Big Money: Lost 3 Billion HK Dollars In 4 Years, How Did Daphne, A Public Shoe King, Make Money?

Faced with the loss of HK $1 billion last year, Daphne, the popular shoe king, is very sad.

In the recently released 2018 earnings report, Daphne International (00210.HK) wrote: "in 2018, the group continued to implement a business pformation strategy aimed at restoring profitability.

However, the adverse economic environment to combat consumer desire makes the effect of the group's business pformation plan not fully reflected in the 2018 financial performance.

Originally wanted to pform and upgrade to return to profitability, who thought the economic environment was too depressed, Daphne pushed the loss pot to the big environment.

But in the village love, the most wealthy rich man, Dana, said: "I have no ability to say that I have no ability. Why do you go there?

Are you the one who destroys the environment?

You know, Daphne's losses are not in the past two years.

In 2015, Daphne lost HK $380 million in the year, HK $837 million in 2016, HK $742 million in 2017, and HK $1 billion 10 million in 2018.

The number of stores has also decreased from 6881 in the peak period to 2648 now.

Share prices and market capitalization also fell horrible.

At the peak of Daphne International's stock price in 2012, its share price exceeded HK $11 and its market value exceeded HK $17 billion. Now, the share price has shrunk to HK $0.25 and its market value is HK $412 million.

It is hard to say that Daphne's current situation is attributed to the "big environment".

In the past 32 years, a similar rise and decline has been staged in this old shoe company.

But this time, the pain of cutting meat and the cruelty of the market, Jean Daphne himself pinched his sweat.

A generation of shoe king

Daphne, the goddess of laurel, is a symbol of beauty and chastity in Greek mythology. Daphne, the brand of women's shoes, has been a representative of success and success in Chinese shoe enterprises.

In 1980, the financial crisis caused by the financial crisis swept through Taiwan. Chen Xianmin, one of the founders of Daphne, lost his job. Under the "desperate situation", he raised 20 million NT dollars with his elder brother Zhang Wenyi and co founded the "Qiao Zhi Limited by Share Ltd" to enter the footwear industry.

At that time, after 30 years of development, the industry of Taiwan footwear industry was becoming more and more mature, with excellent shoes and cheap labor. It became the top choice of famous shoe enterprises all over the world, once known as the "shoemaking kingdom".

Zhang Wenyi family, that is, Chen Xianmin's father-in-law mother family, or shoemaking family.

"Qiao Zhi enterprises" catch up with the express train from the nurses shoes, and gradually rely on the OEM to take a place.

But in less than 10 years, along with the awakening of labor awareness and the increase of manufacturing costs, the footwear industry in Taiwan is on the decline. "Qiao Zhi enterprise" is facing difficulties in recruiting workers, and the production line is about to stop.

Fortunately, Chen Xianmin has a keen sense of smell.

In 1987, the Taiwan authorities opened their relatives and ended the 38 years of isolation. Chen Xianmin and Zhang Wenyi rushed to Hongkong to establish the "wing en group", the predecessor of the Daphne group. In 1988, they came to Fujian and set up shoe factories in Putian, becoming one of the first Taiwanese businessmen to rush to the mainland.

The profit margin of the OEM is limited. Chen Zhang two and Chen Xianmin's brother-in-law Chen Mingyuan decided to create their own brands. In 1990, "Daphne" was born.

In the past 10 years, Daphne has gained popularity in mainland China by differentiating regional design, "high and inexpensive" pricing strategy, "three pack" after-sales service and overwhelming advertising.

In 1995, wing en group was listed in Hongkong. In 1996, Daphne changed wholesale to direct or agent, and spread the sales point throughout the country.

But rapid expansion soon brought crisis.

In 1999, Daphne's performance had a serious decline. In order to inventory, it led to long-term discounts, coupled with problems such as old style, shoes and grinding feet. Daphne became a discount brand in the hearts of consumers, followed by a $15 million funding gap and corporate executives' job hopping.

When the second generation of leaders of young enterprises took office, Chen Xianmin's nephew Chen Yingjie was appointed as the general manager of Daphne. He joined hands with the old and young to restore the defeat through a brand new image, a mid-range positioning, and a strategy of closing stores, promoting sales and inventory.

In 2000, Daphne turned a profit.

Through this campaign, Daphne has revival, and the younger generation has come to the fore, taking a diversified line, invites S.H.E. and other popular celebrities to endorse, and builds its own logistics with great momentum. Following the trend of community development, it creates a brand oriented "shoe cabinet" for the community, and also gets Adidas's China's zero sale agency right.

In 2004, Daphne claimed that 1 out of every 5 pairs of women's shoes in China came from Daphne.

