Intern Zhang Lei and financial reporter Zhao Chong
2024 has been off to a rough start for Peacebird.
Recently, Peacebird released its first-quarter performance report, which showed that in the first quarter of 2024, revenue and net profit both declined, down 12.92% and 27.07% year-on-year, respectively. Less than 40 minutes after the opening of the next day, Peacebird's stock price fell to the limit.
Source: Baidu Stock Connect 2024.04.16 stock price data
The four major brands collectively declined
According to the report, Peacebird's revenue in the first quarter totaled 1.806 billion yuan, a decrease of more than 12 percentage points from 2.073 billion yuan in the previous year. The net profit attributable to shareholders of listed companies was 159 million yuan, down 26.92% from the same period of last year, the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses was 108 million yuan, down 39.22% from the same period of last year, and the net cash flow from operating activities was 8.1689 million yuan, down 94.36% from the same period of last year.
In response to the changes in the deduction of non-net profit and net cash flow, Peacebird explained that the situation was mainly due to the year-on-year decline in operating income and gross sales margin in the current period, resulting in a decrease in gross sales profit and a year-on-year decrease in cash received from the company's sales of goods.
It is understood that there are four main brands under Peacebird, namely PEACEBIRD women's wear, PEACEBIRD men's wear, LEDiN Lecho and Mini Peace children's wear. The quarterly report shows that the revenue of the four major brands collectively declined, among which LEDiN Lecho had the largest decline over the same period last year, as high as 37.50%, and gross profit fell by 9.64 percentage points, while PEACEBIRD women's clothing fell by 12.98% over the same period last year, and gross profit fell by 7.38 percentage points.
Q1 2024 Report
It is worth noting that PEACEBIRD's 2023 annual report shows that the comprehensive revenue of its brands has decreased by 9.43% compared with the previous year, and among the four major brands, only PEACEBIRD men's wear is still strong, rising by 4.16% against the trend. However, the gross profit margin of the four major brands is on an upward trend, and the consolidated gross profit margin has increased by 5.83%. However, PEACEBIRD's menswear efforts were also broken in the first quarter of 2024, and in the end, PEACEBIRD's full-brand revenue and gross profit declined to varying degrees.
He also flew high into the air
Peacebird, which is currently in an embarrassing situation, also had a brilliant story a few years ago.
When reading the financial report of Peacebird, the financial reporter found that in 2020, Peacebird achieved contrarian growth in revenue and profit under the epidemic through IP co-branding, improving the operation quality of directly operated stores, and vigorously expanding franchises. According to the annual report, in 2020 alone, Peacebird launched more than 50 IP co-branded series, using IP to establish connection and emotional resonance with young consumers.
Keen on co-branding and new Peacebird, because of this strategy "fly" to the forefront of the industry. But behind such a model, the huge sales expenses cannot be ignored. In 2020, PEACEBIRD's sales expenses accounted for 34.86% of revenue, reaching 3.272 billion yuan, but R&D expenses in the same year were nearly 116 million yuan. According to media reports, from June to August of that year, the average monthly launch of the Peacebird Tmall flagship store exceeded 1,740 new models, and the average value of SKUs on sale exceeded 6,000. In the following year, selling expenses continued to increase by 20.65% to 3.949 billion yuan.
Source: 2020 financial report
Jiang Han, a senior researcher at Pangu Think Tank, said in an interview with a financial reporter, "The rapid extravagance strategy requires a lot of capital investment, and if these investments are not effectively converted into revenue and profits, it will put pressure on the company's financial situation." ”
The rapid development model has brought considerable market response to Peacebird, but the problems that come with it are gradually becoming apparent. On the one hand, Peacebird was accused of plagiarism on Weibo's hot search, and on the one hand, it responded that it could go through legal procedures, and on the other hand, it removed the goods involved. Netizens didn't buy it, and the black material in the past was also picked up one after another. On the other hand, the financial report shows that in 2021, Peacebird's R&D expenses will be 152 million yuan, accounting for only 1.39% of the total revenue, which is also far lower than the 526 million yuan of advertising and publicity expenses that year.
"Too frequent new launches may cause consumers to have a sense of distrust in the brand, perceive the product quality as inconsistent or lack of innovation, and affect the brand image. Jiang Han, a senior researcher at Pangu Think Tank, also said, "Accelerating the launch of new products will indeed increase the risk of plagiarism, and insufficient R&D investment may also lead brands to rely more on external designs or imitate other brand designs, but it should be pointed out that plagiarism is more of a brand management and ethical issue." ”
Close thousands of stores to reduce costs and increase revenue
Later, Peacebird slumped in 2022, with a sharp decline in revenue and net profit. In order to achieve the effect of reducing costs and increasing efficiency, Peacebird decisively pressed the pause button for the radical store opening behavior.
In 2022 and 2023, Peacebird closed 1,483 stores. Correspondingly, the sales expenses in the two years decreased by 19.81% and 11.49% respectively to 3.166 billion yuan and 2.803 billion yuan, but due to the decrease in operating income, it still accounted for 35.97%.
In 2023, although the revenue will be reduced and the profit will be increased, it will also allow Peacebird to rely on the increase in gross profit margin to reverse the negative net profit in 2022.
Source: 2023 financial report
The Q1 2024 report shows that Peacebird continues its strategy to reduce costs. There were 60 net store closures in the quarter, bringing the total number of stores to 3,671, leaving Peacebird's existing stores to only 70% of the peak in 2021.
However, a large number of offline stores have been closed, and the proportion of online channels does not seem to have improved much.
In terms of sales channels, the online revenue in the first quarter of this year was 516 million yuan, a year-on-year decrease of 6.08%, and the operating cost increased by 3.13%, making the gross profit margin decrease by 4.89 percentage points compared with the same period last year. According to statistics, online revenue in the quarter accounted for 28.68% of total revenue. In 2020, this figure exceeded 30%.
Source: 2024 first quarter report
Peacebird said in 2020 that online has gradually become the main gathering place for young people, and the rapid growth of online retail is the company's business focus. But at the moment, this focus does not seem to be being paid much attention.
Jiang Han said that for future development, Peacebird should optimize product strategy, strengthen R&D and innovation, improve product quality and added value, and create more competitive products. Secondly, refine channel management, improve store operation efficiency and service quality, and actively expand online sales channels to enhance brand awareness and sales. Third, strengthen brand building and control costs, enhance consumers' sense of identity and loyalty, and ensure the steady development of the company.