Women Shoes "Three Swordsmen" High Growth Mode Meets Difficulties

Daphne International (00201.HK) 2013 three quarterly report shows that the core brand business of the group declined by 18.1% in the same store, and the same store sales in the first three quarters dropped 12.2%, down far beyond the expectations of the outside world.

Coincidentally, the dilemma of revenue growth and profit decline is in women. shoes "Oligarch" BELLE International (1880.HK) and another A shoes listed company on Saturday (002291) also has different degrees of expression.

Under the background of the abrupt change of competition pattern in the domestic women's shoes market, the high growth mode that women's shoes "three swordsmen" once prides on is experiencing collective resistance.

　　 Net profit fell sharply

Daphne was once praised as a high growth model for small and medium-sized enterprises. There is even a book entitled "Daphne mode successfully monopolized", which analyzes the story behind its high growth. In the past 2008-2011 years, Daphne's revenue grew rapidly from HK $5 billion 290 million to HK $8 billion 580 million. Its growth rate also increased year by year, when it was 10.26% in 2009, and increased to 29.48% at 2011.

But in 2012, behind the continued expansion of the scale, it was difficult to conceal the dilemma of Daphne's growth and profit decline. In 2012, although Daphne's sales exceeded HK $10 billion for the first time to HK $10 billion 530 million, its sales growth of 22.8% was 6.68 percentage points lower than that of 2011, and its profit also declined by -0.3% to HK $1 billion 365 million, the first decline since 2004. Its annual same store sales increased by 9%, lower than the previous 12% forecast. In the second half of the year, its profits declined by -10%, while its sales in the same store increased by only 3%, and the performance of the main brands dropped by -20%.

The decline continued to expand in 2013. In the first half of this year, Daphne's sales revenue increased by 1.7% to HK $5 billion 200 million, but its profit dropped by 35.6% to HK $450 million, and net profit dropped by 35.7% to HK $310 million in the first half of the year. Same store sales, the first half of the decline of 9.2%, the three quarter of the decline is more severe, dragging down the first three quarters of the same store sales decline to 12.2%.

Over the past few years, the "oligarch" BELLE shoes, which maintained its high growth in performance, has slowed down in recent two years.

In 2012, its sales revenue increased by 13.5% over the same period last year, representing a decrease of 8.6 percentage points compared with the 22.1% increase in 2011. The profit increased by 2.6% over the same period last year, a decrease of 30.3 percentage points compared with that in 2011, and the net profit increased by only 2.3% over the same period last year, a decrease of 21.9 percentage points compared with that in 2011.

Worse things follow. In the first half of the year, net profit or even negative growth: sales increased by 11.25% to 17 billion 800 million yuan compared with the same period last year, but net profit fell 3.35% to 2 billion 167 million yuan over the same period. In the three quarter, its footwear business grew by 1.3% in the same store, though it increased by 2.3% over the two quarter, but decreased by 1.5% over the same period.

Saturday is facing the same situation. In the first half of the year, its revenue grew by 20.86% over the same period, but net profit fell by more than 30% (-34.78%), and earnings per share also dropped by -30.77%.

As for the deterioration of the three quarter performance, Daphne said it was because the mainland market in July and August was extremely hot, the street shops were reduced, the competition was intense, and the consumption intention was sluggish. Although the product discount has been adjusted over the same period last year to raise gross margin, it is still difficult to change the trend of sharp drop in profits. In fact, the sharp decline in the number of people in the shops, the continued weakness of consumption, the "cake" under the diverging line of electricity providers, is it not the pain of BELLE, Saturday and all other women's shoe brands?

The footwear industry observer Ma Gang pointed out that the footwear industry competition situation is more intense, the impact of the electricity supplier is obvious. Take Daphne as an example, its brand "route" is wide, but it is mainly low and medium end products. This part of the product is more pressure than the high-end brand because of the impact of the electricity supplier, and sales decline is inevitable. In addition, the shoe industry has been developing for a long time. Basically, the market development of every enterprise is in a state of saturation. It is rather difficult for the brand to develop in a big way.

　　 Store expansion slowed down significantly

With the rapid expansion of stores, Daphne's sales doubled over the past 5 years. However, under the pressure of current performance, its overall expansion has shrunk dramatically.

According to the financial report, in 2011, the total number of Daphne's total stores increased by 966 to 6165; in 2012, the total number of stores increased by 716, and the growth rate of the stores decreased by 25.6%; in the first three quarters of 2013, the number of stores increased by only 195, of which 286 outlets were directly added, and 91 stores were closed. By the end of the three quarter, the number of Daphne's core brands was 6564, of which 5713 were direct stores.

The growth rate of BELLE international stores has also slowed down significantly. In 2011, it increased its net footwear industry by 1958 stores, and the net increase movement. Clothes & Accessories There are 1025 self operated stores. In 2012, it increased the number of footwear self-employed stores 1820, and increased 794 sports apparel stores. In the three quarter of this year, its domestic stores increased by 280, a decrease of 431 compared with the same period last year.

By the end of 2011, the number of self operated retail outlets was 15112, and at the end of 2012, it was 17564. As of September 30th this year, there were 18596 stores in China, of which 12816 were footwear outlets and 5780 were sportswear outlets, representing an increase of 11.2% and 12% respectively.

Saturday is also not immune. In 2012, it added 555 self operated stores, of which 196 were purchased from hepper shoes, 359 from new self operated stores. By the end of 2012, there were 2351 stores on Saturday. In the first half of this year, there were only 52 new outlets and 28 new distribution outlets. As of June 30th, there were a total of 2431 brand chain stores on Saturday.

It is worth noting that, while the overall expansion of stores is slowing down, Daphne and Saturday both want to increase the proportion of self owned stores.

Accelerating the reduction of franchised stores and moderately expanding self operated stores are the common strategies of the two brands.

In 2012, Daphne was once pushed to the top of the storm because of its unilateral policy of not extending the contract to most of the franchisees. It was accused of "rabbit dead fox cooking", but its efforts to reduce franchisees were very firm. In 2012, Daphne cut 113 franchises, reducing 51 in the first half of this year, and reducing another 40 in the three quarter. In the first half of the year, its direct stores increased by 263.

In fact, since 2000, Daphne has gradually shifted its channel strategy from agents to self operated stores, accounting for about 83% of its current outlets. At the beginning of its development, about 80% of the proportion was franchised stores.

Insiders pointed out that the rapid expansion has brought great pressure to Daphne's revenue growth, operating costs continue to grow, management difficulty is rising, and marginal profit growth has become extremely difficult. Next, its business strategy will focus on "maintaining stability".

For the whole women's footwear industry, the continuous downturn in the consumer market, the sharp decline in sales and profits, the sharp rise in the price of terminal property rents and the rising operating costs are all important factors for the expansion of stores. On the other hand, under the new competitive environment, it is also important to integrate and close down inefficient shops, and the growth strategy is shifting from rapid expansion to paying attention to improving the efficiency of single stores.