Per editor: He Xiaotao Xiao Yong
The cruelty of the market is beyond imagination.
In the casual shoe market, many brands familiar to the post-80s and post-90s are gradually marginalized, such as Daphne.
Image source: Screenshot of Daphne Weibo
In the golden age, Daphne was once synonymous with trends, loved by young women, with a market share of 20%, and brand stores with large posters of SHE and Rene Liu opened from first-tier cities to small towns in remote areas.
However, since 2013, Daphne has gradually slipped from the peak, with revenue declining year by year, large-scale store closures, and the company's market value has also plummeted.
Entering the sneaker space is Daphne's prescription for herself. On September 26, Daphne International (00210. HK) announced a personnel adjustment, with Han Bingzu, who previously served at 361 Degrees and Kappa, an independent non-executive director of the Company. On the same day, Daphne's share price soared 26.67% to HK$0.475.
However, today (September 27), Daphne International's stock price suddenly fell off a cliff, falling more than 47% at one point, the biggest decline in twelve years.
Daphne International Day Candlestick Chart
As of the close, Daphne International was down 36.84% at HK$0.3 per share, with a market capitalisation of only HK$495 million, a 97% evaporation from its peak.
Daphne International Monthly Candlestick Chart
On 26 September, Daphne International announced that Han Bingzu is an Independent Non-executive Director, Chairman of the Audit Committee, Member of the Remuneration Committee and Nomination Committee of the Company, effective 25 September 2019. Han Bingzu has entered into a contract of appointment with Daphne, who has served as a director of Daphne for a three-year term with an annual honorarium of HK$396,000.
According to public information, Han Bingzu previously served as an independent non-executive director of Food & Beverage Management (China) Holdings Limited, Building Blocks Group Limited and 361 Degrees International Limited, as well as the chief financial officer of China Trend (Group) Co., Ltd., the parent company of Kappa.
It is worth noting that in April this year, Daphne told the media that in recent years, Daphne has been extending to the sports and leisure market. In the 2019 interim earnings report, Daphne said that it is increasing investment in product research and development and launching more fashionable sneakers.
In recent years, the performance of shoe companies such as Daphne and Guijin Bird has declined, and the net profit loss has been serious, while the revenue growth rate of the greater China market in 2018 was divided into 44%, 18%, 21% and 20%, and the trend is still continuing.
Ju Xinghai, chief analyst of Guosheng Securities, yang Ying and Liu Jiawei, analysts, reported last month that the global sports footwear and apparel market exceeded 330 billion US dollars in 2018, and the chinese market size was about 40.1 billion US dollars. Chinese average consumption expenditure on sports shoes and clothing is only 28.8 US dollars / person, compared with Japan, Europe and the United States still have a large gap. It is expected that China's sports shoes and apparel market will exceed $65 billion in the next five years with a CAGR of 9%+, and by 2023.
Perhaps spurred on by the move to the sneaker market. Yesterday, Daphne International rose sharply at the end of the session, soaring by 28% at one point, reaching a high of HK$0.48 during the session, a new high in nearly a year. It was up 26.67% at HK$0.475 as of the close.
Daphne International's share price movement yesterday
As of now, Daphne has no major negative news from the fundamentals, why did it rise sharply yesterday and suddenly plummet today?
The analysis pointed out that it may be related to the huge sell-off of yesterday's profit plate funds.
Daphne International soared 207% in less than two months, with its share price rising from HK$0.163 to its current high of HK$0.5, with a net increase of HK$556 million in the range market value. After 2 p.m., the big sellers accelerated.
According to real-time data from Futu brokers, Oriental Fortune International sold 16.4 million shares, BOC International sold 10.48 million shares, Kaisa sold 7.23 million shares, and Huasheng and Futu sold more than 5 million shares.
Daphne International shares rose to a peak of HK$11.172 in April 2012 and then fell all the way down, falling to HK$0.15 on July 9 this year. Daphne International's market capitalization, which once reached HK$18.9 billion, is now only HK$495 million, a 97% evaporation.
Daphne was founded in 1987 and listed on the Hong Kong Stock Exchange in 1995.
Daphne had a glorious time. In 2004, Daphne claimed that 1 in every 5 pairs of brand women's shoes in China came from Daphne. In the best period of performance, Daphne can sell 50 million pairs of women's shoes in 1 year, and sit firmly in the first brand of women's shoes in the mainland for 5 consecutive years, with a market share of nearly 20%, and won the title of "Volkswagen Shoe King".
