Rongmei shares (301088. SZ), performance has stalled. In 2023, Rongmei Co., Ltd. will achieve operating income of 767 million yuan, a year-on-year decrease of 19.13%, net profit attributable to the parent company of 84.7194 million yuan, a year-on-year decrease of 49.28%, and non-net profit of 48.4488 million yuan, a year-on-year decrease of 61.45%. Compared with the financial reports of previous years, the above three indicators of Rongmei shares have all recorded the largest decline since listing, and the non-net profit has fallen for three consecutive years.
Behind this, in addition to the objective reasons for the downturn in the clothing and apparel consumer market, Rongmei shares, which lock in the "cost-effective" route, at the expense of profits.
With the traditional clothing companies scrambling to lay out online channels and the rise of new online clothing brands, Rongmei shares, which were the first to eat online brand dividends, had to face the embarrassment of revenue stagnation, and online sales revenue fell by nearly two percent year-on-year last year.
In the secondary market, the share price of Rongmei shares has not been affected by the negative performance for the time being. On April 24, it closed up 2.48% at 11.14 yuan. However, this price is the bottom range after the listing.
After listing, the non-net profit continued to decline
Rongmei Co., Ltd. was listed on the A-share market in October 2021, and the company's main business is based on the Internet platform, relying on the "Rongmei RUMERE" brand, engaged in the planning and design, supply chain management and sales of clothing and other products, the main products include professional and casual style women's clothing, men's clothing, jewelry, home textiles, etc.
In 2023, in the face of severe and complex international and domestic macroeconomic situations, the apparel market will not see a significant recovery, and the shrinking trend of operating income and total profit will continue. According to the data released by the National Bureau of Statistics, in 2023, the total profit of industrial enterprises above designated size in the country will be 7,685.83 billion yuan, a decrease of 2.3% over the previous year, of which the operating income of the textile, garment and apparel industry will be 1,210.47 billion yuan, a year-on-year decrease of 5.4%, the total profit will be 61.38 billion yuan, a year-on-year decrease of 3.4%, and the profit margin of operating income will be 5.07%. From the perspective of the output of major clothing categories, in 2023, the output of woven garments by enterprises above designated size in the garment industry will be 6.556 billion pieces, a year-on-year decrease of 15.01%, and the output of knitted garments will be 12.833 billion pieces, a year-on-year decrease of 5.08%, a decrease of 9.86 and 2.84 percentage points deeper than the same period in 2022, respectively.
In the context of this industry, Rongmei's operating income and net profit will both decline by double digits in 2023. In this regard, Rongmei shares said that it was mainly caused by the following five factors: (1) the decline in the clothing and apparel consumer market, according to the announcement analysis, the turnover of clothing and apparel on the Ali platform declined year-on-year, and the company's business environment was sluggish; (2) the fourth quarter cooled down late but the cooling was larger, and the stock of products in autumn and winter was relatively insufficient, which made the sales fail to meet expectations; (3) the competition between retail platforms and sellers intensified, which had a negative impact on the operating profit margin; (4) the average inventory age has increased, and based on the principle of prudence, the inventory decline loss accrued according to the inventory age structure has also increased accordingly;(5) in the middle of 2023In order to promote the implementation of the fund-raising projects "Design and R&D Center Construction Project" and "Exhibition Center Construction Project" and the company's daily operation needs, the company's subsidiaries purchased office buildings, resulting in a significant increase in depreciation expenses compared with the same period last year.
Titanium media APP noticed that before and after the listing, the operation of Rongmei shares formed a huge contrast. From 2017 to 2020, the attributable net profit and non-net profit of Rongmei shares showed a trend of getting better year by year, and the non-net profit deducted in 2020 reached a high point of 154 million yuan. After listing, from 2021 to 2023, the non-net profit of Rongmei shares decreased by 2.57%, 16.39%, and 61.45% year-on-year respectively, and the decline was larger year by year. Last year's non-net profit has regressed to about 70% of the level in 2017.
This pressure has continued into the first quarter of 2024. In the first quarter of this year, the operating income of Rongmei Co., Ltd. decreased by 12.86% year-on-year to 180 million yuan, and the attributable net profit and non-net profit were 25.9996 million yuan and 15.9523 million yuan, respectively, down 28.46% and 38.22%.
Sacrificing profits for "value for money".
Since its establishment, Rongmei has been deeply involved in the Taobao platform for many years, mainly through the Taobao seller platform for the online sales of its own women's clothing brand "Rongmei RUMERE" related products, and has opened three online stores on the Taobao platform ("Rongmei high-end women's clothing A-share listed company", "Rongmere flagship store", "Rumere flagship store").
However, Rongmei shares, which was the first to eat online brand dividends, have faced the embarrassment of stagnation in revenue. According to the data, in 2023, the online sales revenue of Rongmei shares will decrease by 19.13% year-on-year.
In the eyes of industry insiders, with the rise of traditional clothing companies competing for online channels and new online clothing brands, the competition in the clothing industry is extremely fierce, especially women's clothing. Rongmere flagship store and Rumere flagship store even sell some of the same goods, which makes it difficult for consumers to have a complete and clear style impression of a clothing brand.
Apparel is the main income business of Rongmei Co., Ltd., and its products are subdivided into several categories, such as tops, coats, pants, skirts, and furs. The revenue of the above-mentioned major sub-products will all decline year-on-year in 2023, among which fur will decline the most, reaching 38.95%. The income of tops and coats declined by 25.63% and 28.63% respectively. The revenue from tops and outerwear accounts for more than half of the overall revenue.
Jewelry is a new product line opened by Rongmei in 2023, and the product contributed 36.5596 million yuan in revenue last year, accounting for 4.76% of revenue.
However, due to the year-on-year contraction of gross profit from sales, coupled with the expansion of new jewelry business, and the long stocking cycle of raw pearls, the net cash flow generated by operating activities of Rongmei in 2023 decreased from 125 million yuan in 2022 to -7.3442 million yuan.
According to the report, Guo Jian, founder and chairman of Rongmei, said on his Weibo account that the company has lowered its gross profit margin and improved its cost performance. He also said that Rongmei has stocked up a lot of high-end raw materials through suppliers to ensure quality and price, for example, Rongmei has made an advance payment of more than 30 million yuan to Consini to lock 15.5 micron cashmere at the price level in 2021.
This is also bound to sacrifice the company's profits. The gross profit margin of Rongmei shares has decreased from 45.56% in 2021 to 39.18% in 2023. And the peer Peacebird (603877. SH) gross margin was around 54% last year.
Industry insiders believe that the cost performance of clothing products is not determined by gross profit margin and raw material quality alone, and design and production are also factors that need to be comprehensively considered.
In addition, Rongmei shares, which are facing a growth ceiling in a single channel, have begun to develop offline. Last year, Rongmei Co., Ltd. has invested 280 million yuan to purchase Building 4 of Shanghai Wanyuan City A Street Commercial Office Project to promote the construction of "Design and Development Center Project" and "Exhibition Center Construction Project", and the company's first image display store will be set up here. It remains to be seen whether the sluggish performance of Rongmei shares can be used to turn around. (This article was first published in Titanium Media APP, author|Liu Fengru)