"Socks King" Lun Sha Was Suspected Of Pyramid Selling Was Punished For Transformation Test

Once the king of socks, Lun Sha, was once again pushed to the top of the storm. Under the lawsuit of agents, the shares of lssha were deeply trapped in the "pyramid selling door".

In recent days, Lun Sha's Knitting Company Limited (hereinafter referred to as "the lac company") was arrested by the people's Court of Huangmei County of Hubei province for freezing the company's associated financial accounts with financial institutions on suspicion of pyramid selling.

According to the insiders, in recent years, the development of LSAC shares is unstable, and offline stores are closed, and now they are suspected of pyramid selling. Once China's "socks king" has fallen into a dilemma. Prior to that, the company was trapped in the bottleneck of development and tried to transform, but it ended in nothing.

In the midst of numerous crises, the management of the management of Sha Sha shares raised the performance of the "edge ball" of pyramid schemes, which eventually led to the more difficult development of the company.

　 Suspected pyramid selling

Recently, Lun Sha company, a subsidiary of Lun Sha shares, was put forward by the Hubei Huangmei county market supervision and Administration Bureau for an application to freeze the account of Lun Sha in the financial institutions. On the suspicion of pyramid selling, it was considered by the people's Court of Huangmei county that the court held that the application rules of the Huangmei municipal and Municipal Supervision Bureau were in accordance with the law, and in May 9th, in accordance with the relevant regulations of the prohibition of pyramid selling Ordinance and other related laws and regulations, the freezing of the related funds accounts between the company and the financial institutions in the city.

Economist Song Qinghui believes that the alleged pyramid selling penalty may bring fatal harm to the shares of lsha, and the shares should be clarified and explained in time, so as to avoid four market speculation. In this regard, Beijing Business Daily reporter interviewed the relevant person in charge of the Sha Sha shares, did not get the relevant reply.

Data show that once known as China's "socks king" of the shares were founded in 1995, by Weng Rongjin, Weng Guanrong, Weng Rong Di three joint financing. In 2007, the group successfully launched A shares on the Shanghai stock exchange. The group has already carried out many industries such as socks, clothing, underwear, household, finance and so on. The company has repeatedly invited superstars to be the Advertising Spokesperson of the company, including King Emil Chau and big s Barbie Hsu.

However, once became a leading enterprise, the shares of Lour Sha also fled but gradually declined, and Lun Sha shares, which tried to transform, fell into the mystery of pyramid selling. Although the company is a subsidiary of the lsha Holdings Group Limited, but from the management point of view, the company did not take the road of electricity supplier, but chose to sell water directly.

It is understood that Lun Sha Shares applied to the Ministry of Commerce for a direct selling licence in 2017, but was suspended by the Ministry of Commerce and has not yet obtained a licence. In addition, there are also doubts about Lun Sha's unlicensed direct selling and suspected pyramid selling on the Internet. Regarding this, the relevant person in charge of the Sha Sha shares replied to the Beijing Commercial Daily reporter that the relevant media reported that the direct selling business was engaged in the business of the group related enterprises.

Textile and clothing management expert, general manager of Shanghai Liang Qi Brand Management Co., Ltd., Cheng Weixiong, believes that based on Lun Sha's alleged pyramid selling, we can see that Lassa's management and production thinking and product thinking are business oriented. Lassa shares are currently trying to take shortcuts, trying to use the light assets business practices such as direct selling to pry the market and channels. In fact, this is the most short-sighted behavior.

Business pressure increases

Behind the allegations of pyramid schemes, it is the dilemma of the continued decline of the company's performance. According to the insiders, as a listed company, there is no legal sense, but from another level, we can see that the management of the shares is very big in the market competition, so that they choose to take risks.

In fact, the performance of the company has been in an unstable state in recent years. According to the financial report, the net profit attributable to listed companies in the past 2011-2015 years was 34 million 680 thousand yuan, 10 million 370 thousand yuan, 8 million 170 thousand yuan, 1 million 960 thousand yuan, and 20 million 680 thousand yuan loss respectively. During the five years, the profits decreased year by year, and there was a loss in 2015.

