Image source @ Visual China
Text | Finance and economics are unscrupulous, the author | Jiang Xiaoqiao
Over the past few years, Local Chinese menswear brands seem to be a little bit unhappy collectively.
In 2019, Zhou Jianping, chairman of Heilan Home, was furious at the annual shareholders' meeting. Some minority shareholders questioned the inventory scale and business model of Heilan Home, and Zhou Jianping "hardened" on the spot, "This problem has been heard and the ears are cocooned... No one is allowed to question Heilan's inventory problem, and our ping efficiency can even surpass Zara and Uniqlo. ”
The greater unhappiness comes from the difficulties of the growth of Chinese men's clothing.
Lilang, who just issued the 2021 financial report, the annual net profit fell by nearly 16%; youngor's net profit in the third quarter of 2021 fell by 21.05% year-on-year; even Heilan Home, which has the largest market share, although it began to transform after Zhou Jianping handed over zhou Lichen, is still considered by the media to have encountered a "mid-life crisis".
But this result is not a pass.
Ten years later, the seven wolves took a small step
There are hundreds of menswear brands in China, but there is only one Chinese men's wear museum.
The museum is finely arranged, and the vein clearly combs the history of the development of Chinese men's clothing. Through the construction of the museum, the seven wolves have sought a historical position for themselves, and then built their legitimacy as the head brand of Chinese men's wear, making themselves a specimen of Chinese men's wear.
2012 was the highlight of the seven wolves, achieving revenue of 3.48 billion yuan, net profit of 560 million yuan, market value of up to 25.451 billion yuan, china's first men's wear brand was born.
Looking back at the historical revenue of Seven Wolves, the company first reached a revenue peak of 3.477 billion yuan in 2012, and then its growth momentum was suddenly interrupted, and there was negative revenue growth for 3 consecutive years, the lowest year was only 2.39 billion yuan in revenue, until 2015 to stop the decline and return to the growth range.
Just when the market thought that the seven wolves would return to the right track of development, the sudden impact of the epidemic made the company's revenue grow negatively again. The revenue of 3.514 billion yuan achieved in 2021 has not yet fully recovered to the pre-epidemic level.
In fact, the gross profit margin of seven wolves sales is not low, and the gross profit margin in the past few years has basically stabilized at about 45%, which is similar to nike's gross profit margin, but the net profit margin has dropped from 16.27% in 2012 to 7.77% last year.
The reason for the divergence between gross profit and net profit, first of all, is the high cost of the period, which erodes the profit margin of the seven wolves.
According to the financial report, the company's expense ratio for the period in 2021 reached 27.88%, and the net cash flow from operating activities was only 545 million yuan, a decrease of more than 36 million yuan compared with the previous year. Its sales expenses for the period were $755 million, an increase of 2.06% year-on-year, and management expenses were $255 million, an increase of 6.1% year-on-year.
Not only in 2021, but in recent years, the sales expenses of the seven wolves have been relatively high, exceeding 20% for three consecutive years, and 21.5% after a slight decline in 2021.
But the biggest problem is inventory. Inventory turnover days is an important indicator of the apparel industry, high inventory will increase the company's manpower, transportation costs, and then affect the operation and profitability of enterprises.
Inventory has always been a common problem in Chinese men's clothing.
Last year, some media sorted out the business data of nine men's wear companies in China. Among them, the inventory turnover days of only red beans are 36 days, and the inventory turnover days of some men's wear companies are as high as more than 200 days, compared with the parent company of foreign fast fashion brand ZARA, which is only more than 80 days.
That is to say, the double increase in revenue and profit of Seven Wolves in 2021 is actually insufficient, and the former first brand of Chinese men's wear has still not really come out of the growth dilemma.
Old men's clothes that want to catch young people
Meituan Wang Xing once mentioned a conclusion on the value of market consumption in the meal: girls> children> young women> old people> dogs> men. For a long time, men's dislike of spending money seemed to be the consensus of the market.
But it would be too simple to explain the inventory of the Seven Wolves in this way.
It is generally believed that the main driving factor behind inventory is to optimize the store mix, emphasizing original design and product rejuvenation. This is also the transformation trend of Chinese men's wear in recent years.
By the end of 2021, there were only 1,876 Seven Wolves stores left, almost halving the number of 4,007 stores in 2012.
It must be objectively said that the number of stores does not mean everything. Since 2013, the Minpai men's wear, including Seven Wolves, has gradually entered the closure and adjustment cycle, and the channel strategy of various companies has shifted from "expansion" to "upgrading".
Although the terminal stores have been greatly adjusted, in 2021, the sales of the Seven Wolves offline channel increased by 10.77% year-on-year, but the online sales shrank slightly.
But the store is only a place to sell, which cannot solve the design problem of the product.
Over the years, compared with the blossoming of women's clothing, the design of Chinese men's wear brands has always seemed to be an awkward existence. The local men's wear industry continues to paste and copy European and American styles, Japanese and Korean styles, and British styles, staying in the initial stage of clothing production, and failing to form a fashion industry.
Marketing didn't work, and R&D didn't keep up. In fact, the overall research and development cost of Chinese men's wear brands is not high. Youngor's research and development expenses in 2020 are only 0.67 billion yuan, Heilan Home's research and development expenses have risen from 0.25 billion yuan in 2017 to 0.83 billion yuan in 2020, and the annual research and development expenses of Seven Wolves in recent years have remained at about 0.5 billion yuan, and in 2021, they have increased to 0.77 billion yuan, and the proportion of research and development investment in revenue is only about 2.1%.
