Fosun International Buys And Sells Behind: The Acquisition Of Fashion Brands Make Money Difficult

On the last day of last year, Guo Guangchang, chairman of Fosun international, sent an internal letter: "2018 times, and three things that I will continue to do well in the new year".

Among them, Fosun fashion group and Fosun medicine, Fosun tourism culture group and other industrial groups have been placed in an important position.

Soon after, Fosun international issued a takeover offer to Germany's fast fashion brand Tom Tailor.

In February 19th, Fosun International announced that the company intends to subscribe to the German apparel company Tom Tailor, a total of 3 million 849 thousand and 500 shares, the total amount of cash contributions to 8 million 699 thousand and 900 euros.

After the completion of the subscription, Fosun international will hold about 14 million 969 thousand and 500 shares of Tom Tailor shares, equivalent to about 35.35% of all issued shares and voting rights of TomTailor, after Fosun international has held 28.89% of the brand.

Fosun international will also act as an offeror to make voluntary disclosure offer to all Tom Tailor shareholders, so as to acquire all Tom Tailor shares that have not been directly held by the company.

The offer price per share of TomTailor shares is 2.26 euros.

Is Tom Tailor cost-effective?

Fosun international has said that it is a major investor in Tom Tailor, increasing its equity in Tom Tailor shares through this paction, and will benefit from the long-term growth potential of TomTailor.

This is not the first acquisition of Tom Tailor by Fosun international.

According to public information, Tom Tailor group was founded in Hamburg, Germany in 1962. It has two main brands of TomTailor and Bonita, all of them are fast fashion brands.

Currently, there are more than 1200 shops in 31 countries around the world.

Tom Tailor began to enter China in 2003.

At that time, fast fashion brands such as Zara and H&M had not yet opened up in China.

It can be said that TomTailor has broad market space when entering China.

It is understood that at that time, Tom Tailor mostly opened a department store in the form of agents.

However, due to the lack of understanding of China's consumption environment, TomTailor's development in China was not smooth. In 2006, it once withdrew from China due to poor performance.

In 2012, Zara, H&M, UNIQLO and other brands entered China in succession. Chinese consumers' acceptance of fast fashion brands was getting higher and higher. TomTailor also returned to China and opened flagship stores in Xidan, Beijing.

Regrettably, the flagship store finally closed down due to a delay in a clear shop plan.

It was not until 2014 that Fosun first invested in Tom Tailor, and Tom Tailor was able to expand to the Chinese market again.

In the following year, TomTailor's first flagship store opened in Shanghai Hongqiao Tiandi shopping center, with a total area of 540 square meters.

Tom Tailor shifted its strategic focus from Europe to China.

As far as the current development is concerned, the awareness of Tom Tailor in the minds of consumers is not very high, far less than that of Zara, H&M and UNIQLO.

At present, Tom Tailor has only a small number of shops in Shanghai.

It is understood that after the participation of Fosun international, the operation of Tom Tailor has improved.

Cheng Yun, President of Fosun fashion group, said in an interview that in 2016, TomTailor had many difficulties in its operation. Its net profit after tax was 73 million euros, and its share price fell to 3.6 euros.

Since then, Fosun international and TomTailor have jointly adjusted the brand and streamlined and optimized the global retail stores.

In 2017, Tom Tailor achieved profitability and net profit of 17 million 100 thousand euros.

According to Fosun international semi annual report 2018, sales of Tom Tailor 2018 in the first half of the year amounted to 399 million euros, with net profit of 2 million 30 thousand euros.

However, according to its latest financial data, Tom Tailor lost 300 thousand euros in the third quarter of fiscal year 2018/2019.

In view of this, whether Fosun international can benefit from the long-term growth of TomTailor still needs to ask a question mark.

Cheng Weixiong, general manager of textile and clothing brand management and Shanghai Liang Qi Brand Management Co., Ltd. believes that in the current market situation, the layout of fast fashion is not a wise choice.

In recent years, Zara, H&M and other fast fashion giants are facing development bottlenecks. Consumers love the fast fashion brands more than before. TomTailor has no sense of existence in China.

Judging from the proportion of this increase, it may be a simple investment behavior.

Buying and selling will not stop.

