Fosun Fashion Upgrade To Industry Group Guo Guangchang Deep Fashion Plate

In March 26th, 00656.HK released its 2018 annual performance.

During the reporting period, the company achieved a total revenue of RMB 109 billion 350 million yuan, an increase of 24% over the same period in 2017, achieving a net profit of 13 billion 410 million yuan, an increase of 2% over the same period last year, and maintained an increase for seventh consecutive years.

In the letter to shareholders, Guo Guangchang, chairman of Fosun international, attributed the group's achievements in recent years to industrial operation.

When it comes to industrial operation, another recent action of Fosun has also attracted much attention. That is Guo Guangchang's "Fosun fashion group", which has been mentioned by many times.

Fosun fashion changes from investment sector to industry group

Fosun began to set foot in the fashion industry as early as 2013, but at that time it became more and more popular as a financial investor in some fashionable brands, including the high-end women's clothing brand StJohn known as knitting, the Italy high end men's clothing manufacturer Caruso, which supplied the first tier luxury brands such as LV and Dior, and the fast fashion brand TomTailor with 95% consumer recognition in the German speaking area. Fosun was a minority shareholder of the three companies in a long period of time.

However, as Cheng Yun, chairman of Fosun fashion group, said in an interview, to do a good job in the fashion industry needs long-term and deep operation. As a small shareholder without too much voice, Fosun is often faced with the embarrassing situation that these enterprises are faced with "no strength and no place", so it is hard to really create value for them and help them achieve profitability.

Thus, at the end of 2017, Fuxing, which was determined to make a difference in the fashion industry, finally became the controlling shareholder of StJohn and Caruso. In the first half of 2018, it bought the most advanced fashion brand Lanvin in France and the high-end underwear brand Wolford in Austria. Fuxing fashion group was also formally established, which marks the formal entry of Fosun into the fashion industry.

So far, Fuxing fashion group owns four holding brands: Lanvin, Wolford, StJohn and Caruso.

The Greek brands FolliFollie and Paris designer brand IRO, which are often confused by the public, are not among them.

In addition to brand acquisition, in February this year, Fosun fashion group also announced the establishment of FosunFashionBrandManagement, a member of more than 15 years of brand operation experience in China. It is designed to provide retail, wholesale and e-commerce services to brands that want to expand its business in the Greater China market, especially for those overseas brands who want to enter the Chinese market but do not understand the local environment and lack local resources.

At present, the company has taken over the operation of Wolford and StJohn of the Fuxing fashion brand in Greater China, and has also opened the same services to the brands outside the Fosun system.

From the end of 2017, it was announced that the delivery of four brand control rights will be completed in 2018. Then, by the beginning of 2019, the brand management company was established and formally took over the two major brands. In the short span of a year and a half, the action of the brand is frequent. We can see that the value of the star's attention to the fashion plate and the execution of its fruit are broken. Apart from the integrated operation at the group level, the brands of the group have already started their own revival plans.

Post investment management of Lanvin

More than a month ago, in February 27th, in Paris's Clooney Museum in thirteenth Century, the 31 year old BrunoSialelli released his first season of work as the creative director of Lanvin.

In addition to more youthful and rich design, we also noted that the proportion of garments and footwear accessories has been greatly improved in the show, revealing that the brand will strive to get rid of the embarrassment of "no applause" and pay more attention to the success of commercialization.

According to the industry media report, the brand is about to appoint two heavyweight executives to design handbags and shoes, and adjust product line strategy. There are also plans for pformation of the store, including flagship stores in Paris and Losangeles.

The brand is also considering the active expansion in London, New York, Milan and Asia. Its flagship store at BFC the Bund financial center in Shanghai and the 130th Anniversary Theme Exhibition at the Fuxing Art Center are also being prepared in an intense way to help Chinese consumers better understand the world's oldest high-end fashion brand in France.

This series of decisive and purposely clear movements is the first answer in the past 12 months since the star took over the brand.

In February last year, after the controlling shareholder of Lanvin, the former shareholder of acquiring company, the company quickly reformulated the company strategy and adjusted the management team. In August of the same year, it announced the appointment of the former Sandro global CEOJean-PhilippeHecquet as the new CEO of the company.

Jean-Philippe, known for its hard work, has helped French fashion brand Sandro grow several times in the world, especially in Asia, and has served in LVMH for more than 14 years.

With both luxury brand operation experience and young brand development capability, he is expected to help Lanvin build a new organizational system and development path as soon as possible.

In fact, if we dig deeper into the follow-up actions of other star brands, we will find that this latest fashion group that Guo Guangchang has frequently mentioned in public has achieved good results.

Creating collaborative value of 1+1>2 platform

The first is Wolford, which has completed its holding acquisition since mid year. Considering that its product development and production capacity is strong enough, Fosun will focus its efforts on the first stage of the cost organization structure optimization, digital operation of the company and brand image youthful three pieces.

In the first three quarters of the 2018/2019 financial year's earnings report, we can see that although the direct retail business and wholesale business have declined, though the market is weakening, the company's reform and reorganization has achieved initial success. During the period, the total cost of 10 million euros has been saved, thereby eliminating the adverse effects of sales decline.

Meanwhile, online business sales grew by 10.2% year-on-year.

