Expansion Is A Double-Edged Sword. La Natsu Bell Will Focus On Multi Brand Stores In The Future.

In the three or four year, after experiencing the failure of the A share market listing and turning to H-share, La Natsu Bell, the Shanghai women's wear group, was finally listed as a dream of listing.

A few days ago, La Natsu Bell, a Chinese version of ZARA, was listed on the Hong Kong stock exchange.

According to the results of its announcement, the 11 million 555 thousand and 600 part of the public offering of the shares was equivalent to 95% of the total number of the public offering, which was not fully subscribed, and the offer price per share was 13.98 yuan, which was the lower limit of the stock price range (13.98 yuan ~18.2 yuan).

After deducting the listing fees, the net amount of capital raising is about 1 billion 606 million yuan.

The prospectus shows that La Natsu Bell originally planned to raise HK $1 billion 700 million ~22.1 billion, which was mainly used to expand the retail network and to lock in SendaInternationalCapitalLimited and Zhou Dafu based company based investors, subscribed for $30 million and 20 million IPO respectively.

It is noteworthy that La Natsu Bell's growth rate and market share data are quite eye-catching, even more than the recent fashion brands such as fast fashion brands, UNIQLO, ZARA, H&M, etc.

Although the accelerated expansion has brought good results, it has also brought about financial problems for its operation.

In addition, because all of its retail outlets are direct, it also poses a challenge to inventory turnover, and there will be some pressure on its profitability in the future.

As early as 2012, La Natsu Bell was in line to sprint IPO, during which he experienced eighth IPO "Gates". At the end of May 2013, La Natsu Bell appeared in the list of "termination review" companies announced by the SFC and dreams of A shares.

In November 2013, La Natsu Bell submitted his IPO application to HKEx.

So far, it has been listed successfully.

La Natsu Bell is a multi brand fashion group founded in 2001. It focuses on women's casual wear. It is mainly engaged in design, brand promotion and sales of apparel business.

La Natsu Bell group currently has 8 brands.

Its main brand is LaChapelle (launched in 2001) and LaChapelleSport (launched in 2003).

After its establishment, La Natsu Bell quickly realized the diversification of the brand and product line, and launched the women's clothing brand 7.Modifier (launched in 2012), Candie 's (2010 launch) and LaBabit e (launched in 2012) with different positioning and style.

In the past two or three years, it has launched the new men's wear brand LaChapelleHomme (launched in 2011) and Pote (launched in 2013). In 2013, the brand LaChapelleKids of children's wear was also introduced.

According to the prospectus, La Natsu Bell's income and profit growth rate has been quite impressive in recent 3 years. The income increased from 1 billion 860 million yuan in 2011 to 3 billion 872 million yuan in 2012, and increased to 6 billion 225 million yuan in 2013. The compound annual growth rate was 82.7%. The net profit increased from 123 million yuan in 2011 to 260 million yuan in 2012, and increased to 413 million yuan in 2013, and the compound annual growth rate was 83.3%.

In 2011, 2012, 2013, the first half of 2013 and the first half of 2014, the sales revenue of the main brands LaChapelle and LaChapelleSport accounted for 96.4%, 88.5%, 73.7%, 77.9% and 67.5% of the total revenue respectively.

In 2013, LaChapelle sales amounted to 2 billion 560 million 900 thousand yuan, and LaChapelleSport sales amounted to 2 billion 31 million 700 thousand yuan.

In the current large number of garment companies declining performance, compared with the industry leader, La Natsu Bell's growth rate is very bright.

It is understood that the sales volume of 2011 sales is 12 billion 400 million yuan, 15 billion 591 million yuan in 2013, and the annual compound growth rate is 13%.

According to the Euromonitor report of the well-known consulting firm, China has become the second largest clothing market in the world in terms of retail value in 2013, with a total retail sales amounting to US $247 billion 400 million, second only to the total retail sales of the US apparel market in 2013 for us $298 billion 900 million.

In 2013, La Natsu Bell accounted for 5.7% of China's retail market share, 4.8% of HKEE International Group, 3.2% of ZARA, 3.2% of IgG, 2.9% of UNIQLO and 2.2% of H&M, ranking third.

Two years ago, La Natsu Bell's market share was only 2.1%. In just two years, La Natsu Bell achieved "counterattack".

