American Apparel: Adjusting MC Brand Positioning Management Is Becoming More Sophisticated.

Investment advice:

Forecast Ltd's EPS in 2012-2014 years is 1 yuan, 1.16 yuan and 1.40 yuan respectively, corresponding to PE are 14.0X, 12.0X and 10.0X respectively.

Company location

The space is very broad. Under the environment of economic downhill consumption, facing the international fast fashion brand impact, although the performance growth rate has slowed down, but by repositioning its brand and fine management to improve the terminal sales ability, the company adjusts its organizational structure and management mode to improve its internal governance problems. If the economy bottoms up, the company will have larger adjustment space in the future.

We are optimistic about the long-term development of the company and maintain the "recommended" rating.

Main points:

Readjustment

To the fine, centralized development: the company can not achieve the rapid turnover of ZARA, from last year, MC has reorganized and changed its own brand positioning, redefined the core values and brand spirit of the MC brand, and the brand positioning to fine and centralized development.

As the MC brand gradually finds its clear positioning and market development space, the problems that the company will encounter will be cyclical rather than trend oriented. By constantly adjusting itself and changing specific ways of doing things, the MC brand will still have room for improvement in the future.

MC implements the product manager responsibility system, and the proportion of short term products continues to improve. The company has implemented the product manager responsibility system since last year, and has divided four series of product lines: Men's wear, women's wear, accessories and children's wear.

Production and retail and other links, forming an independent business cycle, product managers directly docking with suppliers, improve operational efficiency, will also be opened in the next four series.

To accurately meet market demand and solve inventory problems, the company has intensified efforts to develop short term products with rapid response since last year, and the proportion of short term products will continue to increase.

Shopping Mall will become the focus of MC's future opening: the focus of MC's channel development will be ShoppingMall. Now there are about 1200 Shopping Mall in the whole country. If MC four series separate shops, the number of channel terminals will exceed 3000.

The company began to test the water this year to develop MC franchisees, with an annual sales of about 50 million. In 2013, the company will further develop MC's franchise business.

Single quarter results are negative growth, gross margin or room for improvement: as the weather continues to be hot, sales of autumn clothes are not smooth, and the company helps the franchisee to digest inventory, and proposes to control futures sales. The three quarter of the economy has not bottomed out, and the franchisees make up less. The company's three quarter single quarter sales growth is negative.

Starting in October this year, the company began to control the discount of terminal sales. In the future, profit and inventory will be used as an assessment index to improve gross margin and brand image, and promote profitable business.

Risk factors: economic recovery is lower than expected, terminal inventory digestion is lower than expected, large non lifting risk.