Li Bang Mens Loss Situation Improved, Ruyi Group As "Savior"

If asked what fashion styles the boys like today, most of the answers will be "Chao", "personality" and "original fashion". The old, single and business men's wear is no longer the fashion trend pursued by millennial generation of young consumers.

The trend of new men's wear has gradually become the mainstream, which has caused a certain blow to traditional men's clothing enterprises, and the growth of this performance also encountered resistance.

Traditional men's clothing enterprises mainly produce shirts, Western-style clothes, casual wear, western trousers and so on. The monotonous edition, the fixed style and the dull color are the people's impression. Nowadays, it is hard to attract the younger generation's eyeballs, so the decline of their performance is inevitable.

A few days ago, Hongkong senior men's clothing retailer Li Bang Limited (hereinafter referred to as "Li Bang" men's wear) released its annual results, showing that its operating income reached HK $1 billion 723 million in 2018, an increase of 1.28% over the same period last year. The core business realized a loss of HK $248 million, down 43.74% compared to the same period last year. The profit attributable to shareholders should be realized at HK $265 million, down 56.47% compared to the same period last year, and the gross profit was HK $1 billion 195 million, an increase of 3.02% over the same period last year.

This is the result of the fourth year performance of Li Bang menswear after a loss in 2015.

Net profit in 2015 was HK $89 million, HK $442 million in 2016, HK $608 million in 2017, and the deficit continued to deteriorate.

Li Bang menswear said in the earnings report that it has benefited from the new authorization agreement with the Ruyi group that the gross profit margin has been improved, from 68.2% in 2017 to 69.4%.

In addition, Li Bang menswear adjusted its brand positioning and pricing, further controlling costs, reducing output costs and raising gross margins.

It is noteworthy that after making a loss, Li Bang men's clothing started a series of rectification policies, focusing on brand management structure, cutting costs and structural reform of more efficient supply chain to strengthen the group's fundamental consolidation. The cost control was achieved by shutting down stores and closing Hongkong's clothing factories and layoffs, but achieved little effect.

In 2017, the net liabilities of Li Bang men's clothing reached HK $1 billion 169 million.

The emergence of Ruyi group saved the performance of Li Bang's men's wear.

In November 2017, Li Bang men's wear issued 1 billion 846 million new shares to the Ruyi group, with a paction price of HK $2 billion 200 million. After the completion of the paction, Ruyi group will hold 51.38% of the shares to control the Li Bang men's wear.

Ruyi group has begun to pform its Kent&Curwen, Cerruti 1881 and Gieves&Hawkes brands after taking up the Li Bang men's wear. In order to attract the new generation of consumers and cater for the trend of leisure style, it will introduce the concept of young product lines and new stores, and gradually develop into younger ones.

In addition, Li Bang men's clothing opened the layout of the electricity supplier channel, and entered the largest luxury goods business Temple library and Jingdong platform in Asia to increase sales.

In mid 2018, the report showed that the retail sales of Li Bang men's clothing and sales of the same store recorded strong growth of 8.1% and 10.1% respectively. The reform achieved remarkable results and the deficit situation improved.

In December 2018, Li Bang men's clothing once again signed with the Ruyi group and Feng's 1937 group to sell the old quarter inventory agreement, so that the group will bear the distribution task of HK $55 million per year.

Li Bang menswear said that the signing of the agreement will help Li Bang menswear improve its brand awareness in Greater China, expand customer base, expand sales channels, improve cash flow and save performance losses.

With the help of Ruyi group, the loss of men's clothing has been relieved. The net profit deficit has risen from HK $608 million in 2017 to HK $265 million in 2018, and its revenue has increased.

In this way, Ruyi group has become the "savior" of Li Bang's men's clothing.

Traditional men's clothing enterprises such as YOUNGOR, Li Lang, seven wolves, and Hai Lan are all the best men's brands in China. But now they see a smell of "full flavour of the earth". Whether it is propaganda, endorsement or design style, they are full of old age and are hard to be recognized by the new generation of consumers.

Today, male consumers no longer take the basic consumption as the main consumption concept. They pay more attention to the design sense, fashion sense and personalization of clothing, and want to show their fashion value and attitude through clothing. But if the traditional men's clothing brand has been sticking to the rules and not following the footsteps of consumers, it can only be abandoned.