How Should La Natsu Bell Go Through The Road Of Diversification After Breaking Through Billions Of Yuan?

Shanghai La Natsu Bell apparel Limited by Share Ltd (hereinafter referred to as "La Natsu Bell") has released its 2016 performance report.

Under the background of "cold winter" in the clothing market, La Natsu Bell relied on the rapid expansion of shops to increase revenue and break through 10 billion yuan.

But the earnings report still shows that La Natsu Bell's net profit has dropped for the first time since its listing, and the number of stores that has grown sharply has led to overall revenue and increased cost pressures such as rent.

As a traditional clothing brand, La Natsu Bell looks forward to a diversified way to break through the performance bottleneck, but there are still many uncertainties about the effect.

Net profit fell for the first time

Through a large number of shops to boost revenue growth La Natsu Bell although revenue has exceeded 10 billion yuan, but also due to the increase in the cost of opening shop reduced net profit.

In 2016, La Natsu Bell's operating income increased from 9 billion 100 million yuan in 2015 to 10 billion 200 million yuan, the first time breaking tens of billions of yuan, an increase of 12.5% over the same period last year.

According to the annual report data, La Natsu Bell's net profit in 2016 was only 532 million yuan, down 13.5% compared to the same period last year.

For the growth of revenue, La Natsu Bell said frankly that the group had always insisted on expanding the retail outlets, but at the same time the large number of stores increased, so that the cost of sales and administrative expenses increased. The total cost of the two increased by 707 million yuan, which directly affected La Natsu Bell's net profit in 2016.

In 2016, La Natsu Bell added 1014 new stores, which increased the cost of rent and cost besides increasing sales and administrative costs.

In 2016, La Natsu Bell's rent cost was 335 million yuan more than that of 2015, which amounted to 2 billion 772 million yuan.

The competitive pressure of the garment industry is increasing. The expansion of the horse race enclosure in the early stage will bring a fatal blow to the enterprise.

From 1995 to 2003, Metersbonwe's stores had spread all over the large and medium-sized cities throughout the country, with nearly more than 1100 stores.

By 2012, the number of Metersbonwe's stores was as high as more than 5220.

In 2008, its revenues and net profit were 4 billion 474 million yuan and 588 million yuan respectively. After that, both revenues and net profits rose.

The rapid expansion of early stage made Metersbonwe develop rapidly. However, due to the global fast fashion brand's attack and a series of problems caused by too many stores, Metersbonwe's performance has been declining, closing 1500 stores in three years, and net profit from profit to loss of 400 million yuan.

In 2015, Metersbonwe lost its first time since its listing, losing 432 million yuan, and its net profit plunged 396.57% over the same period.

Worrying about the old store

As a garment company, which mainly focuses on women's clothing, the sales growth of mature shops will affect the overall profitability of La Natsu Bell retail stores in the future.

The same store sales refer to the sales shop's opening for at least one year. The same store sales in the same period and the same store sales data can better reflect the operation of a mature old shop.

Despite the sharp increase in the number of stores, the same store sales growth rate, which reflects the growth of La Natsu Bell's mature store sales, is declining.

According to the prospectus disclosure data, 2011-2012 years, La Natsu Bell's same store sales growth rate as high as 41.6%, 2012-2013 years, the data dropped to single digit growth is only 6.6%, the latest financial data show that in 2016, La Natsu Bell same store sales growth has been in a negative growth state, to - 6. 4%.

The same store sale is a reflection of the sales growth of the mature shops. The decline of this indicator reflects to a great extent that the situation of the old store is not satisfactory.

Cheng Weixiong, general manager of the clothing industry senior observer and Shanghai Liang Qi Brand Management Co., Ltd., in an interview with Beijing business daily, said that La Natsu Bell was mainly self-employed and operating costs were too high. If La Natsu Bell continues to take the traditional road of expansion, the future is likely to fall into a bottleneck.

In 2016, there were 8907 retail outlets in La Natsu Bell, of which only 0.1% were the number of affiliate outlets.

In addition, due to the same store sales decline and the relatively small number of retail outlets in the year, La Natsu Bell's LaChapelle revenue decreased by 6.4% compared to the same period last year, with a mere income of 2 billion 745 million yuan.

In 2016, the number of shops increased by 495 fewer than that of the previous year. The increase in the number of stores has made it a fast selling garment company, but with the slow expansion of stores and the gradual pformation of new stores into mature shops, it is worth noting that the growth of revenue in the future will be guaranteed.

Where is the road of diversification?

Garment industry is still facing many challenges such as channel adjustment, foreign brand impact and so on.

Many garment companies expect to pass the adjustment period through cross-border acquisitions.

At present, La Natsu Bell owns 10 private brands, including La Chapelle, Puella, 7m, La Babit, Candie, s, JACK WALK, Pote, WALK, and La.

In 2016, La Natsu Bell crossed the border to invest in TNPIHK Co, Limited, and obtained franchise in the South Korean, mainland China and Hongkong, and managed the coffee shop under the Segafredo brand.

As a traditional clothing brand, La Natsu Bell has gradually diversified from the investment clothing field, and has invested in many fields across the border.

In early 2017, La Natsu Bell launched again, investing in BeCool's brand entity "Dora clothes dream", a female garment rental business platform.

In 2017, La Natsu Bell invested the Internet eyeglasses brand in Yin and MI.

In addition, through external holdings or participation, La Natsu Bell added a number of clothing brands, including OTR, OTHERMIX, Siastella, Tanni, Maria Luisa, NN, Mum Meet Me, Kin and sardni, etc.

After the first decline in net profit, it will be one of the challenges for La Natsu Bell to upgrade stores and eliminate poor stores under existing stores.

Diversified La Natsu Bell should consider how to solve the existing problems in the future.

Cheng Weixiong said that a large area of shops will have a large number of stocks. In the future, how to solve the huge inventory, high operating costs and low efficiency and flexible chain reaction of La Natsu Bell are all worth pondering.