Why Do Investors Pay For Fashion Clothes And Clothing Stores?

As the shops become more and more popular, if half of the old stores are closed because of poor performance, how can we ensure the benefits of the newly opened 428 stores?

If the project pays, does the failure rate of up to half of the shop fail too much investment risk?

On the evening of June 24th, the China Securities Regulatory Commission announced that the Guangzhou Tian Chuang fashion shoe Limited by Share Ltd (hereinafter referred to as "Tian Chuang fashion") had applied for the first time.

This means that the "KISSCAT" brand of women's shoes will become the fifth domestic women's shoes industry listed companies after BELLE international, Saturday, Daphne international and 100 degrees.

In the direct shop mode, such as the bright future, Tian Chong fashion still concentrates on the opening of direct investment stores. In its prospectus, the company plans to use 466 million yuan to raise funds to build 428 Direct stores in large and medium-sized department stores, but it is rather paradoxical that in the three years from 2012 to 2014, there were 724 stores in the world, of which 324 were closed because of poor performance, accounting for about 45%.

Blind expansion of Direct stores

It is difficult for the industry to understand the trend of the development of the company.

The industry generally believes that the industry relies on large scale expansion of stores, which has been difficult to sustain.

According to the latest retail sales data released by BELLE in the first quarter of this year (3 to May 2015), the number of retail outlets in the mainland has decreased by 167.

In the first quarter, the performance of women's shoes such as Daphne and Saturday was also unsatisfactory.

Among them, the total number of Daphne core brand outlets decreased by 14 to 6388, and the same store sales of core brand businesses fell by 15.9% year-on-year.

In the leather shoes industry, which has been surging in the shops, it has gone against the trend. It is hoped that the expansion of offline stores can be achieved by raising funds. Is there any advantage in the store operation than that in its peers?

The prospect of expansion is worrying.

Facts have proved that no.

Constrained by the plight of the entire industry, 324 of the 724 shops that were closed by Tian Chong fashion, with poor performance, accounted for about 45%.

The unsatisfactory performance is related to the high labor cost and sales cost.

Financial data show that from 2012 to 2013, the business income of Tian Chong increased 22.50% and 16.88% compared to the same period last year, but its operating profit increased by 3.85% and 4.84% respectively.

The reporter found that during the period of Tian Chong fashion, the cost appeared to be two high and eroded profits.

During the reporting period, the cost of creating a new fashion period was 440 million yuan, 530 million yuan and 640 million yuan respectively, showing a rapid growth trend, even exceeding the revenue growth rate.

Among them, the sharp rise in sales costs is the main reason for the high cost of the period. During the reporting period, the selling expenses were 246 million yuan, 340 million yuan and 430 million yuan respectively, with an annual growth rate exceeding 20%, of which the most rapid growth was in the salary of employees.

Tian Chong fashion shows that the continuous rise in labor costs will adversely affect the company's performance.

A staff member of the shoe industry told reporters on Saturday.

Industrial scale production links have the characteristics of labor intensive. Labor cost is one of the main costs of enterprises.

After the introduction of the new labor law, the hidden cost of labor force of shoe enterprises has risen sharply.

The decline of traditional sales channels, the rising rigidity of labor costs, and the increasing rental of stores have forced shoe and clothing enterprises to think about how to digest inventory and speed up turnover through e-commerce channels, but the business mode of Tian Chong fashion through offline store expansion is no less than a "big gamble".

It seems that the future outlook is still very worrying, whether investors will "pay" and whether the security of funds can be guaranteed after paying the bills.

Have to face the problem.