Closed: Baleno 6 Stores 3000 Stores Overweight Children's "Self Help" Accused Of No Innovation

Baleno, a clothing brand who has driven all over the streets and lanes, now has to face the "closed shop tide" brought about by the continuous decline in sales volume.

In June 19th, Baleno's parent company 00321.HK (hereinafter referred to as "Germany Yongjia") released its annual performance report as of March 31, 2019. Baleno reported sales of HK $3 billion 73 million in 2018, down 6.1% from a year ago.

In 2012, the number of Baleno's stores was Ceng Pan's peak, with 4044 stores in mainland China. Subsequently, Baleno's performance began to decline year by year, and has been continuously closed in recent years. According to statistics, as of August 2018, Baleno had only more than 1000 stores in the mainland of China, and about 3000 stores were closed in six years.

We hope to seek the opportunity to make a decision to develop children's products in the future and focus on the competitive children's clothing market. It is reported that Baleno stores have opened up a separate children's wear area, but there are also insiders told the Yangtze daily news reporter that the local popular children's clothing market has been in the Red Sea stage, Baleno children's clothing price driven strategy is not necessarily an advantage.

For the development of Baleno's children's clothing business in June 27th, the Yangtze daily news reporter sent an interview letter to de Yongjia, but no reply has been received as of press release.

Revenue fell by 6.1%

In June 19th, De Yongjia's annual report showed that, in the 2019 fiscal year ended March 31, 2018, De Yongjia earned 8 billion 210 million Hong Kong dollars, down 3.76% from the same period last year. Although operating revenues still declined, compared with the previous two quarters, the profits of De Yongjia group gained a positive growth, and net profit growth increased 6.87% to HK $325 million. In the 2017 and 2018 quarters, the group's profits decreased by 54.4% and 36.5% respectively.

In addition, during the reporting period, the revenue of group retail business fell by 13.6%, from HK $3 billion 989 million to HK $3 billion 448 million, accounting for a sharp decrease of 480 basis points to 42% in the proportion of group business, of which the sales of Baleno's most famous brand accounted for nearly 90%. De Yongjia said that the consumption sentiment in mainland China was weak and retail business was also affected by extremely warm winter weather.

In fact, since the beginning of fiscal year 2016, the performance of de wing Jia's retail and distribution business in the mainland market has gone down from 4 billion 14 million yuan at the peak to 2 billion 786 million yuan in the current fiscal year.

Under the double attack of the rise of the electricity supplier and the international fast fashion brand, Baleno, which has not caught up with the consumption trend, still follows the traditional production process and is left behind.

Data show that in May 2012, Baleno reached 4404 stores nationwide. Subsequently, Baleno's performance began to decline year by year. Since 2015, Baleno's sales growth has been almost stagnant. In the three years of 2015-2017 years, Baleno's operating income was HK $3 billion 260 million, HK $3 billion 144 million and HK $3 billion 274 million respectively.

Or because of the decline in brand sales, Baleno has been shutting down stores in recent years. According to statistics, as of August 2018, Baleno had only more than 1000 stores in the mainland of China, and about 3000 stores were closed in six years. Nowadays, it is hard to see Baleno stores in the mainstream business circle of a second tier city.

In addition, according to the earnings report, Baleno's sales revenue in 2018 was HK $3 billion 73 million, down 6.1% compared to the same period last year. Last year, German wing Jia also spent HK $28 million, increasing its equity stake from 64% to 82%. De wing Jia said that the group's retail business is focusing on the brand, while other brands are closing or weakening.

Brand power is fading away.

In June 27th, the Yangtze River Commercial Daily reporter visited in Jianghan Road, Xu Dong and other prosperous business circles and found that compared with the fast fashion brand UNIQLO, ZARA and some Anta and Nike brand entities, there were few customers in the Baleno store, and the customers who queued up for payment were even fewer.

"Business is much worse than before. Now there are too many clothing brands in the mall, and the competition is huge." In the face of inquiries about the business situation, Baleno salesmen in pin Mao mall told the Changjiang Daily reporter.

In fact, according to the Changjiang Commercial Daily reporter, the low price is a consistent strategy of Baleno. Whether it is on major holidays or on ordinary working days, there are always two distinct words in the Baleno store, which are "discounted", although a T-shirt is only 50 yuan, but in the face of Shi Pingping's lack of innovative clothing, many consumers refuse.

In a random interview with reporters, some middle-aged customers said that they were completely at the discount. "The price is quite cheap, though the style is very ordinary, but the price is enough." However, there are many young consumers who believe that clothing brands like UNIQLO, H&M and UR, which are relatively popular among young people, are in the discount season. After a discount, they are dozens of pieces to more than 100 pieces. "It's better to buy these brands, feel better than Baleno, and also have a sense of fashion and design."

In the clothing industry senior brand consultant Liu Xiaoqing looks, Baleno has become the pronoun of cheap clothing, "Baleno as the representative of a clothing brand, because positioning is not in line with today's market, has gradually lost itself."

It can be seen that in recent years, the fast fashion brands represented by UNIQLO, H&M, ZARA and GAP have been expanding rapidly in China. These fast fashion brands are rich in style, pay attention to price ratio, and strive to win the favor of young people both online and offline.

In addition, compared with the production mode of fast fashion brands, Baleno is still in the traditional production process, a garment from design to production will take several months to be listed, mass production, and the international fast fashion brands such as UNIQLO, ZARA and so on. The new product will be updated to one or two weeks, and a small amount of production will cater to the needs of young consumers.

　　 Overweight children's clothing market "save themselves"

It is worth mentioning that in order to save its performance, he said in the earnings report that the group will continue to control operating costs and improve production efficiency. With a strong development team, more innovative and value-added products will be launched to enhance business performance. The retail business will strictly control costs to reduce operating expenses, while strengthening the development of children's clothing to expand customer base.

The Changjiang Commercial Daily reporter found in the visit that Baleno has opened up a separate area for children's clothing, and has also cooperated with the cartoon IP, which is popular around the world, such as Thomas's small train, super flying boy and little Ma Baoli.

According to the news, Baleno will open up an independent children's clothing area and take the theme of the cross brand multiply theme series, which indicates that the Baleno children's wear shop will be on the way. When it comes to the opening of Baleno children's wear shop, the salesperson said, "no notice has been received from the manufacturer, but the children's clothing store in Wuhan may soon open."

Changjiang Commercial Daily reporter noted that although the children's wear market has ushered in a period of rapid development, the competition in the domestic children's wear market is also fierce. Anta, 361 degree and other domestic adult sports brands have been accelerating the penetration of children's products industry since its successful listing. Li Ning Co has also established a joint venture with Parker's company to operate Lining's brand children's clothing independently, which has intensified the competition of children's shoes and clothing market.

Cheng Weixiong, general manager of Shanghai Liang Qi Brand Management Co., Ltd., told the Yangtze daily news reporter: "the local popular children's clothing market is already in the Red Sea stage. The price driving strategy of Baleno children's clothing is not necessarily an advantage. In addition, IP joint cross-border marketing has been an old way, and there is not much innovation. It is expected that the joint venture can not fundamentally change the vulnerable position of Baleno children's clothing.