At its peak, Daphne can sell 50 million pairs of women's shoes in 1 years, and sit firmly in the chair of the first brand of mainland women's shoes for nearly 5 years. The market share is nearly 20%.

In 1999, Daphne's annual turnover was less than 1 billion yuan, and 10 years later, the figure was 7 times.

There is also a rumor that Chen Yingjie said, if BELLE wants to do "Mercedes Benz" in women's shoes, Daphne will be the "TOYOTA" in the women's shoes industry.

Nightmare repeats

But in Daphne, history is always an amazing repetition.

It was difficult to slow down from the crisis in the end of the century, and Daphne began to recycle to death.

The first is rapid expansion and confusion in management.

Daphne's first generation of leaders set a huge and complex distribution system.

In Daphne, there are direct sales franchises, franchised stores, consignment joint ventures, self-employed agents and other forms of sales channels, and after investigation, Daphne found that in the second and the following cities open shop, low rent and high efficiency, then gradually withdraw from the mall, down to the 18 line city streets.

Soon, Daphne's stores spread all over the country.

In the 5 years from 2008 to 2012, Daphne has opened nearly 800 new stores every year. At its peak, the number of stores has reached 6881. To this day, Daphne can also be seen on the street beside the county supermarket.

But many complex stores do not take care of it. Daphne wants to increase the proportion of Direct stores.

Originally, the franchisee and Daphne's contract was signed for 3 years. In 2011, Daphne began to renew the contract unilaterally without even joining the franchisee, and even tried to beat the franchisee with a low price strategy.

The expansion of Daphne stores in the past 10 years is also the most dramatic 10 years of rising housing prices.

Zhang Wenyi, one of Daphne's founders, used Suzhou's sales volume as an example in 2007 to show that second tier cities and lower cities have lower sales costs and larger profit margins.

But in 10 years, housing prices in Suzhou have long been the same.

There is also huge inventory pressure associated with expansion.

Originally, Daphne was pleased with its logistics system and replenishment capacity, but the dilemma of oversupply quickly concealed the advantages of logistics.

In 2009, Daphne's inventory turnover period reached 180 days, when the reasonable cycle was generally 120~160 days, and the inventory turnover period in 2015 even reached 218 days.

That is to say, without adding the time of design and production, a shoe of Daphne will cost more than half a year from storage to sale.

With the expansion of production, the labor cost of the mainland is also improving.

The discount method used to go stock has further lowered Daphne's brand image.

"Noble is not expensive" has always been the positioning of Daphne since its establishment.

But the strategy of "golden mean" is not pleasing to the new consumer escalation.

The price of Daphne women's shoes is usually between 100~400 yuan, but in the view of young consumers, online shopping can sell more unique and better quality shoes at the same price.

In the market below three or four lines, female consumers often feel that Daphne's pricing is too expensive. It is better to buy the brand of real two pairs and 100 yuan, such as Dadong, and Daphne will not let go when it launches new products.

If you want to pursue grades, consumers also prefer to spend more money on brand name shoes.

After 90 years of celebration, the girl told the author: "when reading, I think Daphne is quite tall and can't afford it.

But after work, I feel that Daphne is out of circulation.

Another 80 year old female consumer Sujia also said bluntly: "when I was in college, Daphne was on fire, but I couldn't afford it. When I upgrade my consumption, I despise it."

In the past, you didn't answer me, but now I am, you are a great fan. This is the true portrayal of Daphne.

Once, Daphne's slogan "beautiful 100 points, beautiful without discount" echoed through the north and south, but helplessly went to the inventory discount strategy, but further pulled down Daphne's underpants.

Low price and quality problems.

In the interview of Anta, who has just undergone a difficult pformation, he said: "expensive things are good to do, cheap things to do well, cheap and good things to do."

Daphne seems to have chosen a shortcut for the mass line, but in fact it has chosen the most difficult way to go, and has not yet gone well.

In order to control costs, Daphne women's shoes are usually made of PU (artificial leather), and the material is hard. Even women's shoes priced at more than 200 yuan will use PU skin.

The rough statistics of Daphne's flagship store sold by Tmall are about 690 shoes and packages, which are made of cowhide, sheepskin, pigskin, and so on. There are no more than 80 pieces.

Over the past few years, Daphne has also frequently been included in the quality blacklist, including children's shoes.

"The shoes that first bought Daphne felt that the quality was acceptable, but later found that the quality of shoes was getting worse and worse, so it was better to buy more low-end brands."

Another young female consumer, Winnie, told the author.

Poor quality and old style.

In an interview with the interface news, Daphne's third generation head and Zhang Wenyi's son Zhang Zhiqiao said: "Daphne can't become a fashion brand completely. Its historical brand value is still cost-effective, so the market can't completely overturn it."

Indeed, the opening of Daphne Tmall flagship store is hard to get rid of in fashion in 2019.