Starting in 2016, the operation of the company began to pick up, and the data from the sky eye showed that the first dividend from 1998 to 2018 was welcomed. In the 2015-2018 year, the net profit of the company began to grow continuously. According to the annual report of 2018, the total sales revenue reached 388 million yuan, an increase of 12.86% over the same period last year. The net profit attributable to the listed company was 29 million 161 thousand and 800 yuan, up 27.05% over the same period last year.

In recent years, there has been a closed shop in the physical stores of the company. According to the 2018 annual report, there were 69 new stores in the Sha Sha line in 2018, and 109 were closed, with 456 remaining as of the end of 2018. Among them, there are only 2 remaining outlets, 102 franchisees and 440 remaining.

When visiting a physical store, the Beijing Commercial Daily found that the store under the Sha Sha line was mostly distributed in the underwear area of the shopping mall. Therefore, the products were mainly socks, no underwear products, and a few trousers and umbrellas were added. The product styles were relatively old. Although the product structure has a slight advantage in the competition of the surrounding shops, the volume of the shops under the Sha Sha line is much less than that of the surrounding shops. The sales staff of the store told the Beijing Commercial Daily that the sales volume of the shops was still good, mainly for repeat customers and older consumers.

In the annual report, the company said that the brand of the company's "Lingsha underwear" is in the period of construction and cultivation, and is in an unfavorable competition pattern among its peers. The current situation of the textile underwear industry is labor intensive, technical barriers and low barriers to trade, and low added value of products. This leads to the dilemma that the company is facing overcapacity, rising labor costs and shrinking profit margins.

Cheng Weixiong believes that socks and underwear are high frequency consumer goods, if the wave is based on the brand latitude thinking transformation and upgrading, careful brand positioning, product research and development and innovation, do well the intensive cultivation of the channel stores, should be able to tap the market potential, but the transformation and upgrading of the shares of the wave some hunger, the loss of the original product and channel advantages.

　　 Transformation meets test

It has been a long time for the company to explore the transformation and upgrading, but it has not been smooth. In April 2015, Weng Rongdi, the real controller of the company, disclosed on the "China Internet financial health forum" to enter the Internet financial field. In May of the same year, the company announced that "due to planning for major matters suspension", a few days later, "the company plans to purchase the underlying assets important conditions are not yet ripe" to resume trading. In the same month, the company decided to buy a construction project and stopped buying it on the grounds of "uncertainty about the contribution of future listed companies to the purchase project" after 3 months.

In addition to other areas of trial water, the shares of the company in the main industry has also conducted a variety of electronic business, micro business and other attempts, the business side of the electricity business is available, but the micro business has nothing to do with it.

It is noteworthy that the shares of the Sha Sha company have also been punished repeatedly in the quality of the socks industry. In 2015, Shanghai Quality Supervision Bureau in the 20 batches of socks products, one of the unqualified products. In 2017, the Hunan Provincial Administration for Industry and Commerce informed the quality inspection of commodities in circulation in the fourth quarter of 2016. Among them, the brand name is "Sha Sha", a batch of Ms. Lingsha's seamless underwear was found to be unqualified. In May 2019, the Jiangsu provincial market supervision bureau organized supervision and spot checks on women's underwear. Among them, the name and content of Lingsha's underwear were not in conformity with the actual situation. In addition, the shares of Sha Sha are also facing the risk of counterfeiting. Data show that fake sore sock products once erode the market share of the 30% of Sha Sha.

In the main business crisis, the company has made a business plan in its 2018 annual report. It is estimated that revenue and profit plan will grow by 10% on 2018 basis in 2019. However, in the industry view, the future of the company is not optimistic, and the completion of the business plan is very difficult.

Cheng Weixiong believes that for the Sha Sha shares, the window period of the textile underwear industry has passed, and the shares of LAFA itself are also facing many difficulties, focusing on the main business again, and developing more difficult, and the management of LAFA shares is more willing to walk in the wrong direction, and may be tired of long-term investment, which will lead to the more difficult development of the future.