Summary Of Reasons For Hasen Shares' Pre Performance Reduction

Domestic high-end footwear listed companies

The Commerce (China) Limited by Share Ltd (hereinafter referred to as "Hasen shares") announced the results announcement after its closing in January 23rd. After preliminary calculations by the financial sector, it is estimated that the net profit attributable to shareholders of Listed Companies in 2017 will be reduced from 56 million 500 thousand yuan to 72 million 500 thousand yuan compared with the same period last year (statutory disclosure data), a decrease of 70% to 90% compared to the same period last year. Net profit after deducting non recurring gains and losses attributable to shareholders of listed companies will be reduced from 58 million 300 thousand yuan to 74 million 300 thousand yuan compared with the same period last year (statutory disclosure data), reducing 110% to 141% compared to the same period last year.

According to the world's clothing and shoe net, Hasen shares disclosed that during the reporting period, the domestic sales of the company were affected by the store's adjustment and closure of some shops with poor performance prospects, resulting in a 159 reduction in the number of stores and a decrease in domestic sales.

The impact of the pfer of purchase orders to low cost Southeast Asia and Central America has resulted in a substantial reduction in the export orders, resulting in a loss of export business.

Due to the reduction of export business and the adjustment of domestic sales, Hasen shares had a total of 19 million 960 thousand yuan in the reporting period, including 12 million 410 thousand yuan in export business and 7 million 550 thousand yuan in domestic sales. In addition, during the reporting period, the impact of non recurring gains and losses on net profit increased by about 1 million 840 thousand yuan during the reporting period. The main reason was that the government subsidy was 8 million 160 thousand yuan during the reporting period, which was reduced by 24 million 330 thousand yuan over the same period last year. In the current period, the authorized financial revenue was 9 million 590 thousand yuan, an increase of 8 million 460 thousand yuan over the same period of last year. During the current period, the disposal of the subsidiary company, Shanghai 70% capital of the, achieved a profit of 15 million 220 thousand yuan.

Public information shows that Hasen shares are mainly engaged in brand operation and products of high-end leather shoes.

Production and sales, mainly owned by Hasen (HARSON), Cardenal (KADINA), Kavin (COVER), love ALLER-A (ALLER-A) and Hasen men's shoes (HARSONBUSINESS) five private brands, and agents such as ROBERTA, AS and other well-known foreign brands products, self and agent brands are mainly sold domestically, at the same time for DANSKO, SPERRY and other foreign famous brands to provide OEM/ODM processing, mainly export.

The company's domestic footwear products are mainly used to meet the consumer demand of female consumers.

According to the financial report, in 2017 1-9, Hasen shares realized business income of 1 billion 74 million yuan, down 12.41% compared with the same period last year. The net profit was -256.35 million yuan, down 106.56% compared with the same period last year. The net profit attributable to the parent company was 20 million 928 thousand and 400 yuan, down 62.36%, EPS0.10 yuan.

The loss of non net profit is mainly affected by the increase of cost rate and the increase of asset impairment loss, which is higher than net profit, mainly because of the increase of investment income and increase of financial products revenue resulting from the disposal of subsidiary companies, resulting in the rapid growth of non recurring gains and losses.

Earnings data show that starting in 2014, Hasen shares continued to decline in revenue, so far is still in the adjustment period.

Quarterly, the first quarter of 2016, the three quarter of -2017, Hasen shares operating income decreased by 16.79%, 17.42%, 0.38%, 14.77%, 11.37%, 9.43%, 17.05%, respectively. The net profit attributable to the parent company decreased by 24.48%, decreased 51.41%, 119.92%, decreased, growth, and decreased.

Among them, in the three quarter of 2017, the channel extension dropped by 10.26% compared with the same period last year, and the export OEM income decreased by 58.24% compared with the same period last year, resulting in an increase in revenue declines. Sales and management fees increased by 4.96PCT and 2.21PCT respectively. The decrease in operating income resulted in a sharp decline in net profit in the three quarter.

Everbright Securities analyst Li Jie believes that with the fierce competition in the women's shoes industry, Hasen shares are still in the performance adjustment period, and the line has been closed continuously. In the first three quarters of 2017, there were 160 outlets, accounting for 8.62% of the initial stores. In addition, in 2017, 1-9 months, the stock channel of Hasen shares was 893 million yuan, down 2.43% compared to the same period last year, and the increase in direct income increased the gross profit margin.

Li Jie predicts that in the future, Hasen shares will strengthen the layout of direct channel, control costs and expenses, and promote profitability.

The industry also said that along with the adjustment of women's shoes industry, Hasen shares despite the existence of a certain channel extension space, but in the short term will still be the main store, and the price increase is difficult to continue to overlay passenger flow decline, making the same store continued to decline, performance will remain pressure, the future growth is mainly in the multi brand, merger and acquisition expectations, pformation of women's fashion industry.

According to the data of Euromonitor, in 2010, the share of the top twenty women's shoes brands reached 33.7% in China. Before 2012, this figure also showed an upward trend reaching 35.4%.

In 2012, the online retail industry rose vigorously, and a large number of Taobao stores seized the market. By the end of 2013, the share of the top twenty brands dropped rapidly to 32.4%. However, with the major brand layout, online flagship stores also began to pick up slowly.

According to the data of the China national business information network, in March 2015, the share of the top ten of women's leather shoes sold in China's key retail enterprises reached 39.11%, of which Hasen shares ranked sixth, occupying 3.19% of the market share.

In recent years, consumer consumption presents a trend of increasing consumption structure and increasing proportion of non shopping consumption. Correspondingly, the channel is changing faster and more diversified, and there are emerging shopping centers, multi brand joint stores, experiential stores, etc. online channels are developing rapidly, including the recent popular Internet red traffic realisation and live broadcast. Therefore, the whole market, including women's shoes market, is facing rapid challenges in the rapid change of channels and the change of consumer behavior patterns.

Guang Fa Securities researcher Mi Hanjie said, at present, most of the domestic women's shoes business is still dominated by offline stores, so in recent years, along with the economic slowdown and the weak market demand, the sales performance of the same store has worsened. Many listed women's shoes enterprises have been on the decline since 2013, and there have been no signs of stabilizing since 2017. Many of the same store sales have declined more than 10%, which has had a great impact on the overall performance.

In the view of MI Han Jie, in order to deal with the challenges, on the one hand, footwear enterprises should pay more attention to online channels and increase investment in electricity providers. On the other hand, they also need to improve the quality of offline channels, and pay attention to some emerging channels that conform to consumer habits, such as shopping center shops.

Because the shopping center is inclusive, it contains many shops, cinemas, gyms, KTV, restaurants and so on, which can satisfy all kinds of daily shopping, entertainment, catering and other needs. It complies with the trend of the diversified consumption structure and the proportion of non shopping consumption.

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