La Natsu Bell's retail outlets mainly operate in the form of counters and stores.

In recent years, the focus of its expansion is crazy shop, the two is to open a large shop.

By the end of 2011, the number of retail outlets was 1841, and by June 30th this year, its retail outlets had surged to 5671.

Moreover, its outlets are mainly distributed in famous department stores and shopping centers in major cities such as new world department store, Parkson, Bailian, Maopai, Tianhong shopping mall, Wanda, Ginza and Dayang general merchandise department.

As of June 30th this year, its revenue from the counter accounted for 71.2% of the total revenue, from the exclusive store business revenue accounted for 28.8% of the total revenue.

From the expansion area, its shops are mainly located in the two or three line cities.

As of June 30th this year, the number of shops distributed in 123 line cities and other cities was 591, 2158, 1387 and 1535 respectively, accounting for 10.4%, 38.1%, 24.5% and 27% respectively.

The company plans to increase about 1200 retail outlets by December 31st this year, and increase about 1500 retail outlets in 2015 and 2016. About 83% of the net proceeds will be used to expand the retail network.

From the perspective of expansion strategy, multi brand retail outlets, multi-storey flagship stores and shopping center stores will be the focus of future store expansion, so as to "further diversify the retail channel of the company".

But on the other hand, the rapid expansion of the company's retail network has also caused some problems for the company.

It is worth noting that, unlike the wholesale clothing distributors in the mainland, La Natsu Bell adopts the direct camp mode, that is, 100% of its retail outlets are directly controlled and operated by the company, which is not common in the clothing industry.

The advantage of this mode is that it can effectively manage the brand, price, marketing and channel, but it also brings challenges to the company's inventory turnover.

La Natsu Bell's average stock turnover time in 2011~2013 was about 200 days, compared with those who rely on wholesale distribution or franchising mode.

The average inventory turnover time is 83.72 days for UNIQLO.

As of 2011, 2012, December 31, 2013 and June 30, 2014, La Natsu Bell's inventory was 398 million 100 thousand yuan, 826 million 900 thousand yuan, 1 billion 292 million 900 thousand yuan and 1 billion 211 million yuan respectively.

Inventory levels are high and growing faster.

At the same time, with the recent rapid increase in store rental, the company's operating costs continued to rise.

In 2011, 2012, 2013, the first half of 2013 and the first half of 2014, the rental costs of the company's retail outlets and warehouses were 97 million 700 thousand yuan, 227 million 900 thousand yuan, 420 million yuan, 190 million 300 thousand yuan and 229 million yuan, respectively, accounting for 5.2%, 5.9%, 6.7%, 6.8% and 6.5% respectively.

According to its prospectus, the gross profit margin in 3 years was 70.6%, 71.7% and 68.8% in 2011~2013, respectively. The gross profit margins in the first half of 2013 and the first half of 2014 were 69% and 69.2%, respectively.

But sales and marketing expenses accounted for 55.9% of the company's total revenue in the first half of this year.

Insiders believe that La Natsu Bell's considerable performance is largely driven by expanding scale.

In addition, despite rapid expansion of stores, same store sales also declined.

The same store sales in 2012 increased by 41.6% compared with 2011, while 2013 increased by 6.6% compared with 2012.

Compared with the same store sales in the first half of this year, same store sales fell by 3.4% in the first half of 2013.

In search of a change, La Natsu Bell began opening an online flagship store in Tmall in August. The integration of online and offline businesses has made La Natsu Bell the key to offset the slowdown in revenue growth in the first tier cities.

La Natsu Bell said, "opening online flagship stores is the first step for the company to implement the O2O strategy, so as to make good use of the potential synergy of offline and online retail sales channels."

But it is understood that even if the electricity business sales accounted for a relatively high proportion of the company, online is only 12%~15%, for La Natsu Bell, the key lies in how to better layout the business of electricity providers, so that online and offline in terms of style and other aspects of the difference, rather than other clothing enterprises like the business channel as a way to clear inventory.

According to institutional research, the profit growth of the company has been rapid in the past 3 years, but the recent negative news in the industry has been continuously affected by the weakening of consumption and the impact of the electricity supplier.

In this case, if the company can improve the terminal efficiency, the balance between expanding the retail network and improving the profitability of the existing retail outlets will be the key.