In 2011, Fosun international began to enter the fashion industry.

Today, Fosun international owns Lanvin, Wolford, FolliFollie and other fashion brands.

(win win network is arranged according to public information)

Not only that, according to fashion headlines, Fosun international also wanted to acquire Italy luxury brand Prada and French down brand Moncler, but at that time there was no deal for various reasons.

According to the financial times, Guo Guangchang said in an interview that in view of the strong financial position of the company and is aiming at more overseas pactions, the group is carefully planning investments in the healthcare, education and tourism industries, including the fashion industry.

Visible, Fosun international future has great probability to other fashion brand income pocket.

From the financial situation disclosed in the semi annual report of 2018, Fosun international has "spare money and heart not panic".

In the first half of this year, Fosun's international revenue reached 43 billion 510 million yuan, up 20% over the same period last year, and net profit to the parent company amounted to RMB 6 billion 860 million yuan, an increase of 17% compared with the same period last year, and its earnings per share were HK $0.98 (about 0.80 yuan), an increase of about 18% over the same period last year.

Among them, the total income of the happy ecological sector including fashion is about 87 yuan, an increase of 33.5% over the same period, and the profit attributable to the parent company is 833 million yuan, up 5.2% over the same period last year.

In Cheng Weixiong's view, the fashion layout of Fosun international needs a clearer plan.

At present, the acquisition of brand star bell has luxury goods and popular brands.

However, at present, the domestic market does not need mass brands, and the acquisition of brands is only the first step. How to combine the current needs of domestic consumption levels and brand management is the next step that Fosun international has to invest in.

Acquisition of brand is facing profit pressure

However, it is not easy to manage a brand after buying it.

In May 2018, Fosun bought nearly 51% of Wolford with 55 million euros.

In mid January, Wolford issued an early warning and expected to continue to record losses in 2018.

Wolford explained that the continued weakness in market demand and sales in the Christmas holiday season were less than expected.

According to Wolford financial report, before the acquisition of Fosun international, the brand has been continuously recording losses, and the situation is not optimistic.

In fiscal year 2017, Wolford sales fell 5% to 152 million euros and lost 3 million 390 thousand euros; in the 2018 fiscal year, Wolford sales fell 3% to 149 million euros, a new low of nearly 5 years, with a net loss of 9 million 220 thousand euros.

Compared to the weak performance of Wolford, Greece's luxury accessories Folli Follie is more troublesome.

Last September, Folli Follie was scandalous in financial fraud.

FolliFollie confirmed in a statement that an external consultant hired by the company found its sales revenue was close to 90% less than that in the financial statements after investigating its Asian operations.

However, Folli Follie is the first major acquisition of Fosun international to develop its fashionable territory, and it is only a financial investment. Fosun international has not been substantially affected.

Since then, Fosun international has also increased its holdings of FolliFollie shares.

Immediately after that, Folli Follie issued a statement last November 15th calling for bankruptcy protection to complete the restructuring plan.

According to the no fashion Chinese network report, the market has been widely rumored that the Fosun international conference will take part in the restructuring of FolliFollie, and Fosun international expresses the need to fully understand the exact financial situation of Folli Follie.

Fosun International's annual report at the end of August showed that investment in Greek companies turned from a 62 million euro yield to a loss due to a false accounting scandal.

In the paction of FF Group, Fosun International's total investment was 86 million euros, during which it received a total dividend of 7 million euros, while the collapse of FF Group's share price plummeted the fair value of the investment by 101 million euros.

Lanvin's performance is also in the doldrums for a long time.

According to the fashion business express quoted public data, Lanvin sales began to decline after its peak in 2012. In 2016, Lanvin sales plunged 23% to 162 million euros, and recorded its first loss in more than 10 years, with a net loss of 18 million 300 thousand euros.

Another source said, Lanvin2017 sales fell by 40.1% to 97 million euros, with a total loss of 27 million euros.

After acquiring Lanvin in February last year, Fosun international has made up its mind to revive Lanvin, which is chaired by Cheng Yun, board chairman of Fosun fashion group.

However, according to industry analysis, roughly calculating the Lanvin brand restructuring requires about 100 million euros of funds.

Visible, Fosun international also needs a lot of hard work for Lanvin.