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Weird Seven Wolves: 80 Percent Off Of Their Own Inventory Goods

2013/7/16 17:03:00 68

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the reasons for the preparation of the late sale of large stocks are no longer mentioned in the past two years' annual reports.

We estimate the terminal price according to the cost, agent price and so on. We find that the price of the seven wolves inventory is nearly 22%, which is equivalent to less than 80 percent off.

Compared to P, the price decline rate of stock products at the end of 2012 was 9.33%, far below the level of seven wolves.

However, if we return the expected return of the good bird to return to check its inventory of goods, its fall rate is far higher than that of the seven wolves.

The high rate of good news birds originates from the high gross profit rate. If the gross profit rate is converted to 40%, the adjusted commodity price ratio will be close to that of the seven wolves.

seven wolves did not mention the problem of channel return and the corresponding accounting treatment in the annual report.

However, compared with the wedding birds, the seven wolves should face greater pressure on channel inventory.

In terms of the quality of financial reports, information disclosure and compliance, it is worth affirming that the news birds predict liabilities, while the seven wolves have many unidentified aspects in dealing with them.

we think that the seven wolf's strange stock price drop may be closely related to the channel's "replacement".

the reason for missing is .

in the men's clothing company A shares, the seven wolf's unique position is not only in its brand image and positioning, but also in its recent large amount of inventory depreciation.

over the past three years, the sale of seven wolves was mainly concentrated in inventory items.

In the end of 2012, the book balance of inventory commodities was 680 million yuan, and the inventory depreciation rate was 149 million yuan, and the depreciation rate was 21.92%.

The inventory decline rate of the P wolf wolf rose at the end of 2009, rising from 2% at the beginning of the year to 17.86%.

In the annual report, the loss of assets impairment was 235.99% year-on-year, mainly due to the expansion of the company's direct operation system, the aggravation of price competition in terminal sales, and the net realizable value of the off-season goods at the end of the year was lower than the cost. Therefore, the provision of corresponding inventory prices was more prepared.

At the end of P, the ratio increased to 22.79% at the end of 2010.

The company's annual report repeats similar explanations.

in the next 2011 and 2012 annual reports, the seven wolves no longer mention the specific reasons for the increase in inventory depreciation.

According to the foregoing reasons, if the proportion of company's direct operation continues to increase and the price competition situation of the industry has not improved significantly, then the inventory depreciation ratio of inventory commodities should continue to increase or at least maintain the original level.

according to the 2011 Annual Report of the seven wolves, the company has a total of 3976 terminal channels, including 530 Direct stores, an increase of 36.6% over the same period, and 3446 stores, an increase of 9.85% over the same period.

However, in the case of a larger increase in self run stores, at the end of 2011, the price decline rate of the seven wolves inventory declined or declined from 22.79% at the beginning of the year to 17.61%.

less than 80 percent off sale?

seven wolves at the end of 2012, the depreciation rate of inventory products was 21.92%, high or low?

at the beginning of 2012, a company's Research Report on seven wolves introduced the company's agent level and delivery discount.

Among them, 75% of the revenue of seven wolves is realized through agents. The discount rate of agents is about 59% off from the company directly, and the discount rate of agents is further 50 percent off to the next level franchisees.

seven wolves 2012, < a target= "_blank" href= "http://www.91se91.com/" > clothing < /a > gross margin is 46.57%, considering that sales margin to agents is lower than that of self operated, we estimate by gross margin of 40%.

based on these data (excluding tax factors), assuming that the cost of the seven wolves is 10 yuan, the selling price to the agent is 16.67 yuan [10/ (1-40%)]; assuming that the discount from the company's goods is 60 percent off, the terminal price of the product is 41.67 yuan.

In this case, if the commodity depreciation rate is 22%, the net realized value will be 7.8 yuan [10 x (1-22%)], which is equivalent to less than 80 percent off sales at the end price of 41.67 yuan!

generally speaking, the profits of < a target= "_blank" href= "http://www.91se91.com/" > brand clothing < /a > tend to be concentrated at two ends, that is, the so-called smile curve.

The front end brand design and the back-end channel sales occupy a large part, and the middle is a low profit production link.

According to the foregoing estimation data, only 10 yuan in the terminal retail price of 41.67 yuan is the cost of production, the rest is the brand (seven wolves) and the channel (agents, distributors, franchisees, or seven wolf self shop).

that is to say, in terms of brand clothing, because the cost of production is not high in its selling price, there is a "margin of safety" for its inventory commodities.

Therefore, according to the foregoing estimation, the seven wolves will sell at a retail price of less than eighty percent off and lower than the cost.

peer comparison

let us examine the situation of other listed companies in the same industry, and exclude the new listed companies, and the early morning news birds at the end of 2012, the inventory balance of the inventory commodities is 738 million yuan, and the depreciation price is 69 million yuan, the price fall ratio is 9.33%, far below the level of the seven wolves.

however, according to the discount analysis of the aforesaid net realizable value, taking account of the smiling curve factor of brand clothing, the price depreciation ratio of 9.33% of the commercial goods is also at a higher level.

