Edit | Yuer Lake
出品 | 潮起网「于见专栏」
It is said that women and children make the best money, so the children's clothing track targeting the children's market is also a battleground for clothing brands. As a children's clothing brand under the A-share listed company Semir Apparel, Balabala is also regarded as the "pearl in the palm" of Semir Apparel because the company's revenue contributes nearly 7% of its revenue.
However, with the fading of the demographic dividend, the children's clothing market, which was full of growth potential in the past, has gradually encountered a growth bottleneck. For Balabala, the inflection point of the decline came in 2022.
In 2022, Semir Apparel handed over the worst profit report card since its listing, with a net profit of only 637 million yuan, compared with the net profit of more than 1.2 billion yuan in 2011, the first year of listing, and almost halved. Even according to the latest data in the third quarter of 2023, the net profit attributable to the parent of 832 million is far from that of more than 10 years ago.
So, in addition to the impact of factors such as the dividend of the children's clothing market is fading, what makes Balabala return to the pre-liberation period? We may be able to find the answer by tracing back to the roots of Semir clothing and Balabala in recent years.
The performance carries the "beam" of Semer, but the growth is weak
In fact, in the early years, Balabala has been in the children's clothing industry with high revenue and high growth, which is a mythical existence. In terms of market share, even now, in the entire domestic children's clothing market, Balabala is also the first in the industry.
In 2018, Balabala's revenue was 8.825 billion yuan, a year-on-year increase of nearly 40%, which can be said to be far behind its peers. However, due to the fragmentation of the children's clothing market, although the market share of balabala children's clothing ranks high, the absolute value is less than 10%.
According to the data of Ruiou Consulting, Balabala children's clothing accounts for 7.1% of the domestic children's wear market share, followed by Anta children's clothing with a market share of 1.6%. It can be seen that although Balabala's market share is far ahead compared with the second place in the industry, it is still somewhat insignificant compared to the overall market of children's clothing.
It is worth mentioning that in the performance market of Semir clothing, Balabala has been "carrying the beam", and the proportion of revenue contribution since this year has been rising year by year. According to public data, from 2017 to 2019, the revenue of children's clothing business accounted for 52.56%, 56.14% and 65.49% of Semir clothing's revenue respectively. In 2020, the proportion will reach 66.64%, and the revenue will also exceed 10 billion yuan.
However, the good times were short-lived. In 2022, after a lapse of 2 years, Semir Clothing behind Balabala will also be "hit" to the bottom due to the impact of factors such as the "black swan event" of the epidemic and the rise in raw materials.
According to the announcement, in 2022, the revenue of Semir Apparel will decrease by 13.54% year-on-year, and the net profit attributable to the parent company will decrease by 57.15% year-on-year. At that time, reducing the number of stores and clearing inventory at a discount under the pressure of high inventory became the norm for Semir Apparel. The financial report data also shows that the revenue of Semir's casual clothing business was 4.282 billion yuan, a year-on-year decrease of 14.83%, accounting for 32.12% of the total revenue, while the revenue of children's clothing was 8.933 billion yuan, a year-on-year decrease of 13.04%, accounting for 67.01% of the revenue.
After the epidemic, the overall performance of Semir clothing has picked up. However, the performance growth rate of the children's clothing sector where Balabala is located has long been much worse than before. Although the specific data of the children's clothing business was not disclosed in the third quarterly report of Semir Apparel, the data of the Soochow Securities Research Report showed that the children's clothing revenue of Semir Apparel in the first three quarters of 2023 was 6.049 billion yuan, an increase of 2.8% year-on-year, while the children's clothing revenue disclosed in its 2023 interim report was 3.825 billion yuan, and the revenue of the children's clothing business in the third quarter was 2.224 billion yuan.
You must know that the scale of revenue is almost unchanged compared with 2018 five years ago. In terms of growth rate, the data at that time was a year-on-year increase of 39.6%. Compared with the overall growth rate of less than 3% in the first three quarters, there is also a huge difference. Compared with historical data, it can be seen that the compound growth of Balabala's revenue scale is very slow, and even the goal of 10 billion yuan over the years is still difficult to stabilize.
It is worth noting that at the beginning of 2023, Qiu Jianqiang will also officially succeed his 72-year-old father Qiu Guanghe as chairman. Therefore, in the face of the weak overall performance growth of Semir Apparel and the failure to achieve the goal of 10 billion yuan in Balabala, Qiu Jianqiang will also be "under great pressure".
The second generation inherited, how much imagination does Balabala still have?
A new broom sweeps clean. At the beginning of April 2023, Qiu Jianqiang, who had just taken office, also had to go out in person to solve the strategic work of de-stocking and online transformation for the company. The most important thing is that in 2022, due to poor traffic, the inventory pressure of Semir increased sharply, and by the end of 2022, the company's inventory scale reached 3.847 billion yuan, accounting for 21.06% of the total assets.
At that time, Semir Apparel held a performance conference, for the clothing inventory issue, Semir Apparel Director and General Manager Xu Bo replied at the press conference, "In the future, the company will actively explore and promote the spread of brand value through various channels, use new retail tools such as membership + community + live broadcast to improve store operation and inventory turnover efficiency, and control and maintain a reasonable inventory scale." ”
Although the strategy of Balabala in front of him is very obvious. However, for the volatile market, if these strategies want to land, I am afraid that it will not be wishful thinking, so there are also various uncertain factors that affect its ability to achieve the goal of 10 billion again.