Similar to the situation of many domestic men's wear brands, the clothing design of the Seven Wolves has never kept pace with the brand upgrade. As its main product, the jacket has a very limited incremental space, and the brand positioning can neither cut into the high-end track, nor can it win the favor of the "Z generation".
But for the Seven Wolves brand, catching young people may be a congenitally inadequate proposition. Because since its inception, its consumer positioning is not young. Seven Wolves belongs to social clothing, and the core consumers are middle-aged men, even slightly younger in their 30s.
Li Ning and ANTA are a good example, positioning the brand as "fashionable, cool, global vision", providing more personalized and fashionable products, and with the help of the national tide, completed the transformation of consumer brand mentality.
Obviously, the Seven Wolves still have a long way to go.
Exquisite writer Guo Jingming described his understanding of fashion in the 314 pages of the book "Your Life Is So Long": "I am in my second year of junior high school. I had my first pair of LINING sneakers. I began to feel that Giordano and Benny Road were designer clothes. At that time, there was no Metsbonwe, and there was no Semir. I used the pocket money I had saved for a long time to buy a vest for Giordano's 98 yuan. ”
In 2008, Xiao Si had already arrived in Shanghai, and he was still in love with Giordano and Benny Road.
In "The Little Times 1.0 Origami Era", he poured out his emotions, "The flagship stores on Nanjing Road Giordano and Benny Road flashed huge electronic screens. In the gold and silver buildings full of streets, the gold chains are thicker than one. Countless pedestrians held up their cameras, and the flashes clicked and flashed. ”
But what he didn't know was that a few years later, the era of Chinese clothing brands was as fragile as paper.
In 2012, the peak number of Benny Road mainland stores reached 4,044, but in the next six years, a total of 3,000 stores were closed, and due to continuous losses and no hope of transformation, they were sold by the parent company for 250 million yuan in 2016.
Giordano's performance peaked in 2013 with revenue of HK$5.848 billion and has since fallen all the way, with sales down 5% in 2014 and 3% year-on-year in 2015. By 2021, it will finally turn a profit.
After 2012, the Chinese menswear collective entered a difficult period. Affected by international FMCG clothing brands such as Zara and H&M, chinese consumers' fashion choices have doubled, coupled with the rise of online shopping, the local men's wear road is getting slower and slower.
The root cause is that Chinese men's wear has not established its own fashion system. The fashion system is a complex system that integrates the production, sales and promotion of clothing. It also means not only business, but also the subtlety of culture. Fashion is only called fashion if it reacts to the era and society in which it is located, otherwise it is just a trend without a soul.
Japan is a good example. Before 1960, Japan was also a fashion desert. But now, Yohji Yamamoto, Rei Kawakubo and Issey Miyake... Japan's fashion aesthetic has influenced global fashion trends.
Looking back at the history of modern Japanese menswear, we will find that every wave of clothing revolution, including jeans revolution, Yankee style, ancient fashion, etc., is accompanied by textbook fashion education.
While importing and imitating, Japanese men's wear companies continue to internalize and create, taking American clothing items as prototypes, dismantling them one by one, patiently studying, and then innovating. For example, Full Count jeans founder Tsujida Kanharu, carefully studied every detail and every stitch of Levi's vintage jeans, and found that the cotton fiber of the old jeans was longer, which was the top raw material that industrial spinning technology could not afford, thus inventing high-grade denim fabric.
In China today, there is men's clothing, but there is a lack of men's clothing culture. Looking back at the development of Chinese menswear, in addition to the pursuit of commercial success, it seems that establishing its own fashion system has never been its goal.
Shanshan clothing "not doing business", turned to the development of lithium batteries, investment in private hospitals, but also want to develop cultural tourism towns in Turpan, Guilin Yaoshan and other scenic spots; Youngor invested in real estate, but also opened a zoo in Ningbo.
Since 2013, many domestic garment groups have chosen the "industry + investment" two-wheel drive and interdependent business structure. The Seven Wolves also gradually began to develop content other than their main business, such as investment.
In 2014, Seven Wolves took back the original externally authorized knitting trademark and began to make men's underwear, underwear, socks and knitted products. The second is the horizontal expansion of cross-field, which has opened up the operation mode of "industry + investment", one of the important means is real estate operation. In addition, Seven Wolves has also entered the venture capital industry, and it is also doing a good job, and public data shows that Seven Wolves has set up 6 investment companies, such as Xiamen Seven Wolves Equity Investment Co., Ltd.
The general process of the product cycle of the global apparel industry is: market feedback, concept, demonstration, development, testing, mass production, promotion, listing, life cycle assessment, fast as 4 months, slow as one year, and fast fashion brand ZARA can reach 2 weeks. During these years, the Seven Wolves gradually degenerated from one protagonist to a marginal role.
The scale of China's men's wear market is growing steadily, and there is considerable room for growth of fashion casual men's wear brands in the future. According to the report of the China Research Institute of Industry, according to the statistics of retail sales, the size of the men's wear market in mainland China in 2020 was 510.8 billion yuan, down 12.02% year-on-year. After the epidemic, the men's wear market will maintain a stable growth trend, and it is expected that the Chinese men's wear market will reach 657 billion yuan in 2025, with an average annual compound growth rate of 3.26% in 21-25 years.
But after a series of losses, Karl Lagerfeld finally achieved profitability for the first time in 2021. From the financial report data, Karl Lagerfeld brand sales revenue in the reporting period of 279 million yuan, to achieve "double" growth, to achieve a net profit of more than 11 million, year-on-year turnaround, the business is seven wolves to open the window in the field of light luxury clothing, is expected to create a new incremental space.
"Men have more than one side, how many sides do you have?"