But unlike the seven wolves, the higher level is more reasonable. First, the birds have earlier retail time, and their stock backlog time will be longer, or even more "over season". Two, there is a channel return situation in these inventory commodities.

in recent years, the sports brands listed in Hong Kong are less than a target= "_blank" href= "http://www.91se91.com/" > dress < /a > companies enter the industry in winter. China's trend and Lining are all due to a one-time buyback channel inventory, and a huge amount of impairment allowance has been prepared.

the annual report of good bird has reflected the factors of inventory repurchase in this channel.

In the "media questioning statement", the news bird said that the company began to optimize its marketing policy as "buyout + a certain proportion of returns" policy in 2010 to enhance the sales enthusiasm of franchisees and improve the flexibility of franchisees.

further, the news bird introduced the specific operation and accounting treatment methods: the company signed a contract with the franchisee, contracted the normal delivery to the franchisee, and allowed a certain proportion of the goods to return after meeting the agreed return conditions.

In accordance with the accounting standards, the company confirms the cost of carrying the proceeds according to the delivery amount of the franchisee, and at the end of the reporting period, sells the sales return conditions that are not yet completed, and conducts the accounting treatment of the expected returns according to the terms stipulated in the terms of the franchise contract. According to the expected amount of the refund, the current income and cost will be reduced, and the estimated liabilities for the corresponding balance will be charged.

After the actual return, the accounts receivable and VAT output tax will be reduced, and the inventory will be increased. The difference will partly reduce the estimated liabilities.

at the end of last three years, the reported debts of the news birds were as high as 119 million yuan, 323 million yuan and 402 million yuan respectively, and the pressure of channel return was obvious.

we can return the expected return of the birds to check their inventory.

That is to say, this part of the estimated debt is regarded as the preparation for the depreciation of stock (the return of gross profit which has been confirmed), and the expected return of the return (actually the corresponding joining Shang Cunhuo) is regarded as the inventory of the company's stock.

Estimates show that in the late three years, the adjusted price ratio of commercial birds was 28.50%, 39.58% and 35.47%% respectively.

, we can see that the rate of fall after adjustment is far higher than that of the seven wolves.

The high proportion of good luck birds originates from its higher gross profit margin, which is expected to be returned to stock. According to the annual report, the gross profit margin of returns in the past three years is as high as 60.16%, 66.99% and 68.20%, respectively, which are higher than the consolidated gross profit margin of the company.

In contrast, the combined gross profit margin of the seven wolves is much lower. If the gross profit margin of the birds is converted to 40%, the adjusted commodity price ratio will be close to that of the seven wolves.

or "replacement" caused by .

seven wolves annual report did not mention the problem of channel return and the corresponding accounting treatment.

But if the seven wolves sell their stock at 80 percent off of the selling price, or the net realizable value of the inventory goods is only 80 percent off of the retail price, then how can it be true for the agents who purchase around 60 percent off, or those who are about 50 percent off to purchase, and who need to pay the rent, labor and related taxes and fees? /p

in fact, the seven wolves should face greater pressure on channel inventory compared with the wedding birds.

This is because, on the one hand, the news birds launched the wholesale and retail mode earlier. According to the prospectus issued earlier, the wholesale sales accounted for 56.08% of the revenue in the first half of 2012, while the seven wolves put forward the strategy of "wholesale" to "retail" later, and wholesale sales accounted for a higher proportion of income.

on the other hand, the concentration of the seven wolves is even higher. If the net realizable value of the products decreases sharply, or the terminal price plunge sharply, the channel inventory repurchase pressure is greater.

The annual report shows that the total sales volume of the top five customers of the seven wolves in 2012 was 801 million yuan, accounting for 23.05%, while the total sales amount of the first five customers was 129 million yuan, accounting for 5.73%.

it is noteworthy that the seven wolves introduced "increasing channel support" in the annual report. In view of the decline in terminal profits, the company increased support for key channels; strengthened the implementation of the three party agreement between the company and its agents and some distributors, and directly implemented credit, rebate, subsidy and replacement to some distributors, making the distribution of profits more reasonable and enhancing the terminal operation capability.

in the "flexible and effective inventory handling", in order to alleviate the inventory pressure of dealers and promote the rationality of terminal commodity structure, the company increased the proportion of channel replacement and carried out effective inventory promotion plan to assist channels to deal with inventory.

"P >" do not know whether the "exchange" of the seven wolves belongs to the "return" of the newspaper bird, or whether it is in the substantive sense of the channel stock repurchase.

objectively speaking, if the return or repurchase is handled as an independent inventory purchase business, and on the basis of which the provision for declining price is made, that is, similar to some H-share sports Brand Company's practice, it will not only inflate the operating income and profits of the past year, but also distort the operational efficiency indicators such as inventory turnover.

from this point of view, it is worthwhile for the good news bird to predict the handling method of liabilities, and there are still many uncertainties in the handling of "replacement" by the seven wolves.

In addition, we believe that the seven wolves' strange inventory pricing may be closely related to the channel's "replacement".