Looking Forward To The Breakthrough Of Social Media Marketing, Can Daphne Make A Comeback?

At the most brilliant time, the generation of "shoe king" Daphne had a total of 2 sales outlets, and almost every five pairs of shoes sold in the mainland came from Daphne's factories.

In recent years, however, Daphne has been in a predicament of profit loss.

On the evening of March 27th, Daphne (00210.HK) released its annual performance report for 2018.

According to the financial report, in 2018, Daphne's gross profit margin dropped from 52.8% to 49.9%, and the shareholders of the company accounted for HK $994 million.

It is understood that this is Daphne's fourth year loss.

Changjiang Commercial Daily reporter noted that in the peak of 2012, the number of Daphne's brand stores was close to 7000. Now, in 2018 alone, Daphne closed 1016 sales outlets. In terms of conversion, it closed 2.8 stores a day.

At present, there are less than 3000 stores in Daphne.

4 years loss of nearly HK $3 billion

In March 27th, Daphne International (00210.HK) released its annual performance bulletin as at December 31, 2018.

During the reporting period, Daphne's international sales volume was HK $4 billion 127 million, down 20.8% from the same period last year, and the share loss of shareholders was about HK $994 million, up 35.4% from the same period last year, and the gross margin decreased by 2.9 percentage point to 49.9%.

It is worth mentioning that this is Daphne's fourth consecutive year of loss.

In fact, since 2015, Daphne's performance has started to drop rapidly.

Data show that in 2015, 2016 and 2017, Daphne's losses were HK $380 million, HK $838 million and HK $742 million respectively.

According to statistics from the Yangtze daily, Daphne has lost a total of HK $2 billion 926 million from 2015 to 2018, and its share price has dropped from nearly HK $3 in early 2015 to about HK $0.25.

As for the weakness of the group performance in 2018, Daphne said that the sales volume of the group declined and the number of shops in the core brand business decreased by 26.2% to 2648, resulting in a decline in sales.

It is reported that by December 31, 2018, the group closed 1016 sales outlets in the year, and converted nearly 2.8 stores a day.

At present, the group has a total sales point of 2820, including the core brand business 2648 sales points and other brand business 172 sales points.

It is understood that Daphne's core brand business refers to the retail business of footwear products and accessories sold in mainland China, Daphne and shoe cabinet.

2018 net sales of 941 sales outlets (including 899 Direct stores and 42 franchised stores) all year round, and the number of sales of core brand business decreased by 26.2% over the same period.

Such a large closet also explains to some extent the current predicament of Daphne.

It should be noted that the narrowing of Daphne's sales network and the decline in same store sales are also important factors leading to a decline in core brand business turnover from 19.2% to HK $3 billion 799 million.

According to the financial report, the core brand business accounts for 86% of the total revenue of Daphne group.

The gross profit margin of core brand business decreased by 4% to 45.2% in 2018, and the average selling price dropped to 155 yuan.

By the end of April 4, 2019, Daphne's market value was HK $409 million, and its market value shrank by 98% from its peak of HK $19 billion 500 million.

Behind the electricity business, the style is approved old.

In fact, the expansion of Daphne began in 2002 and accelerated after 2005.

At that time, Daphne adopted the form of Street store and franchised expansion, the main product price of 200 to 300 yuan, and the sales channels of more than four to six line cities, making it develop rapidly.

It is understood that in the ten years from 2003 to 2013, the number of Daphne's general store shops increased from 739 stores to 6702 in 2013, an increase of 9 times.

But the rapid expansion also left Daphne with no hidden danger.

After 2012, the demand for women's shoes began to decrease due to the downturn in the industry. From then on, Daphne put more energy into advertising investment. In 2012, its sales cost accounted for almost half of the sales revenue.

In addition, lower market demand kept Daphne's inventory higher.

Data show that Daphne's sales revenue in 2013 amounted to HK $10 billion 447 million, and its inventory reached HK $2 billion 643 million.

At the same time, before and after 2012, the era of electronic commerce is coming, and the simple offline store sales mode seems powerless when competing with the electricity supplier.

In recent years, many consumers think that Daphne shoes are becoming more and more old-fashioned and lack of innovation, resulting in a sharp decline in sales.

At the same time, the rental of stores and the increase in labor costs have also increased Daphne's operating pressure.

In fact, Daphne also admitted in its earnings report last year that thousands of self run shops made up of large scale expansion resulted in "heavy assets" in business mode.

To mitigate risks, Daphne plans to introduce partner system.

In addition, the electricity supplier sector will gain more power to work closely with Daphne product design and supply chain departments. In 2019, Daphne will cooperate with a brand consulting firm to adjust its brand marketing strategy and focus on social media marketing.

The company will continue to promote implantable products and help its products get more exposure in the media.

Cheng Weixiong, general manager of textile and clothing management and Shanghai Liang Qi Brand Management Co., Ltd., in an interview with the Yangtze daily news reporter, said: "Daphne plans to focus on social media marketing in the future. There are some kinds of ghosts, but hot spots are not pursued by Daphne and other brands. Daphne should make a brand repositioning and make accurate product development."