Home Textile Giant To Support Franchisees Due To Slower Growth

Recently, three domestic companies

Listed companies such as Luo Lai home textiles (002293), fuanna (002327) and Meng Jie home textiles (002397) surrendered their pcripts in the first three quarters of 2012.

In contrast to the substantial growth in the same period in 2011, the growth of operating revenue declined in the first three quarters of this year and the first half of this year, which has become a common problem faced by the three enterprises.

With this slowdown in performance, home textile giants are starting to strengthen support for franchisees to save their performance.

As the main form of income for home textile enterprises, franchise chain is still the main business mode of the three major home textile giants.

With the overall slowdown in revenue growth, home textile enterprises such as Luo Lai home textiles, fuanna and Meng Jie home textiles have taken actions to increase support for franchisees.

For example, Meng Jie's home textile has extended the credit period of some customers, while fuanna has helped franchisees improve their sales ability.

Operating income growth slowed down collectively

As a listed company in the home textile industry, Luo Lai, Meng Jie and fuanna are facing the dilemma of slowing income growth this year.

In October 29, 2012, the home textile industry giant Luo Lai home textile announced the third quarter report in 2012.

The report shows that in the first three quarters of this year, the company achieved a total revenue of 1 billion 848 million yuan, an increase of 13.09% over the previous year.

This looks like a good performance compared with the performance of Roley home textiles in the same period last year.

Statistics show that the total sales income of 1 billion 634 million yuan in the first three quarters of 2011 was 42.62%.

As well as the home textile enterprises of Luo Lai home textile company, there is also a decline in the total revenue growth of home textile enterprises, as well as Meng Jie home textiles.

Meng Jie home textile 2011 three quarterly report shows that the company in the first three quarters of 2011 achieved total revenue of 811 million yuan, an increase of 63.86% over the same period last year.

In the first three quarters of 2012, the company's performance was abrupt.

In the first three quarters of this year, Meng Jie home textile realized total business income of 806 million yuan, an increase of -0.6% compared to the same period.

As another listed company in the home textile industry, fuanna is also facing a slowdown in revenue growth this year.

In 2011, the three quarterly report shows that the company achieved a total revenue of 945 million yuan, an increase of 35.34% over the previous year.

In the first three quarters of 2012, the total revenue of fuanna was 1 billion 192 million yuan, an increase of 26.21% over the same period.

Referring to the reasons for the slow growth of business revenue this year, the domestic market economy showed a downward trend in 2012, and the consumer goods market also showed a downturn. In the first half of this year, the total retail sales of consumer goods decreased.

The reason is that Luo Lai home textile is not enough for the severe market environment, and sales revenue growth is slowing down obviously.

In the face of the overall slowdown in the income growth of the three giants of the home textile industry this year, Ding Lei, general manager of China's franchise chain promotion network, the first choice platform for chain industry, said that China's business newspaper (blogger, micro-blog) reporter said that there were two reasons for the growth of the home textile industry. First, the overall economic growth slowed down in 2012; second, the slow pace of the development of the channel, the domestic textile enterprises hovering over the choice of the electricity supplier and the physical store. The progress of the electricity supplier had a great impact on the industry, but taking into account the consumer factors, the entity store is still the support point for the growth of the performance.

Ding Lei said that in the future, the home textile industry should pay more attention to the laying of terminal stores while joining the electricity suppliers. Joining the chain is a major trend and a catalyst for the industry to rekindle its vitality.

Increase support for franchisees

In the face of the slowdown in operating revenue growth, the support strength of home textile listed companies to franchisees is further increased.

As the main business mode of home textile enterprises, franchise chain mode has always been the main source of income for home textile enterprises.

For example, fuanna joined the channel in 2011 revenue of 830 million yuan, accounting for 1 billion 429 million yuan of business income of 58.08%.

In 2010, the operating income of the company's affiliate channels was 664 million yuan, accounting for 64.03% of the total revenue of 1 billion 37 million yuan in the same period.

Meng Jie home textile 2011 joined the channel business income of 837 million yuan, accounting for 1 billion 251 million of the total revenue of that year, the proportion was 66.91%.

In 2010, the operating income of the company's affiliate channels was 591 million yuan, accounting for 69.2% of the total revenue of 854 million yuan in the same period.

Faced with the slowdown in operating revenue growth this year, the home textile listed companies

The support efforts were further intensified.

Meng Jie home textile 2012 semi annual report shows that the end balance of accounts receivable in the first half of 2012 was 168 million yuan, an increase of 38.1% compared with the 121 million yuan receivables balance at the beginning of the year.

The main reason for the sharp increase in the final balance of accounts receivable in the first half of this year is that the main reason is the extension of the credit period of some customers, resulting in an increase in the balance at the end of the year.

For the above measures taken by Meng Jie home textiles, Ding Lei said that the main business mode of Meng Jie home textile is franchising mode, so the extended period of credit extended by some customers is mainly to extend the credit period for franchisees.

In this year's overall downturn of the home textile industry, the inventory pressure of franchisees is greater. The company's measures to extend the credit period of its main customers are mainly to alleviate the financial pressure of franchisees, which is a greater support policy for franchisees.

At the same time, it also helps the company to establish a good image among franchisees and enhance the sense of identity of franchisees.

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In the face of pressure from franchisees, Fu also took the initiative to increase support for franchisees.

"The purpose of the company to support the franchiser is to help it improve its product sales capacity, one of which is to serve as a commodity adjustment platform among the franchisees."

Hu Zhenchao, Secretary of fuanna board, told our reporter that the sales of different products produced by the company were different in different franchisees, as a product sold better in a city, but the sales situation in another city was not very satisfactory.

In this case, according to the information returned by the franchisee, Fuan can invite the same franchisee with better sales and undesirable franchisees, and coordinate the sale of a bad distributor with the same commodity to a better sales shop. This will help improve the sales rate of the product, increase the income of the franchisee, and strengthen the communication between franchisees.

Hu Zhenchao further pointed out to reporters that in addition to the above measures, the company will also strengthen training for franchisees, such as providing training for franchisees, guiding the decoration of franchised stores, providing marketing strategies for the franchisees, digesting inventory and allowing franchisees to enjoy the advertising resources of the company. These measures can fundamentally help franchisees enhance their sales ability and enhance their competitiveness in their region.

The support strategy adopted by the franchisees is that in Ding Lei's view, the enterprises have done enough work in the franchisees, and the establishment of a systematic support system should be the focus of the future.

At the same time, when recruiting new franchisees, how to choose better franchisees is also the main way to get rid of the decline in performance growth.