Recently, Langsha's underwear was randomly inspected as unqualified, involving men's underwear. It should be noted that in recent years, Langsha has frequently reported unqualified sampling inspections, including unqualified fiber content and unqualified product instructions. It is worth noting that the underwear sector, as an important source of revenue for Langsha (600137), has shown a significant decline in both revenue and revenue proportion in the past five years, of which the overall revenue has fallen by 40%.
The underwear sampling inspection was unqualified
Again on the regulatory "black list"
Recently, the "Notice of Guangdong Provincial Market Supervision Administration on the Supervision and Random Inspection of Clothing Product Quality" disclosed by the Guangdong Municipal Supervision Bureau shows that after sampling inspection, 405 unqualified products were found, and the unqualified items were: product instructions (identification), fiber content, pH value, formaldehyde content, color fastness to water, color fastness to acid perspiration, color fastness to alkali perspiration, color fastness to dry rubbing, color fastness to wet rubbing, color fastness to light resistance, light fastness, sweat composite color fastness, pilling, surface moisture resistance, decomposable carcinogenic aromatic amine dyes.
The brands that failed this sampling included many well-known brands such as Langsha. Among them, the notice shows that the underwear "VIP-Langsha Hongyun Cotton Men's Underwear 4 Strips" produced by Zhejiang Langsha Underwear Co., Ltd. is unqualified, and the unqualified item is the product instruction (mark).
According to the 2022 annual report of Langsha Co., Ltd., Zhejiang Langsha Underwear Co., Ltd. is a wholly-owned subsidiary of Langsha Co., Ltd., which has total assets of 647.0645 million yuan in 2022, achieved an operating income of 326.7207 million yuan (about 327 million yuan), a net profit of 17.6729 million yuan (about 18 million yuan), a net cash flow of -9.3597 million yuan, and a cash dividend of 1500.00 to the parent company Sichuan Langsha Holding Co., Ltd. for the whole year million yuan (about 15 million yuan). According to public data, in 2022, the overall revenue of Langsha Co., Ltd. was 327 million yuan, and the net profit was 17 million yuan.
In response to the above-mentioned non-conforming products, the notice shows that the Guangdong Provincial Administration for Market Regulation has organized the market supervision department under its jurisdiction to do a good job in supervising and spot-checking the unqualified products in accordance with the law, ordering corrections and administrative punishments and other post-processing work, and in accordance with the provisions of the Guangdong Provincial Administration for Market Supervision and Supervision of Product Quality Credit Classification, the information on the untrustworthiness of relevant products and their operators has been entered into the quality credit archives. At the same time, we will trace the root cause, analyze the reasons for product failure, and further organize administrative guidance or quality and technical assistance for product operators.
In fact, since the beginning of this year, Langsha shares have been exposed more than once that its products are unqualified. More than two months ago, the Jiangsu Provincial Administration for Market Supervision issued the "Circular on the Provincial Supervision and Random Inspection of the Quality of 67 Consumer Goods such as School Uniforms", showing that among them, 200 batches of knitted underwear products were randomly inspected, 7 batches were unqualified, the spot check failure rate was 3.5%, and 7 batches of products were unqualified in fiber content items. In addition, 100 batches of women's underwear products were randomly inspected, 8 batches were unqualified, and the spot check failure rate was 8%, which was unqualified for fiber content items.
Among these unqualified underwear brands, including underwear produced by Zhejiang Langsha Underwear Co., Ltd., a wholly-owned subsidiary of Langsha Co., Ltd., the unqualified items are displayed as "fiber content (nominal)".
It is reported that the fiber content is the explicit labeling of the raw materials used in textile and garment products, which reflects the true attributes of the product. Since consumers often purchase textile and apparel products based on the explicit fiber content, the fiber content label does not match the actual or does not explicitly indicate the fiber content will directly harm the legitimate rights and interests of consumers. The fiber content of textile products sold in China should meet the requirements of standard GB/T 29862-2013 "Identification of textile fiber content".
In addition, the industry pointed out that the product use instructions (identification) item mainly assesses whether the identification information of the product meets the standards or explicit requirements. If the project is unqualified, it will make consumers lack the basis for the correct use of goods, and at the same time, it will deprive consumers of their right to know about the goods, which is not conducive to the effective supervision of the goods by the supervision department. The reasons for the unqualified product instructions (labels) are mainly reflected in two aspects: first, enterprises do not pay enough attention to the problem of product instructions (logos); Second, the producer does not understand the labeling requirements of the instructions (labels) for the use of clothing products, resulting in intentional or unintentional missed or wrong labels.
Underwear used to support 100% of the main revenue
Today, the proportion has fallen to less than 30%.
For Langsha shares, underwear used to be the foundation that supported the company's performance, and it was also the whole of the main business. According to the 2011 annual report of Langsha shares, the underwear revenue exceeded 400 million yuan, which also constituted the only source of main revenue, which is also the highest revenue recorded by the underwear sector so far after the securities abbreviation was changed from "Changjiang Holdings" to "Langsha shares".
