Sima Clothing: Poor Performance Does Not Hinder Its Brand Value

With Meibang Clothes & Accessories , Souyute, Zhejiang Semiannual report of Sima Garments Co., Ltd. in 2012 seems to be less prominent. During the reporting period, the operating revenue of Sima Garments in the first half of the year decreased by 16.54% year-on-year to 2.511 billion yuan; Operating profit decreased by 43.41% year-on-year to 338 million yuan; The net profit attributable to the parent company decreased by 43.22% year-on-year to 248 million yuan, corresponding to 0.37 yuan of earnings per share.

The second quarter saw a further decline in revenue, poor performance in casual wear, and negative growth in children's clothing. along with clothing The sales terminal situation continued to be sluggish, and the youth leisure clothing industry was increasingly affected by the dual impact of foreign brands and e-commerce. The company's operating income in the second quarter fell 17.3% year on year, increasing the decline compared with the first quarter. In the first half of the year, the company's main brand Senma's revenue dropped by 19.9% year on year, while the company's children's wear brand Barabala's performance was relatively stable, but its revenue also fell by 4.0% year on year, increasing its proportion by 3.7 percentage points to 28.9%.

For the decline in performance, Sima Garments believes that the main reasons are: affected by the macro-economy, clothing demand growth is slow, coupled with the rapid development of international clothing brands and new domestic clothing brands, market competition intensifies, and the company's operating income is lower than expected; With the increase of the company's inventory, the corresponding provision for inventory depreciation increased, and the terminal channel cost and labor cost increased, which increased the company's operating costs.

The company has strengthened the construction of the marketing network, especially the construction of the direct sales stores in the core business district, and has invested more funds in product research and development, marketing network and industrial park construction, brand promotion, etc. The efficiency of the above investment has not been effectively reflected in the short term, leading to the increase of the company's operating expenses and the decline of short-term profits.

Galaxy Securities believes that the increase in the ratio of sales and administrative expenses and asset impairment losses is an important reason for the decline in net profit far greater than the decline in revenue. In the first half of this year, the sales expense rate and the management expense rate were 19.0% and 4.3% respectively, and 12.2% and 2.8% respectively in the same period last year. Asset impairment losses increased by 197.3% year on year.

Although the financial revenue increased from 15.06 million yuan last year to 77.39 million yuan in the first half of this year, the decline in net profit was still far greater than the revenue. The increase in sales expenses is due to the continuous increase in the construction of marketing networks, especially in core cities, and the investment in product research and development, marketing network and industrial park construction, brand promotion, etc.

CICC said that the problem of the inventory backlog of Sima clothing was aggravated. In the first half of the year, terminal sales were in poor condition and channel inventory pressure was high, which made the growth rate of shipment slower than that of orders. The company's inventory increased by 27.9% compared with the beginning of the period, and the number of days of inventory turnover increased by 62 days on a year-on-year basis. The increase in inventory led to the provision for inventory falling price of up to 100 million yuan in the first half of the year.

Development trend: inventory clearing becomes Sima Clothing First, discount stores, factory stores, e-commerce and other inventory clearing channels are fully launched. Gross profit margin will be under pressure in the next 1-2 years, and revenue growth may pick up in the fourth quarter. Product research and development, refined terminal management and supply chain improvement are relatively long-term processes.

In the second half of the year, Sima Garments will take measures to actively respond to market challenges according to the changes in the market environment: optimize the organizational structure, streamline management processes, reasonably control expenses and reduce operating costs; Open discount stores and factory stores, increase e-commerce sales, and speed up the processing of the company's inventory products.

Strengthen brand publicity and product research and development, and enrich product styles and categories according to the changing market demand to improve product competitiveness; In addition, it will also increase support for agents, strengthen cooperation with agents, carry out refined training for terminal sales personnel, improve the company's terminal retail ability, promote efficiency and improve the company's sales performance.

Although the performance report of Sima Clothing in the first half of this year was unsatisfactory, it did not hinder its own brand value. It is understood that in mid August, Hurun Research Institute released the 2012 Hurun Brand List in Shanghai. As a Wenzhou brand, "Sima" ranked 65th with a brand value of 6.2 billion yuan, and ranked 20th in the "Most Valuable Private Brand List in China", becoming the first value brand in Wenzhou.

This list is based on the 100 most valuable brands in China, of which 39 private brands are among the 100 most valuable brands in China. In addition, the "2012 Clothing brand In the value ranking list, "Sima" ranked second.