On October 27, Hongdou Shares (600400. SH) released the third quarter report said that in the first three quarters of 2021, the operating income was 1.619 billion yuan, of which the operating income in the third quarter was 587 million yuan, an increase of 23.24% year-on-year (of which the main garment business in July and September achieved operating income of 485 million yuan, an increase of 57.65% year-on-year). Although the economic growth rate in the third quarter was affected by the epidemic, flood conditions and the increase in the base and other factors, the terminal retail sales were lower than expected, and the main apparel industry of Hongdou Co., Ltd. showed strong resilience and vitality in the third quarter.
For the revenue and net profit in the first three quarters, Hongdou shares disclosed in the announcement, "The company achieved operating income of 1.619 billion yuan, after deducting the impact of 390 million yuan of epidemic prevention materials, an increase of 23.99% year-on-year." Compared with the same period last year, the decrease in net profit was mainly due to the impact of the epidemic and the flood situation in Henan, the increase in the company's consulting expenses and R&D expenses in the early stage of high-end transformation and upgrading, and the decrease in epidemic prevention materials. "This shows that the current red bean shares in the process of transformation and upgrading, the benefit impact is staged, the company's overall clothing main business has more potential, the future with the rapid advancement of high-end transformation is expected to usher in better growth."
The main business of clothing has excellent quality, and the channel transformation has begun to show results. In the third quarter of clothing consumption by the epidemic, flooding, warm weather and other external factors affected by the industry fluctuations, 1-9 months of Hongdou shares
The main garment business achieved operating income of 1.412 billion yuan, an increase of 20.22% year-on-year (of which the main garment business achieved operating income of 485 million yuan from July to September, an increase of 57.65% year-on-year).
The operating income and gross profit margin of its Hongdou men's wear brand also increased in the first three quarters, 5.94% and 6.68% respectively. Under the current situation of reducing the number of stores, the company's brand channel transformation strategic layout is beginning to show results, and the profitability of brand terminals is gradually improving. The financial report also mentioned that the company signed a "strategic consulting service agreement" with Shanghai Junzhi Enterprise Management Co., Ltd. and hired it to provide strategic consulting services according to the company's development needs.
Previously, Hongdou co., Ltd. said to the outside world on channel transformation: "The company is adjusting the store development strategy in a timely manner, focusing on the transformation of high-end strategy, increasing the management and empowerment of franchisees, actively adjusting the layout of direct and franchised associate stores, and strengthening the empowerment of terminal operations." Grasping the survival of the fittest in low-end stores on the one hand, and grasping the layout of high-end stores on the other hand, the future store location will be dominated by shopping malls (shopping malls) and core business districts. ”
It is not difficult to see that the act of joining the direct operation seems to be the top priority of the adjustment of Hongdou Men's Wear this year. According to the disclosure of the third quarter, from the beginning of the year to the end of the reporting period, the company focused on the improvement of store profitability and the improvement of operating quality. There are 12 newly opened direct-operated stores and 24 franchised stores; 341 franchised stores have been transferred to direct-operated stores. As at the end of the reporting period, the number of physical stores of the Company was 1,001.
Regarding this move, it is a strong signal of its brand building. For important stores, the direct operation mode is adopted to enhance the control of the terminal, which is more conducive to the development of its later high-end strategic transformation, especially in the laying of store image and high-end products, which can shorten the transformation pain period with faster execution.
With reference to the situation in the industry, brand-type clothing companies are currently pursuing high-quality construction of channels for offline channels, rather than blind expansion of low efficiency. This year, Bosideng has adopted a "multi-level structural layout" channel construction, proposing to "lock in China's key cities, mainly directly operated stores, to better build the brand's cognitive high point in the minds of consumers; better allow franchisees to undertake the market in lower-tier cities." In addition, in the future, we will pay more attention to channel quality, choose the best business district, and do the best product presentation, while the number of channels is relatively secondary to the quality of a single store, and even a certain reduction. ”
The Mini Program business has created an industry benchmark, and the continuous growth of the online business can be expected. Reading the third quarterly report of Hongdou shares, the rapid growth of online business is also eye-catching, and the growth performance is better than the industry growth rate. From January to September, the national online retail sales were 9,187.1 billion yuan, an increase of 18.5% year-on-year. Among them, among the online retail sales of physical goods, eating, wearing and using goods increased by 20.2%, 15.6% and 14.5% respectively. The online operating income of Hongdou Co., Ltd. reached 305 million yuan, an increase of 55.64%, and the gross profit margin increased by 12.61% to 39.02%.
According to media reports, Hongdou Men's Wear recently won the Tencent Mini Program 'Doubling Action Apparel Industry Benchmarking Award', following the "Best Growth Award" in 2020. With the means of "public number + mini program + video number", it makes good use of the connector of WeChat users, strengthens the same frequency resonance between online and offline, and establishes an industry position in the apparel category with rapid development.
At present, the apparel industry has a variety of brands and products, Hongdou men's wear takes customer experience as the core and comfort as the driving force, and cultivates smart retail as a new growth engine. It is learned that Hongdou men's clothing is currently focusing not only on the transformation of offline channels, but also on online channels. On the one hand, the company further sorts out and plans the main flagship stores of traditional e-commerce, combines the precipitation of member data, accurately targets the target population, optimizes and controls the cost of delivery; on the other hand, strengthens the new marketing incremental business of live broadcasting such as Douyin and Kuaishou, and the stores cooperate with the main product dissemination, promote according to the location and population of each store, and effectively enhance online sales while improving brand exposure.
With the arrival of the peak sales season in the fourth quarter, industry insiders have analyzed that the industry expects that the "cold winter" with a high probability of arrival will significantly boost consumer demand for winter clothing. The gradual transformation of offline channels, the continuous growth of online business can be expected, the operating fundamentals of Hongdou shares are stable, and the retail data of the garment industry in the fourth quarter is expected to improve significantly and the promotion of e-commerce activities such as Double Eleven, consumer confidence will gradually pick up.