On the one hand, from the perspective of the incremental market of the industry, today's children's clothing market is no longer the era when you could "lie and earn" as long as you opened a store. In particular, in the past two years, the total population of the mainland has experienced negative growth. At the same time, the number of newborn births has fallen below 10 million one after another, indicating that the growth of the children's clothing market has approached the ceiling.
When the demographic dividend fades, it will obviously become more difficult for Balabala, who has already experienced weak growth, to reverse the trend and change the slowdown in growth in the past.
On the other hand, from the point of view of industry competition. At present, while the overall competition in the apparel industry is becoming more and more fierce, the competition in vertical tracks such as children's clothing is also intensifying. In particular, with the increasing maturity of Internet e-commerce and live broadcast e-commerce, the advantages of offline channels in the past are being weakened, so the industry pattern will also change.
In fact, the powerful players at the head of the industry are not only balabala. For example, according to Douyin's "2023 Outdoor Children's Wear Market Insight Report", from January to November 2023, the top five brands in terms of sales of outdoor children's clothing on Douyin were Anta Kids, Xtep Kids, Balabala, moodytiger and Hush Puppies, with platform sales of 138 million yuan, 98.1 million yuan, 86.63 million yuan, 81.68 million yuan and 72.58 million yuan respectively.
It can be seen that on the live broadcast e-commerce platform, Balabala's sales ability may not be as good as that of sports brands such as Anta and Xtep.
In addition, due to factors such as historical inventory, the profitability of Semir Apparel and Balabala is facing challenges. Taking the first three quarters of 2023 as an example, the company achieved operating income of 8.898 billion yuan during the reporting period, a decrease of 0.5% over the same period of last year, and net profit attributable to the parent company reached 832 million yuan, an increase of 206.51% over the same period of last year.
It is worth noting that while the revenue of Semir clothing declined slightly, its net profit attributable to the parent company doubled, not because of the signal that the profitability of its products has become stronger, but because of the result of its "thrift".
According to the third quarter report, in the first three quarters of 2023, the total operating cost of Semir Apparel was 7.684 billion yuan, a decrease of 610 million yuan from 8.294 billion yuan in the previous year. Among them, in addition to management expenses and financial expenses, the company's sales expenses and R&D expenses have decreased.
This also means that if Balabala wants to achieve performance growth, there are not many cards to play in his hand, and he needs to further open up sources and reduce expenditures and find another way.
Tens of billions of revenue have become a bottleneck, and high-end brands and going overseas are difficult to become an antidote
It is observed that for clothing brands, breaking 10 billion yuan in a single brand is a milestone goal. However, Balabala has been lingering at the door. For comparison, Heilan House, which calls itself "men's wardrobe", achieved a revenue of 12.3 billion yuan as early as 2014, and can even be called a benchmark enterprise in China's garment enterprises that exceeded 10 billion yuan.
In contrast, although the children's clothing track looks more promising, because of the low market concentration, the goal of 10 billion has become a bottleneck for Balabala. When there are not too many growth paths in front of him, Balabala is also trying to find a way out through high-end brands and brands going overseas.
According to the annual report of Semir Apparel, as of the end of 2020, the company has a total of 4 subsidiaries with the "Balabala" brand, namely Shanghai Balabala Garment Co., Ltd., Beijing Balabala Garment Co., Ltd., Hubei Balabala Garment Co., Ltd., and Changchun Balabala Garment Co., Ltd.
It is understood that in September 2022, Balabala launched the high-end sub-brand Balabala premium incubated internally, aiming to meet consumers' demand for high-end children's clothing products and enhance the brand image.
In fact, this is not the first time that Semir has been interested in high-end products. In terms of products, Semir tried to join hands with Ningbo Zhongzhe Mushang, which owns the high-end men's casual brand "GXG", but the deal was eventually terminated due to overvaluation. Trying to take the mid-to-high-end route is unsuccessful, can Balabala premium, a subdivision of children's clothing brand Balabala, realize the high-end dream of Semir? Obviously, time will still need to be verified.
In addition, Semir Apparel also develops overseas under the dual brands of Balabala and Semir, and they have defined three core strategic cities with radiation effects: Hong Kong, Dubai, Singapore, and core markets: Saudi Arabia, the United Arab Emirates, Indonesia, Vietnam, the Philippines, and Thailand, and implement different brand strategies in different countries and regions. However, at present, its revenue contribution in overseas markets has not yet shown a scale effect, and it is rarely mentioned in the financial report. Therefore, industry insiders speculate that Semir and Balabala may not go very smoothly to the sea.
epilogue
Although Balabala has a place in the children's clothing market after a long period of market cultivation. However, at present, its growth bottleneck has been very obvious, so it is also urgent to find growth space through high-end transformation and aiming at overseas markets.
However, as a representative question raised by industry insiders, why is it difficult to make a few children's clothing brands in an industry with hundreds of thousands of children's clothing companies and a large market of 250 million children. And why, although Balabala is already the industry leader, its market share is less than one-tenth of the industry, and it is becoming more and more difficult to explore this data.
Industry insiders believe that this is a systemic issue related to the practitioners of the children's clothing industry, children's clothing design, fabrics, supply chain, brand and other perspectives, and it is difficult for domestic enterprises to give standard answers. Although the commercial building of Balabala has already taken shape, and even has advantages in some dimensions that are difficult for other players to have, it is also stumbling on the road of finding answers.
It is expected that Balabala will be able to find its second growth curve on the basis of its existing business as soon as possible through repeated trials.