while its revenue in the third quarter was only 842 million yuan.
It’s not just the Septwolves who are interested in investing. Data shows that Jiumuwang’s cumulative investment income from 2017 to 2020 was nearly 400 million, with an average annual profit of 100 million.
Wu Daiqi said that companies make diversified investments mainly to increase their operating income and improve their ability to resist risks. Since clothing companies have a certain seasonality, offline physical store rentals, personnel and other operating costs and expenses are relatively high. In addition, the rise of online e-commerce has affected offline store business to a certain extent. Under various factors, companies have to obtain more in order to develop. Profits will be considered in other investments.
Success or failure of side business
Reporters from the Beijing Business Daily found that some men’s clothing companies have made huge profits by “not doing their business properly”, but there are also some companies that are on the verge of losing money because of “not doing their business properly”.
Youngor mentioned in its third quarterly report that “Due to the centralized delivery of the first phase of Jiangshang Garden, the real estate sector in this period achieved operating income of 4.997 billion yuan, an increase of 765.24% over the same period last year.” Relying on the development of real estate, Youngor’s revenue in the third quarter achieved a growth of 244.59%. However, the decline in the investment sector has also become the main reason for the decline in Youngor’s net profit in the third quarter.
Similarly, the investment business has also become one of the reasons for the decline in Jiumuwang’s performance. The relevant person in charge of Jiumu Wang told a reporter from Beijing Business Daily that the company’s net profit declined in the third quarter. In addition to the company’s increased advertising efforts, rectification and upgrade of existing channels, and the increase in sales expenses compared with previous years, it was also affected by the capital market. , the fair value of the trading financial assets held by the company at the end of the period dropped significantly during the reporting period. The reasons for the impact of the capital market mentioned by the relevant person in charge of Jiumu King are not unfamiliar. After all, Jiumu King mentioned in its first half financial report that the company’s net profit fell by 40.41% in the first half of the year, mainly due to the gains and losses from changes in fair value and investment income generated by the investment business. Due to year-on-year decrease.
Perhaps realizing that side businesses are not that easy to do, Youngor, Jiumu Wang and others are working hard to focus on the main business of clothing.
Youngor stated in its 2020 annual report that the company’s development must still focus on its main apparel business. At the same time, Youngor is also trying to move closer to new clothing trends, launching many co-branded clothing and launching sub-brands such as MAYOR, Hart Schaffner Marx, and HANP (Han Ma Shijia) for different consumer groups to expand the female market.
The relevant person in charge of Jiumuwang told a Beijing Business Daily reporter that since 2020, the company has launched the “global sales leader in men’s trousers” strategy, continues to increase investment in product research and development, brand promotion, channel optimization, etc., and is committed to building a “global The best pants” and became the “Global King of Pants”. Regarding investment in side businesses, the relevant person in charge of Jiumu Wang said that the company’s funds will give priority to the strategic investment in the main clothing business and daily production and operations. On the premise of ensuring the funds required for strategic implementation and daily operations, the company will use part of its own idle funds for financial investment. , the purpose is to improve the efficiency of the use of funds and will not affect the company’s daily production and operation activities.
Septwolves are also constantly trying to innovate in the field of clothing. It is understood that in the past two years, Septwolves has continuously been involved in national trends, launched joint brand strategies, and invited spokespersons who are in line with the brand’s positioning to promote the transformation and development of the brand.
Bao Yuezhong said that layout in real estate and investment fields is an important strategy for some clothing companies to achieve diversified development. However, the side business overshadows the main business, leaving the company facing the embarrassing situation of “the main business is not prosperous”. In the long run, clothing companies must continue to invest in the development of their main business, strengthen the healthy development of the main business, and provide more important support for the sustainable development of the company.
“These clothing brands have been built for many years, and companies have invested a lot in brand building. To completely abandon the clothing industry is equivalent to giving up existing brand assets. On the contrary, if companies use the established brand awareness to carry out relevant Diversified expansion will be more beneficial,” Wu Daiqi said.
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