However, since then, the performance of the underwear sector of Langsha shares has declined sharply. From the perspective of the last five years, that is, from 2018 to 2022, the revenue of the underwear sector of Langsha shares was 157 million yuan, 111 million yuan, 101 million yuan, 111 million yuan, and 88 million yuan, an overall decline of 43.95%. If it fell from 410 million yuan in 2011 to 88 million yuan last year, then the revenue of the underwear sector has fallen by 78.54% since its peak.
From the perspective of revenue proportion, in the past five years, that is, from 2018 to 2022, the proportion of underwear revenue of Langsha Co., Ltd. to the main revenue is 40.56%, 33.64%, 29.28%, 27.61% and 26.99% respectively. It can be seen that at its peak, underwear was once the main source of 100% of Langsha shares' main revenue, and now, the revenue of the underwear sector accounts for less than 30% of the main revenue.
From the perspective of industry competition, as an "old brand", Langsha seems to be no match for many emerging brands. According to media reports, in the past two years, a number of cutting-edge underwear brands on the market, such as Ubras, Bananai, etc., have emerged on the market, and these brands are quite popular among young consumers. In the 2021 "Double 11" underwear ranking, Aimer shares ranked first, Ubras and Bananai ranked seventh and eighth respectively, and Langsha ranked ninth.
In addition, iiMedia Ranking's "Top 10 Chinese Women's Underwear Brands in the First Half of 2022" released by iiMedia Ranking, the list is: Ubras, Cosmopolitan Beauty, Hongdou, Gerrell, Maniform, Aimer, Gujin, Hengyuanxiang, Dianefen, and Bananai. Langsha was not shortlisted.
In this way, Langsha was "knocked down" by the "back wave"? So what is the reason for Langsha underwear in the market to continue to "regress", underwear revenue continues to decline?
From the marketing side, from 2018 to 2022, the sales expenses of Langsha shares were: 14 million yuan, 15 million yuan, 10 million yuan, 09 million yuan, 08 million yuan, it can be seen that in the past five years, the overall sales expenses have fallen by 42.86%, and have declined for four consecutive years. It is worth noting that during the same period, the revenue of Langsha underwear also fell by 43.95% overall.
From the product side, as mentioned above, Langsha underwear has failed sampling twice so far this year, and has also failed sampling many times before. The industry pointed out that the frequent sampling of products is unqualified, and for consumers, consumption choices will naturally be greatly discounted.
In addition, an advertising announcement of "one-day trip" at the beginning of the year may also provide a glimpse of its operational "embarrassment".
On January 4 this year, Langsha Co., Ltd. disclosed the "Indicative Announcement of the Company Belonging to Langsha Co., Ltd. Signing an Image Spokesperson for Advertising Performance and Portrait Use", showing that "Zhejiang Langsha Underwear Co., Ltd. (hereinafter referred to as 'Langsha Underwear'), a wholly-owned subsidiary of Sichuan Langsha Holdings Co., Ltd., as Party A, recently signed the "Advertising Performance and Portrait Use Contract" with Party B Zhejiang Yishen Culture Media Co., Ltd. and Party B's artists Mr. Lang Lang and Ms. Gina Alice, effective March 1, 2023As of February 28, 2025, the company's advertising products include the use of Gina endorsement products, Gina Langlang endorsement products and Lang Langjina's husband and wife co-endorsement products, serving as the global brand spokesperson for the company's Langsha brand. ”。
According to the announcement, Party A shall pay Party B remuneration as the endorsement fee for the use of Party B's artist image, and the total cost is 2.75 million yuan (RMB) including tax. It should be pointed out that the endorsement fee accounted for 15.92% of the net profit attributable to the parent of Langsha in 2022.
However, one day later, on January 5, Langsha disclosed the "Announcement on Canceling the Cooperation of Advertising Performance and Portrait Use Image Spokesperson Signed by the Company", stating that due to changes in the relevant terms of the contract, Zhejiang Langsha Underwear Co., Ltd., a subsidiary of the company, cancelled the "Advertising Performance and Portrait Use Contract" signed with Zhejiang Yishen Culture Media Co., Ltd. and the artists Mr. Lang Lang and Ms. Gina Alice.
From the announcement of endorsements to the announcement of the cancellation of endorsements, in just one day, the "imprecision" in it also caused investor dissatisfaction: such a child's play.
However, the author found today that the above two artists suddenly appeared in the promotion of Langsha's "Qixi" event.
However, according to Juchao Information Network, Langsha did not disclose the announcement of resuming relevant endorsements except for the previous announcement to cancel the endorsement of the two artists.
However, the author found that the public account "Langsha Group" was officially announced on March 3 this year: Lang Lang's wife Gina became the global spokesperson of Langsha. In stark contrast to the simultaneous signing of two people at the beginning of January this year (and then canceled), how much does it cost to advertise before and after? What is the intention of this move? Why was the relevant disclosure not made in the form of announcement disclosure on the Shanghai Stock Exchange and Juchao Information Network? It is worth paying attention to.
In addition, can this wave of new endorsements trigger the heating up of the underwear sector of Langsha shares, and can the revenue side improve this year? It deserves market attention.
(Image source: Juchao Information Network, Jingdong Mall), Guangdong Municipal Supervision Bureau, etc.)
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