At the same time, the company significantly increased its investment in the brand. The cash expenditure for investment rose to 6 million 800 thousand euros from 800 thousand euros in the first three quarters of this fiscal year, a large part of which was used in the establishment of the new brand image and reached an important milestone in this respect. In August 2018, a new concept of window was introduced. At the end of the year, the company launched a new brand image and opened the first new concept store in Amsterdam, Holland in early 2019.

The brand new visual image and tattoo silk stockings, segmented stockings, logo stockings and other more personalized products will make the brand more attractive to young consumers.

With the help of Fosun fashion brand management, the Asian market will probably become a significant growth point for Wolford in the future.

Similarly, Italy's high-end men's clothing manufacturer Caruso, known for its excellent fabric and full hand sewing, was dragged down two years ago by the industry's downline and overly aggressive retail store strategy. Its performance continued to suffer losses, and then the small shareholder Fosun was promptly injected and purchased.

After its entry into the company, Fosun quickly reinvigorate its business by appointing new management, providing financial support, optimizing cost and debt structure, and adjusting retail and overseas market strategies.

In 2018, Caruso sales revenue achieved a two digit growth over 2017. At the EBITDA level, it turned out to be the first time to turn losses into profits. It became the first successful case for Fuxing fashion group to help its brand achieve turnaround (business revival).

After the financial recovery, Caruso carried out brand positioning and product strategy adjustment in the second half of 2018, expanding from men's business dress to high quality all men's clothing and accessories around Italy's elegant lifestyle, grabbed the fast growing market of men's clothing in recent years, and tried to attract more male consumers with more relaxed design and more competitive prices.

Then, StJohn, after completing the pformation from passive small shareholder to strategic controlling shareholder, Fosun also began to promote the brand to use its deep accumulation in the knitting process and the US market, as well as the new CEO and design team to pform into a more luxurious brand with a more sense of design, younger and more customer experience.

Although it is still in the early stage of pformation, its changes in the global and Chinese markets are worth looking forward to.

From Paris luxury fashion house to high-end underwear in Austria, to high-end men's clothing in Italy, to high-end knitted women's clothing in the United States, the four brands of Fosun fashion group show interesting diversity in geography and category.

In addition to positioning high-end, the four brands all have their own unique production technology and subdivision advantages, but because of past management or lack of funds, their performance has been in a predicament.

But fortunately, brand power has not been diluted too much.

Through new capital injection and management empowerment, Fosun fashion group has the hope to make use of the advantages of various brands to create 1+1>2 platform synergy value.

Deep plowing fashion plate

Restructuring is a long-term and continuous process.

Fu Xing, who has rich experience in post investment empowerment and turnaround, seems ready to give fashion industry enough patience and input.

Choosing this time to overweight the fashion industry is not just because fashion is a natural and indispensable part of the "global happiness ecosystem" built by Fosun, but also because of the tremendous opportunities for the industry to focus on China's dynamic global business.

Cheng Yun said in an interview that in the past few years, the fashion industry has suffered unprecedented shocks and turbulence under the great changes in technology, media, communication and consumer behavior.

In turbulent times, some brands quickly seize the market and the new generation of consumers through successful product upgrading and marketing strategies in a timely strategic pformation. But at the same time, many brands have had brilliant history and brand accumulation, but failed to keep up with the market pformation and lagged behind competitors.

At the same time, with the development of economy and the improvement of consumption level, China has become the world's first luxury consumer to occupy nearly 40% of the world's luxury purchases.

Fosun is looking at this opportunity, hoping that with its rich industry accumulation, leading ability in science and technology and digitization, and its vast resources in the Chinese market, it helps those enterprises who are lagging behind in the wave of the industry but have strong brand power and product potential to achieve the revival of their performance and brand recovery.

In recent years, brands such as Gucci, Burberry and Balenciaga, which have successfully changed their management, designers and younger digital strategy, have successfully established themselves in the new generation of consumers.

Fosun already has a lot of experience in investing in enterprises through industrial capabilities and resource empowerment and helping them reinvigorate their businesses.

As early as 2010, Fosun entered its promising tourism market by investing in the ClubMed, which was in deep trouble.

With the help of Fosun's industrial experience and resources, the latter rapidly expanded in China in just a few years, and increased efficiency in business mode, supply chain management and marketing means. After second years of privatization, it realized profitability.

Subsequently, Fosun has successively arranged the brand of travel agency brand, such as the tourism brand, the brand of the scenic spot management, the brand of the scenic spot, the exhibition of the Performing Arts brand, the one-stop Resort and holiday complex, Sanya, Atlantis, and so on, thus forming the Fuxing tourist cultural group covering the whole industrial chain of tourism today.

Last year, 01992.HK was successfully listed on the HKEx, achieving a net profit of 389 million yuan in 2018 and a 177.9% increase in adjusted EBITDA.

Another example is the British football team wolves, which had been fully bought by Fosun 2 years ago.

At that time, wolves were only hovering in the middle and lower reaches of the England championship, and in just 2 years after the star took over, the team won the championship and went to the Premier League.

In the new season's Premier League, wolves also performed well, temporarily playing seventh league matches, and eliminating old strong Manchester United to reach the England FA Cup semi-final.

Whether we can replicate the success stories of ClubMed and wolves is not known, but the strategy of deep fashion sector seems quite firm.