Can The "End Of The Road" Baleno Rely On Children's Clothing To Turn Things Around?

As international fast fashion brands enter the Chinese market, Baleno's crisis is coming.

Baleno was born in 1981. It is Italy brand. It began to operate in Hongkong in 80s. The earliest name of Baleno was called "bin Nu". In 1987, Macao Fucheng became a dealer in Chinese market for bin nu. After entering the mainland, in 1995, the Guangzhou friendship Baleno Kingdom Limited represented a series of costumes of the BALENO series. In order to distinguish the classic men's clothing products from their style, the official Chinese name was Baleno.

In 1996, Baleno was bought by Hongkong Germany Yongjia Group Co., Ltd., and founded the Guang Zhou Friendship Baleno Company Limited. When Baleno entered the mainland of Guangzhou in Tianhe City, it launched a roll up tour.

Due to the opportunity that domestic casual clothes were still in the blank at that time, Baleno invited Andy Lau and Faye Wong to make brand endorsements. By 2001, the number of stores was more than that of the famous leisure brand Giordano, reaching 600.

Over the next 10 years, with the development of China's hypermarkets and department stores, Baleno has made a number of stores and has opened 4044 stores in the peak of 2012.

Similarly, UNIQLO, a clothing brand, entered the Chinese market in 2002 and was positioned as a popular leisure brand. As a result, Baleno and Giordano were squeezed out of the market at that time, and even sustained losses in Beijing market in 2005.

Recently, Baleno's parent company 00321-HK (hereinafter referred to as "Germany Yongjia") issued a performance report. As of the March 31, 2018 -2019 fiscal year, the income of Germany Yongjia was HK $8 billion 210 million, a decrease of 3.76% compared with the same period last year, and the annual profit of the owners of ordinary rights and interests of the company was HK $325 million, an increase of 6.87%.

Although business revenue is still declining, compared with the first two quarters, the profit of Germany Yongjia group has gained a positive growth. In the previous 2016-2017 and 2017-2018 quarters, the profits of the group fell by 54.4% and 36.5% respectively.

3000 stores in 6

On the brand side, the retail sales and distribution business of the main brand Baleno is 3 billion 448 million yuan, down 13.6% from the same period last year, accounting for 42% of the total revenue of the group. Among them, the main brand Baleno's sales volume was 3 billion 73 million yuan, down 6.1% compared with the same period last year. The sales of the other two brands S&K and I.P. Zone were 136 million yuan and 12 million yuan respectively. Due to uncertain future, some customers' orders have been reduced or delayed. The group said that although the business environment is grim, it can maintain overall business stability.

De wing Jia said that the group's retail business is focusing on the brand, while other brands are closing or weakening. Affected by brand factors, Baleno closed 3000 stores in 6.

The reality is that since 2015, Baleno's brand has been in a state of stagnation. The performance of Baleno has been almost stagnant since 2015. During the reporting period, Baleno's annual income was HK $3 billion 73 million, down 6.1% compared with the same period last year. In the three years of 2015-2017 years, the brand's income was HK $3 billion 260 million, HK $3 billion 144 million and HK $3 billion 274 million respectively.

According to statistics, in the peak period of 2012, Baleno had 4404 stores, and even defeated the first entry into the domestic market of UNIQLO. However, under the attack of domestic brands and foreign fast fashion brands, Baleno began to go downhill. In 2011-2015 years, Baleno closed 12 stores a month. At present, there are only more than 1000 stores in Baleno.

In order to save the company's performance, Baleno began to push children's clothing.

Layout children's clothing to find a way out

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.

Nowadays, children's wear market is very competitive. Every children's clothing brand has its own characteristics. How will Baleno highlight its performance through children's clothing?

At present, Baleno is upgrading its storefront, and new stores are appearing in business super. In the clothing part, Baleno is also working with the cartoon IP, which is popular around the world, such as Thomas's mini train, super flying boy and little Ma Baoli. Although Baleno has made a forty percent off discount, it has been restricted to a remote location and has few patronage.

Judging from the current market of children's clothing, the domestic adult sports brands such as Anta and 361 degrees 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 for children's shoes and clothing market. With the popularity of local children's clothing market in the Red Sea stage, it is hard to say whether Baleno children's clothing price driving strategy has superiority.

Obviously, Baleno needs to make a lot of efforts to save its performance. It is not enough to just lay out children's clothing market.