Since 2013, Daphne's revenue has declined year by year. From 2013 to 2018, Daphne's operating income decreased by 0.78%, 0.87%, 19.09%, 22.4%, 19.86% and 20.8% respectively year-on-year.
Since 2015, Daphne's performance has fallen into a quagmire of losses, and the loss margin has gradually expanded. From 2015 to 2018, the Company's net profit attributable to shareholders was -HK$379 million, -HK$819 million, -HK$734 million and -HK$994 million, respectively.
Data chart, image source: per reporter Zhang Xiaoqing photo
On August 27, Daphne International released the first half of 2019 results announcement. According to the data, during the period, Daphne International once again recorded a double decline in net revenue, achieving a turnover of HK$1.403 billion, a year-on-year decrease of 37.9%; gross profit of HK$651 million, a decrease of 39.7% year-on-year; a loss attributable to shareholders of HK$390 million, a decrease of 20.86% year-on-year; and a basic loss of HK$23.6 per share. In other words, daphne's cumulative loss since 2015 has reached HK$3.316 billion.
In fact, compared to the glory days, Daphne has closed more than 2/3 of its stores. According to Daphne's annual report, at the end of 2014, the company had 6402 physical stores (of which direct stores accounted for 89.78% and franchised stores accounted for 10.22%). As of the first half of this year, the company's physical stores were only 2075, and 4327 stores were closed during the peak period, a decrease of 67.59%, with an average of 2.6 stores closed every day.
Number of Daphne stores since 2007. Image source: Screenshot of China NewsWeek
Daphne International said in the interim report that the company closed a total of 612 sales points during the period, equivalent to an average of 3 stores closed every day.
According to the China Fund News, there are articles analyzing that blind expansion, inferior e-commerce, and brand design have led to the fall of Daphne, who reached the peak in 2012.
1, blind expansion, cheap promotion
Since its inception, Daphne has adopted the method of "direct operation + joint venture + franchise" and began to attack the city to occupy an area, and its record is also very good.
After the first-tier market was close to saturation, Daphne began to shift her attention to the low-tier market, even as far as the remote counties and towns. But after all, the consumption power of lower-tier cities is not as good as that of first- and second-tier cities, in order to quickly break through this market, Daphne has to use low-price promotions to attract consumers.
The consequence of this is that Daphne risks both losses and the possibility of a possible collapse of the brand image. When people all over the street wear Daphne, it is getting farther and farther away from the image of "high-end, fashionable and atmospheric".
Daphne still had to pay the price for her original "willfulness". Unable to afford the huge store expenses, Daphne began to close stores sharply to maintain strength.
Data chart, image source: per reporter Zhang Yun photographed
2, into the inferior quality of e-commerce, tragically dragged down
With the rapid popularity of e-commerce and mobile internet tools, the way people shop has changed dramatically. Affected by the impact of e-commerce, the traditional footwear retail industry has generally encountered a cold winter in the market.
At this time, Daphne also smelled the outlet of e-commerce and tried to get a piece of the online traffic. In 2010, Daphne invested 30 million yuan in the B2C platform "Yaodian 100" and officially entered the e-commerce field.
Unfortunately, the wrong choice led to Daphne's accumulation.
In just half a year, Yaodian 100 burned out Daphne's first round of investment. But instead of stopping the loss in time, Daphne further fell into this "quagmire". At the end of 2011, it even closed distribution channels such as JD.com, Letao, and Haole to fully support Yaodian 100.
In less than two years, Yaodian 100 has burned out 300 million yuan, and its net assets have been negative more than 30 million yuan. On July 30, 2012, Yw point 100 was directly announced to interrupt the operation of the website.
3, the quality declines, the design is old-fashioned
Another important reason for Daphne's decline is that the quality of its shoes is declining, the design is old, and it is difficult to gain the favor of consumers.
On the one hand, Daphne's original advantage has gradually been lost. Under the influence of blindly engaging in market expansion and low-price promotion, the original noble temperament of the Daphne brand has slowly disappeared. In the case of Daphne on the street, some of the original loyal fans have gradually given up their love for it, after all, many female consumers do not like their cherished brands, and one day it will become a "cheap goods" that everyone can afford.
On the other hand, the Daphne brand's innovation ability and design ability are weak, and it cannot keep up with the speed of today's mainstream consumer replacement. A former daphne customer said that in recent years, Daphne's style has become more and more "earthy", and the comfort is far less than before, and it has rarely patronized this brand.
Daily Economic News Comprehensive China News Weekly, Sina Hong Kong Stocks, China Fund News
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