Why Do Gap, Wei And BELLE Choose To Split Their Businesses Under The Trend Of Brand Diversification?

After a wave of brand diversification, many brands choose the way to split their businesses in search of new developments.

Splitting business enables two independent companies to increase their focus on their respective commercial advantages, to pool their resources and create their own characteristics.

From "co operation / franchise" to "self management" mode.

Gap split listing

Gap recently said it will be divided into two independent listed companies, one is Old Navy and the other is not yet named, including other brands such as Banana Republic and Athleta. After the news came out, the company's share price rose by 20%, which means that many people at the capital level are supporting this approach.

Gap Robert Fisher, chairman of the board of directors, said, "obviously, over time, the differences between Old Navy's business model and our customers and our professional brands are getting bigger and bigger. Every company needs different strategies to flourish."

The spin off will help the two companies operate with "a more strategic focus and a tailored operation structure".

Stripping the dominant brand Old Navy indicates or will focus more on the development of the professional market. A series of actions reflect the determination of strategic re integration, open up the key development goals with the advantage of Old Navy as the core, and try to drive the overall development of the group.

Aggressive investors urged the company to split up its dominant businesses.

Similar to Gap, there is also a widening of departmental differentiation within the company.

In recent years, the performance of the company has been sluggish, and the performance of Bath & Body Works has continued to grow, which has become the main driving force for the growth of L Brands's revenue.

According to the data, the revenue in 2018 decreased by 0.17% to 7 billion 375 million US dollars, and the annual revenue of Bath and Body Works rose 11.6% to 4 billion 631 million US dollars.

After a number of bank analysts speculated that the L Brands, which is similar to the Gap group, will become the next retailer to spin off its businesses. It is reported that radical investor Barington has formally urged L Brands to take action as soon as possible.

In response, L Brands responded that the group had focused on providing goods that conformed to consumption trends, while strictly controlling the portfolio and cost of real estate. After consulting with financial advisers, it would focus resources on core areas in the future to enhance performance and speed up growth.

Garment business split after delisting

According to Reuters, privatized BELLE international has hired the Bank of America to help its sportswear business prepare for listing in Hongkong in 2017.

According to the news, the company aims to increase the valuation of its distribution departments including Nike and Adidas to 20 billion to HK $25 billion.

Market research institutes have predicted that the value of China's sportswear market will grow to $58 billion in 2023. At present, BELLE's share in China's clothing and footwear retail market is about 6.7%.

In addition, Shanshan stock is also splitting the clothing business after delisting, through restructuring the assets of its clothing brand, Shanshan and other brand clothing businesses.

After the completion of the share reform and the re listing of H shares, the brand clothing business will be run entirely by H-share listed companies, and Shanshan shares will no longer be in the same or similar business. It will also be considered as a "self-management" with higher self-determination.

Although clothing started, it has become a new business of lithium power.

The sales of clothing parts decreased from over 9 to 10%.

From the view of Shanshan stock company, the listed companies which are more diversified than the diversified ones, whose main business concentration and clear positioning are more conducive to asset valuation, can enjoy a higher market premium.

"Splitting and listing will help Shanshan to achieve revaluation in capital market and obtain asset premium, so as to maximize shareholder value."

This may be one of the considerations for many brands.

Bosideng returns to main business (only dismantled)

Compared with the split business and split listing, there is a more branding behavior of Bobby, which is Bosideng's strategy of focusing contraction.

Return to the main business of down jacket, stripping boys and girls and home, and predict the next three years to close seven to 80% of the physical storefront.

On the brand side, under the guidance of the overall strategy of "focusing on the main channel, focusing on the main brand and diversifying diversification", its consumer awareness and brand strength have improved over the past few years, which has also led to the rise of the brand down garment and the total revenue of the group.

Compared with the diversified brand strategy, Bosideng is undoubtedly reverse, but the good results also confirm the correctness of the "two pioneering" pformation strategy. At present, the diversification of the mainstream development path can accelerate the horizontal development layout of the brand. But for the traditional enterprises with historical advantages, the strategy of focusing contraction is more conducive to the depth of the brand's vertical mining of the brand culture, not blindly following the general trend of the market, and finding out the brand positioning is the most suitable way for the development of the personalized brand, and the two one has its own advantages.

Advantages of splitting business

Analysis of the industry, today's clothing business has begun to do some integration.

It is mainly divided into "can save" brand separate operation, separate or will be the capital territory expansion again; and the performance is not good business is eliminated, also helps to the main business of the focus of the road, increase the opportunity of brand in-depth exploration.

Relative to the main concept of split operation alone, splitting allows two independent companies to increase their focus on their respective commercial advantages and create their own brand orientation.

Especially in the case of Shanshan, which is very different from the main business, the company's main focus is on emerging industries, and the old industry will be affected.

In addition to the expansion of capital territory, the brand influence can be improved. The most important thing is to separate the business from being controlled by the main company and having the right to operate independently. This is also the first step to redevelop the brand.

The gap between the departments and the energy shift, while the Wei and BELLE shoes or just want to go this step.

Whether it is split or pluralism, it is timely to stop or expand the territory, and the greater interest is undoubtedly one of the most fundamental driving factors.