An Li Fang Meets The Two Child Policy To Promote Children'S Underwear Brand

According to the world clothing and shoe net, after the winter of net profit,

(01388) the performance seems to have begun to improve.

In the first half of 2017, the group realized HK $1 billion 183 million (for example, no marked units, the same below), a slight increase of 0.68% compared to the same period last year, and the profit attributable to the owners of the group was HK $88 million 213 thousand, a slight decrease of 1.27% over the same period last year, and the decline was narrowed compared with the same period in 2016.

In the face of the polarized consumption trend, Ann Li Fang continues to play more.

The advantages of strategy.

Among them, the income from the group's flagship brand, an Li Fang, grew by 1.93% to HK $562 million, accounting for 47.48% of the group's total revenue. The turnover from the company was HK $308 million, down 1.36% from the same period last year, accounting for 26.02% of the total revenue.

In addition, the focus of brand development and promotion has been placed on the cultivation of affordable young brand andredo and high-end underwear brand LIZA CHENG, so that two brands can achieve higher goals in their target market.

Share sales increased by 11.22% and 17.51% respectively.

During the period, Ann Li Fang continued to take a closed shop policy, and the number of retail outlets was reduced by 62.

As of June 30th, there were 2005 retail outlets, 1808 of which were sales counters and 197 specialized stores.

In terms of electronic commerce, through promoting the speed and effectiveness of the overall supply chain logistics and distribution services, and promoting proper promotion and promotion activities, the company's e-commerce turnover increased by 21.73% to HK $64 million 440 thousand, and its contribution to total revenue increased to 5.45%.

Although sales improved, Fang Li Fang's gross profit margin in the first half of this year was 2.06 percentage points lower than that in the same period in 2016, to 77.49%.

Zheng Bihao, chief executive officer and executive director of an Li Fang, told reporters that because the atmosphere of consumer goods and consumers themselves tended to be conservative in recent two years, they hoped that there would be promotion on price, so the group lowered slightly the gross profit margin from 78%-80% to 77%-79%.

The following is a news report compiled by reporters.

Q: will the group continue to integrate its retailers or stores in the second half of 2017?

Answer: our company's integration work has been done for several years. The annual target is a net reduction of 100. By the end of June, we had reduced 62 by the end of the year (100 stores in the first half of this year and more than 160 stores).

Our standard of closing stores is not ideal performance (not for loss of money), store location and pedestrian flow are not in line with the overall planning.

The adjustment action will continue.

Q: will there be more than 40 stores in the second half of the year? Will it be concentrated in Hongkong?

A: there will not be many stores in the second half of the year. Most of the shops are in the mainland. We now have 90% of the shops in the mainland, and only about 10% of the shops in Hongkong are left.

Q: now the production base in Shenzhen, Ji'nan and Changzhou, with the increase of production costs in the mainland, will we consider pferring production to other places?

A: production will still be in these three places for a while. The factory buildings in Shenzhen may face relocation or change of land use. We will cooperate with the local government's policies and do not know for a while.

Q: how do we see the overall trend of the retail industry in the mainland in the second half of the year? Will it be warmer?

A: we feel that the consumer industry has slightly recovered in the second quarter of this year, just down, and we have a slight increase of 0.68%.

Q: before the company launched the children underwear brand "Lucie" s World, did you see the demand for children's underwear increased?

A: the mainland has launched the "two child" policy. We feel that this part of the market was previously absent. Underwear should have covered the part of children.

Q: will children's underwear be set up in "store in store" or in a separate store?

A: at present, we are only conducting market tests. We will put them in the shop of an Li Fang. The department stores sign the brand according to this year. We just test this year, and we will open a store later.

Q: what is the difference between the gross profit of underwear for children and adults?

Answer: for the time being, we will adjust the positioning and Maori after the market test is finished.

Q: in the first half of this year, there will be some decline in gross margin. Will there be some measures to improve gross profit margin in the second half?

A: because in recent two years, the atmosphere of consumer goods and consumers themselves tend to be conservative. They all hope that there will be promotions on prices, so we have slightly lowered our gross margin from 78%-80% to 77%-79%.

Q: the proportion of distributors on the distribution has been reduced, will more direct sales be done, and the proportion of electricity providers has also increased?

Answer: wholesale, we intend to reduce the downstream goods, I hope they sell one piece to make up for one, and reduce storage. At present, the storage of the group has dropped from more than 500 days to more than 400 days.

As long as we haven't sold the goods to the consumers, we will have warehousing, so we also hope that they will reduce them.

As for the electricity supplier, this is a trend, but we think that underwear needs to be tried to know whether it is suitable or not, so the offline sales will never be reduced. At the same time, we should keep up with the consumption habits of young people.

Q: the decline in net profit is due to the increase in advertising costs. Will future advertising costs be reduced correspondingly?

A: we have no intention of lowering advertising fees.

We always have budgetary control, which generally accounts for 2% to 3% of the share of sales. In the first half of this year, our advertising Fei Zhan sales share was 1.5%, and the cost rate was almost the same as that of the same year.

Q: about the optimization of stores, as China's urbanization level is getting higher and higher, does the company intend to exert itself in the three or four tier cities?

A: our sales rate will increase because we will do more in the two or three tier cities. We will also put more resources to make products at a lower price and suitable for two or three line cities.

Q: how much is the cost of opening a store? How long is this cycle?

Answer: expenditure depends on the location of this store, ranging from tens of thousands to hundreds of thousands, and the interval is still very large.

Q: the store has saved a lot of costs. How is cash flow now?

A: our cash situation has improved. In June this year, we had 230 million cash in hand, about 190 million in June last year, and about 40000000 more cash in hand.

Q: will more money be spent on other investments?

Answer: there will be some expenditure for the company in the future. In the second half of the year, 20 million of the "intelligent storage" will have to be paid, and the computer system should also be upgraded to keep up with our plan. This also has 40 million of the expenditure. Then several factories and mechanical equipment will be updated every year, and it will cost 2000 to 30 million, so there will still be some money to spend in the second half of the year.

Q: in the first half of the year, Fang Li Fang's shareholders increased several times. What are the plans for the increase or repurchase in the second half?

A: there is no plan for the time being, but we can see that the shareholding ratio of major shareholders and related parties is already very close to 75%. It may be more difficult to estimate holdings.

But dividends can be chosen to send stocks or cash, so some will still choose to send shares.

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