Old shoe companies like Daphne have a lot of weight and heavy historical burden. Usually new products are designed 1 years ahead of time, designers only adjust or imitate big ones for old ones, and want to change bigger ones.

And the beauty of consumers is constantly advancing. After 95, Molly said, "Daphne shoes are pretty good, but now they are ugly."

Looking back at the development history of Daphne, it can be found that in the past 30 years, Daphne has been insisting on sales orientation and constantly falling into a vicious circle of imbalance between production and marketing.

Daphne is not without reflection, but the opportunity to seize is always flowing away from the fingers like fine sand.

In 2009 and 2010, in order to develop women's shoes wholeheartedly, and at the same time, the brand of sports shoes and clothes of the agency declined. Daphne closed all the original Nike brand sales outlets, and gave up the renewal of the mainland Adidas sports shoes dealer's qualification.

However, since 2010, more comfortable and casual sports and street style have gradually occupied the T platform of the world and become a trend. Daphne still dominating the "Lady wind".

In the electricity supplier channel, Daphne has already laid out the layout.

In 2006, Daphne entered Taobao, and also developed its own business platform, "Ai Dai". Before and after 2010, the performance of the electricity supplier was about 2 million yuan per month.

But Daphne's desperate choice has left the development of the electricity supplier stranded.

In 2010, Daphne and Baidu jointly invested in the electronic business platform "Yao point 100". In order to support this platform, Daphne reduced the layout of the electricity supplier, closed Jingdong, Le Tao and other distribution channels, but in the past two years, "Yao point 100" broke down due to the fragmentation of the capital chain and lack of experience, and the development of the electricity supplier was dragged down.

On the promotion of brand image, Daphne also made efforts. In 2014, Gao Yuanyuan co founded the high-end brand "circular Ondul'" and the high-end brand "love". But the annual report shows that the high-end brand's contribution to the total turnover is only about 14%, which failed to carry the banner of Daphne.

When shoes were not sold well, they had to think of some other way out. In 2016, under the guidance of Chen Yingjie, the second generation of helmsman, Daphne participated in the production of the TV talent show "bee maiden team". It was called "ViVi Meimei" magazine, and it took a diversified route.

Chen Yingjie is a "treasure boy". He was a good friend with famous singer Richie Ren when he was young. He also worked with Richie Ren and others in the Taiwan group for the famous "red snake Orchestra".

After 20 years of immigration, Chen Yingjie seems to have broken off the music dream and married mainland actress.

On the face of it, Daphne's investment in the bee girl team also lost HK $26 million 400 thousand.

In 2016, Daphne earned HK $34 million 500 thousand through the programme, and its operating expenses increased by HK $60 million 900 thousand.

Diversified routes did not go well, and within the family were four waves.

In 2004, Zhang Wen Yi, one of the founders of Daphne, started a new business. He became a "legislator" in Taiwan and founded Shun Tai Yu company. As a result, he was sentenced to the mainland for buying and selling fake land, lifting stock, and being arrested by the Taiwan authorities in 2007. The share price of Daphne also dropped.

After the retirement of the first generation of helmsman Chen Xianmin, the second generation of helmsman Chen Yingjie closed shop and diversified routes, and often questioned Chen Yingjie's lack of concentration. Chen Yingjie finally left the Group Chairman's seat in 2017.

After the third generation of helmsman Zhang Zhiqiao and Zhang Zhikai took office, they accelerated the pace of change, changed the design of the brand store, switched off the street shops with poor benefits, pferred to the shopping center, and promoted the cooperation between Daphne and Disney, the US Opening Ceremony.

However, the recognition of Opening Ceremony is not high in China, and the appearance of cooperative funds is also hard to say.

But "seeing a rabbit and looking after a dog is not too late."

In spite of the future, Daphne wrote anxiously in its annual report: "for the group, it is becoming more and more challenging to keep up with intensified market competition and increasingly complex consumer demand."

Mistakes have been circulating for nearly 30 years, and some changes are better than boiling frog suicide in warm water. According to the current annual report, Daphne's stock situation has returned to health, but the pain of closing stores and losing money is more than before.

Looking back at the development history of Daphne, we will find that there is no doubt that the first generation of helmsman has eyes and agility, but "likes to be bold and restrained by love". Similarly, in the face of expansion desire, restraint, concentration and rational judgement are indispensable.

Even if Daphne pushed the biggest stakes to the vast middle end market, the Manolo Blahnik and the founder of the same name said: "the shoes or boots produced have some unusual principles.

They provide the best quality products.

It's hard to master the trend.

We must have innovative design ideas to lead the new trend of fashion in the future.

While restoring the market, Daphne may have to find itself again.

Author: Jade deer