After Deducting Non Profits, The Net Profit Of Meibang Clothing Fell Sharply To Loss

After the first loss in the eight years since the listing of Meibang Clothing, Shenzhen Stock Exchange sent an inquiry letter asking why the company in transition had abnormal performance data in 2015. The reply of Meibang Clothing further revealed its embarrassment.

In 2015, the operating revenue of Meibang Clothing, which owns Metersbonway and other brands, was 6.29 billion yuan, down 4.92% year on year; The operating cost was 3.48 billion yuan, down 3.06% year on year; Net profit loss attributable to shareholders of the listed company was 430 million yuan, down 396.57% year on year; The net profit after deducting non recurring gains and losses was - 450 million yuan, down 573.36% year on year.

Under the circumstance that the decrease of operating income and operating cost was not large, the net profit of Meibang Clothing after deducting non profits fell sharply to loss.

As for the difference in the decline of the two, Meibang Garments explained that it was because "in 2015, we increased investment in brand and R&D. While these measures were rapidly promoted and achieved initial results in the direct marketing channel, the transformation and upgrading of the franchise channel was still relatively lagging behind, and the value of the company's investment in core capabilities such as products, channels and retail experience has not been fully reflected in the market".

Specifically, during the reporting period, the volume and price of Meibang Garments fell together, the sales volume of products dropped by 0.28%, and the average sales price of products dropped by 4.72%, resulting in a 1.22% drop in the gross profit margin of the main business and a 7.33% drop in the gross profit of the main business to 218 million yuan.

In terms of sales revenue, franchise stores have also lagged behind. The franchise income is originally from Meibang Clothing revenue But in 2015, when the direct sales revenue increased by 7%, the franchise revenue dropped by 16.19%, which directly led to a decline of nearly 5% in operating revenue.

In the past two years, Meibang Clothing also closed thousands of stores. In the 2013 annual report, there were nearly 5000 stores at the end of the period. By the end of 2015, the number of direct stores and franchise stores nationwide had decreased to more than 3700.

Due to the decrease in sales revenue, the cash received from selling goods and providing labor services decreased by 447 million yuan. At the same time, the cash paid for purchasing goods and receiving services increased. "The company increased the scale of clothing procurement in the autumn and winter of 2015, so the procurement expenditure increased by 653 million yuan compared with last year (2014)".

However, it was found that the purchase of 653 million yuan more than the same period of the previous year made Meibang Garments, which should have been increasing sales and trying to destock, worse. This also makes investors confused. Clothing enterprises with weak terminal sales and high inventory should have gone out of stock to get more cash flow, but Meibang Clothing did the opposite.

This substantial increase in procurement directly increased the inventory of Meibang Clothing by 6.1853 million units at the end of 2015, up to 37.61 million units, an increase of nearly 20%; The amount of goods in stock increased from 1.716 billion yuan in 2014 to 2.258 billion yuan at the end of 2015, an increase of more than 30%.

In fact, from 2014 to the first half of 2015 Sales data It can be seen that the sales of Meibang Garments have been in a year-on-year downward trend, without any improvement, and the company's inventory has increased by 8.5% year on year at the end of 2014.

Under the pressure of inventory, the task of 2015 should be consistent with the goal of inventory of the whole clothing industry. However, it seems that the game played during the transition period did not go right.

Internet strategic transformation is another important direction of Meibang Clothing. Therefore, in 2015, the company invested 202 million yuan in R&D, with a year-on-year increase of 107.79%.

Meibang Clothing revealed that of the R&D investment of more than 200 million yuan, IT expenditure was 115 million yuan, an increase of 142.15% year on year; The expenditure on clothing design and development was 87 million yuan, an increase of 74.92% year on year.

Among them, IT investment in 2015 was mainly used for the development of O2O commodity full circulation business Banggou Transformational development, "exemplary" mobile fashion social+shopping platform development, and big data platform. "Based on the company's continuous investment in R&D in the past two years, the company's Internet transformation has achieved initial results. In 2015, online e-commerce revenue increased by 123% year on year.".

This e-commerce revenue only expresses the growth rate, but does not specifically list the base in 2014, which is difficult to explain the problem. In particular, the e-commerce channels "Banggou" and "Youfan" built by Meibang Clothing have not separately listed specific sales data.

It should be pointed out that the speed of Banggou Network of Meibang Clothing is not as fast as expected. The statement of Meibang Clothing is: "After the development of the past five years and the experience accumulated in the trial operation of O2O full circulation business of the private brand channel since May 1, 2014, Bongo has now possessed the basic capabilities of brand presentation, product presentation, commodity circulation, consumer information management, etc. to support multi brand O2O services."

It took five years to have only "basic ability", which is obviously slow for an e-commerce website to develop, and its specific sales data has not been shown. It is also worth discussing how "Youfan" App can stand out from many mature fashion apps.

The performance of Meibang Clothing may improve in 2016. In the first quarter, benefiting from the recovery of sales, the company's net profit increased by 32.38%. However, Li Jie, an analyst of Everbright Securities, still believes that because the company is still in the period of business model adjustment and has a large investment in Internet+transformation, the cost is expected to remain high, which will drag down the performance, and the performance pressure is still large. Maintain the "neutral" rating and expect the Internet+transformation effect to gradually emerge.