Zhou Dafu Has Limited Control Over Franchised Stores.

The company was exposed to gold adulteration, the incident company a franchise. But for now, the control of franchisees is still limited.

Zhou Dasheng's IPO wants to raise 1 billion 460 million yuan, of which 970 million yuan is used to build marketing service platform. At the same time, Zhou Dasheng also wants to add 1000 new stores. Franchising means that the franchisee is authorized to set up franchised stores in accordance with the unified business and management system. Franchisees have the right of ownership and income of the franchisees, and perform independent accounting and self financing.

As of June 30, 2014, Zhou Dasheng had 2101 terminal stores in the country, including 1768 franchise stores and 333 self operated stores. In the first half of 2011 ~2014, the proportion of the company's business income in the main business income was 57%, 53%, 45% and 46% respectively.

Jewelry analysts pointed out that because of the large amount of investment in jewelry stores and counters, the way of franchisee can make the best use of the capital and channel relationship of franchisees to make up for their own resources. But at the same time, franchisees' personnel, capital, finance, operation and management are independent of the company. If the Future Ltd product quality supervision can not keep up with the rapid expansion of franchised stores, some of the franchisees' management is not standardized, even if their business activities are contrary to the company's brand management purposes, it will adversely affect the company's image and business performance. Zhou Dafu, the leader of jewelry industry, is mainly self operated stores, which can better control the operation quality of single store and provide better service experience for customers. But focusing on self run stores will occupy a large number of company resources, and at the same time, the speed of expansion will be relatively low. So Franchised store and Self run shop The two business models have their own advantages and disadvantages. Companies should choose the right business routes according to their own development.

Meanwhile, after the "gold rush" in 2013, the jewelry industry immediately experienced a slowdown in growth. Gold and jewellery enterprises have entered a period of adjustment after rapid development in recent years. At this point, Zhou Dasheng greatly increased the number of franchisees and self run stores, and the effect of counter trend expansion needs further observation.

For the jewelry industry, inventories occupy a lot of money. The prospectus shows that in the first half of 2011, the net stock value of the company was 790 million yuan, 1 billion 120 million yuan, 1 billion 180 million yuan and 1 billion 420 million yuan respectively, accounting for 59%, 69%, 64% and 72% of the current assets, respectively. The stock of the company was larger and the proportion of the current assets was larger than that of the current assets in ~2014. If the price of major raw materials such as diamonds and gold fluctuates greatly, the company will prepare for the depreciation of large inventories, devour company profits and reduce operating results. For example, in 2013, as the price of gold fell, the company prepared 43 million yuan for inventory depreciation, accounting for 18% of net profit of 240 million yuan.

　　 gold The risk of raw material price fluctuation is also shown in other aspects: when gold prices fall, there may be a "upside down" phenomenon that the price is higher than the selling price; the price fluctuation of raw materials leads to the instability of the gross profit margin of the company's products; the gold price affects the consumers' judgment of the price trend of prime gold and inlaid ornaments, and then affects the demand and sales volume of the products.

In order to hedge the risk of falling gold prices, the company hedged by leasing gold or futures short selling to banks. In 2013, the yield of hedging tools was 12 million 630 thousand yuan, while the loss caused by the provision for the provision of stock in the same period was 43 million yuan, and the hedging effect was about 29%. Compared with the 50%~70% hedging rate of the same industry, the company's risk aversion needs to be improved. Evading risk is also a manifestation of an enterprise's operational capability. In this respect, Zhou Dasheng has a gap with other leading enterprises.