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Poor Global Performance: Loss Of HK $4 Billion 388 Million In Last Fiscal Year

2013/10/2 10:21:00 25

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Si Jie Global North American Business ZARA

yesterday (September 10th), the 2012~2013 financial year results released by Si Jie global show that as of June 30, 2013, the group's annual net loss was HK $4 billion 388 million, and the loss rate was higher than the market forecast of HK $3 billion 100 million, mainly because the related retail revenue related to management was down 12%.

this is the first loss of Si Jie global listing since 1993. It is also the most difficult report of Si Jie world.

It is worth mentioning that the global profitability of Si Jie has been declining for 4 consecutive years.

In order to reverse the downward trend of performance, P management announced this year that it will formally abandon the 18 billion 500 million yuan pformation plan launched in 2011 and launch a new 3 year pformation plan for 2014~2016.

However, in the announcement yesterday, Si Jie global also pointed out that the next fiscal year will be a pition period for the group, with a slight decrease in turnover and a slight decrease in gross margin.

performance loss far exceeded expectations .

although the market has long predicted that the 2012 earnings will not be good, its performance decline far exceeded market expectations.

results show that as of June 30, 2013, the total turnover of Si Jie was HK $25 billion 900 million in the past year, down 14.1% from HK $30 billion 200 million in the same period last year, and the company's losses amounted to HK $4 billion 388 million.

Earlier, the company issued a related news that the loss was about 3 billion Hong Kong dollars, and Bloomberg News survey 14 analysts after the average expected loss of HK $3 billion 400 million.

In fact, P has issued a profit warning in May, indicating that the four factors led to a larger operating loss than expected. First, the impairment of the residual rights and interests of China's associated companies was reduced by HK $1 billion 996 million; in addition, about 16 loss shops were closed, and 274 million HK dollars were lost; third for the 43 paid shops, the 224 million HK dollars were granted for the paid contracts; finally, the additional inventory was provisioning for HK $228 million due to the change of estimation method to reflect the net realizable value of the inventory more appropriately.

in this performance report, Si Jie global has added a factor: since April 2012, the North American business has been stripped off, the previously announced shops closing and the impairment of fixed assets caused by the decrease in sales volume.

P also pointed out in the announcement that the next fiscal year will be a pition period for the group, with a slight decrease in turnover and a slight decrease in gross margin.

"In the short term, given that the macroeconomic environment is still weak, our sales area is decreasing and most structural measures are in the implementation stage, we expect no significant improvement in turnover," he said.

at present, there are two brands of Esprit and Edc in Si Jie world.

The latest annual report shows that the turnover of Esprit and Edc brand products account for 76% of the company's turnover and 24% respectively.

Among them, the turnover of Esprit brand products dropped by 10.5%, but the development trend of one of its more high-end brands, Collection women's clothing, is more favorable.

In fact, as the three largest product of the Esprit brand, Collection women's clothing accounted for 11.1% of the company's turnover and 3.3% of its turnover in the last fiscal year.

but now, Esprit's turn is still slow.

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P, an independent critic of shoes and clothing industry, said Esprit belongs to one of the first brands to enter the Chinese market. The second most popular period is the fast fashion brand, which is around 2007.

Now, it has entered the era of high-end luxury brands and light luxury brands.

"When they enter China, many fashion brands have not yet entered, and it will change the consumption habits of the existing consumers.

But now, their perception of consumers is not fast enough. "

as of June 30th this year, the number of shops in Si Jie world was 1024, a decrease of 42 compared with the beginning of the year.

Among them, there are 930 shops and 79 special stores.

As part of the company's measures to improve the inventory management platform, the group strategically expanded its special store sales channels and added 12 extra stores.

China's mainland market is the largest market in the Asia Pacific region. The turnover in 2012 accounted for 9.3% of the company's turnover, down 8% from last year.

Si Jie global said that it has put a lot of energy into developing the retail business in the mainland market, making the turnover increase by 2% in local currency.

Unfortunately, the positive growth of the mainland's retail business is dragged down by wholesale turnover, and the wholesale turnover is down by 22.9%.

the two pformation was not effective ().

after the departure of the largest shareholder, the profit of Esprit has been declining for many years since 2009.

Up to now, the 10 billion pformation plan announced by Si Jie in 2011 has been implemented for two years.

But in the industry view, "Metamorphosis" effect is not obvious.

In March this year, after three years of disappointing performance, P hired Inditex executives.

The new management team will shoulder the responsibility for the pformation and profitability of Si Jie Global Holdings Limited in the next 4 years.

The new chief executive, Mr Ma Hao Si, announced that it had abandoned the 4 year pformation plan launched by the group in 2011 and replaced it with the goal of saving costs as a short-term goal.

Specifically, it includes saving 1 billion yuan a year, reducing the proportion of operating expenses by less than 50%, increasing the sales ratio of the mainland market to 10%, and the group's sales volume from 2014 to 2015 will reach 6 billion yuan.

however, at present, with the diversified reform of the group's business pformation, the loss has been enlarged. At present, the new round of reform is still difficult to save the fate of the global recession.

in the view of the industry, most clothing companies are actively seeking change through multi brand and acquisition strategies, and the brand of Esprit is still eating the same old brand. The brand image has been aging.

Correspondingly, ZARA, H&M and other fast fashion brands attack the domestic market aggressively.

In the face of competition from rivals such as H&M, fast retailing and Zara, sprint has adopted measures such as increasing advertising investment and upgrading stores, but the effect seems to be poor.

this year, Si Jie was kicked out of the blue chips during the season of Heng index.

"from the point of view of performance, it is time for Si Jie to be kicked out of blue chips, and the stock price is really not strong enough."

A clothing company official said.

reporter statistics found that the price of Si Jie world shares hit a record high of HK $133 in 2007. But with the declining performance, the company's share price fell all the way, and now it is only 10 yuan up and down.

Looking back at 1993~2008, the composite growth rate of net income and net profit of Si Jie reached 22% and 45% respectively, but in, its profitability declined for 4 consecutive years, and its share price fell more than 90% in 3 years.