Text | AI Finance and Economics Society Zhao Yiran
Editor | Mingxuan
This article was originally produced by AI Finance and Economics. Please do not reprint it on any channel or platform without permission. Violators will be prosecuted.
After nine years of establishment, it was not until it was "sold off" that many people discovered that there were still Hanfu in "men's wardrobes".
On September 16, Heilan House, which is positioned as a popular menswear brand, announced that it planned to transfer 100% of its equity in the Hanfu brand Aijutu, with a total target equity transfer price of 382 million yuan.
Heilan Home attributed the motivation for the sale to operating performance not meeting expectations.
According to past data, from 2015 to 2018, the number of Aijutu stores quadrupled, with 975 new stores. Operating income also increased from 305 million yuan to 1.698 billion yuan, exceeding 1.5 billion yuan.
Although the progress is amazingly fast, Aijutu’s single-store revenue has been declining year by year, and its gross profit margin is only half of that of Heilan Home. After entering 2019, in just 8 months, Aijutu went from a profit of approximately 327 million yuan in 2018 to a loss of 25.3638 million yuan from January to August 2019. Liabilities also increased from 432 million yuan as of December 31, 2018 to 712 million yuan as of August 31, 2019, an increase of 279 million yuan.
From men's clothing to Hanfu, they may seem similar, but for Heilan House, which suffers from excessive inventory and insufficient R&D investment, it is not easy to replicate its glory.
Running to open a store, but being held back by inventory and research and development
Aijutu was founded in 2010. It was originally a clothing brand focusing on fashionable and casual styles. In 2013, it was upgraded to specialize in Hanfu, mainly targeting women aged 20 to 39. According to information on the official website, Aijutu stores are mainly located in third- and fourth-tier cities, with prices ranging from 60 yuan to 600 yuan.
Heilan Home had high expectations for the development of Aijutu, saying that it has "very good development momentum" and is "the company's key development brand". In July 2018, HeilanThe company issued 3 billion yuan of convertible corporate bonds, of which 470 million yuan was used to build the Aijutu R&D office base and 1.093 billion yuan was used to build the Aijutu warehouse. The total investment is approximately 1.563 billion yuan.
Aijutu has indeed experienced rapid expansion similar to that of Hailan House.
According to financial report data, from 2015 to 2018, the number of Aiju Rabbit stores increased from 306 to 1,281; operating income increased from 305 million yuan to 1.698 billion yuan, and net profit was 327 million yuan. According to the plan, it is expected to be by 2020. Aijutu has about 2,000 stores, doubling the number of stores compared with the end of 2017; its main business revenue reached 2.25 billion yuan, about 2.5 times that of 2017.
However, although it has a store-opening strategy similar to that of Heilan Home, Aijutu's single-store revenue has been declining year by year, and its gross profit margin is not as good as that of Heilan Home. The profit pressure is obviously greater.
According to the financial report, from 2016 to 2018, Aijutu’s average single store operating income was 1.3063 million yuan, 1.1885 million yuan and 856.9 million yuan. In 2018, the gross profit margin of "Aiju Rabbit" was 23.93%, a year-on-year decrease of 3.86%. In the same year, Heilan Home's gross profit margin was 43.4%, an increase of 3.06%.
According to analysis by industry insiders, compared with men’s clothing, Hanfu is more competitive, has a shorter elimination cycle, and has higher requirements for the supply chain and research and development. For Heilan Home, which adopts the franchise system and light asset model, excessive inventory and insufficient investment in brand design have always been hidden concerns for its development.
The annual report shows that in 2018, Heilan House’s total R&D investment accounted for 0.26% of operating income; the ending inventory was approximately 9.4 billion yuan, an increase of 11.55%, and the inventory turnover days were 286 days.
It is difficult to change the market of masculine clothing
In addition to internal worries, there are also external ones.
When it comes to the clothing industry, a recent data that has caused widespread discussion is that "clothing sales decreased by 17.85 billion pieces a year." People seem to be buying fewer clothes. But at the same time, serveThe unit price of clothing has increased significantly, the overall expenditure on clothing consumption is still increasing, and people seem to be better dressed and more picky.
Facing a more fierce competitive environment, Heilan House plans to divest the business segments that it had high hopes for but does not seem to match. The 1.434 billion yuan raised funds for the R&D office base and warehouse construction project were changed to permanent supplementary working capital.
As for Aijutu, it is worth noting that Zhao Fangwei, general manager of Aijutu, who obtained 66% of the equity of Aijutu, applied to resign as a director of Hailan Home on the 15th and was approved. According to Tianyancha’s information, Zhao Fangwei has a college degree. He once worked as a fabric salesperson at Jiangyin No. 3 Worsted Woolen Mill, fabric salesperson at Sanmao Group Company, etc. He is currently the general manager, legal person, and executive director of Jiangyin Aijutu Clothing Co., Ltd. It can be said that it has developed and grown together with Heilan Home. It has been responsible for the business of Aijutu before, and may lead Aijutu to develop independently in the future.
When looking beyond Heilan House, not only men's clothing brands are interested in the Hanfu business, but Hanfu companies also hope to cross-border men's clothing.
In September 2018, La Chapelle told the media that after three years of market introduction, from 2016 to 2017, its men's clothing brand POTE has continued to grow by about 30%-50%. Therefore, "from the perspective of the group's multi-brand market strategy, men's clothing will be an important driving force for future development. According to the company's plan, the scale of men's clothing can grow exponentially within three years."
However, according to the latest annual report, La Chapelle said that it has established a brand differentiation development direction with major Hanfu brands as the core, shrinking the business development scale of men's clothing brands such as POTE, and reducing inefficient investment of resources.
It seems that the clothing industry’s exploration of men’s and women’s matching is still on the way.
