Seven Wolf Net Profit Fell 8.42%, R & D Costs Continue To Decline

As one of the leading enterprises in China's men's wear brand, the seven wolves achieved double growth in revenue and profit last year, but with the intensification of market competition, it has become a problem.

In the first half of this year, the seven wolves achieved an operating income of 1 billion 555 million yuan, an increase of 6.55% over the same period, and the net profit attributable to shareholders of listed companies was 123 million yuan, down 8.42% compared with the same period last year.

The Yangtze daily news reporter noted that in recent years, the cost of research and development of the seven wolves has been decreasing and sales costs have continued to grow. In the first half of this year, its R & D investment continued to decline by 29.98%, to 21 million 350 thousand yuan, and sales expenses increased by 33.36% over the same period last year, to 339 million yuan.

Insiders said that from the perspective of the development of the industry, under the background of current consumption upgrading, people's consumption demand for aesthetics, fashion and culture has been increasing. Enterprises in various fields need to readjust their focus in order to adapt to the changing consumption structure in the new era. In the future, for seven wolves, how to create a brand image that young people love to see is the direction of their development.

Net cash flow from operating cash flow 174 million

Statistics show that the seven wolves are mainly engaged in the design, production and sale of "seven wolves" brand men's clothing and needle spinning products. The main products include shirts, Western-style clothes, trousers, jackets, knitwear and men's underwear, underwear, socks and other knitted products.

In the first half of this year, the seven wolves achieved an operating income of 1 billion 555 million yuan, an increase of 6.55% over the same period, and the net profit attributable to shareholders of listed companies was 123 million yuan, down 8.42% compared with the same period last year. Net operating cash flow decreased by 52.23% compared with the same period last year, to -1.74 billion, mainly due to the increase of advertising investment and business service fees.

It is worth noting that since 2014, the R & D investment of the company has declined for four consecutive years, and the R & D investment in 2018 has reached the lowest level of 52 million 780 thousand in the past eight years, accounting for only 1.5% of the current operating revenue. In the first half of this year, the company's R & D investment continued to decline by 29.98%, to 21 million 350 thousand yuan.

On the other hand, the sales cost of the seven wolves has been maintained at a relatively high level. In 2012, the sales cost of -2017 was around 450 million yuan, and the peak price reached 595 million yuan in 2018.

It accounts for 16.9% of the current business revenue. In the first half of this year, its sales cost was 339 million yuan, an increase of 33.36% over the same period last year.

Cheng Weixiong, general manager of the clothing industry observer and Shanghai Liang Qi Brand Management Co., Ltd., in an interview with the Yangtze River Commercial Daily reporter, said, "the transformation of traditional brands has always been the key to the revival of the local clothing industry. From the poor research and development costs, we can see that the local brand men's clothing market relies heavily on the design capability of the factory."

"With the deepening of the so-called new retail business, new technology and new tools are being introduced to make the sales cost of brand enterprises rise sharply, which seems to be on the rise, but profits are eroded by all kinds of expenses. The men's wear market has been lingering in recent years. The key is that the brand does not want to do innovative research and development. The brand that truly caters to the needs of users is always a market. Cheng Weixiong analyzed.

The acquisition of light luxury brands has not yet come out of deficit.

In addition, it is worth mentioning that the French luxury brand Karl Lagerfeld, which was bought by the seven wolves in 2017, is still at a loss. In the first half of 2019, Karl Lagerfeld revenue was 27 million 974 thousand and 600 yuan, operating profit of -1618.99 million yuan, net profit of -1557.47 million yuan, net assets of -6493.09 million.

As for the situation that the brand Karl Lagerfeld is still losing money, Cheng Weixiong said, "the brand of the seven wolves purchased is relatively high and needs a period of investment. In addition, the location of light luxury brands needs to be re positioned according to the local market, but the introduction of the brand is hard to be accepted by the local users."

It can be said that the new brand business of the seven wolves is still in the breeding stage. Its brand 16N and the wolf totem brand subsidiary Shanghai Qi He Garment Co. Ltd. and the Shanghai Holt culture and creative Co., Ltd. lost 17 million 100 thousand yuan and 16 million 380 thousand yuan in the first half of 2019 respectively. In Cheng Weixiong's view, the diversity of the local online and offline channels brings the disorder of user traffic, which is especially important for the brand selection of accurate luxury consumers and the corresponding consumption scenarios.

By the end of the reporting period, the total assets of the company were 8 billion 417 million yuan, 2.04% less than the end of last year, and the net assets attributable to shareholders of listed companies were 5 billion 818 million yuan, an increase of 1.57% over the end of last year.

In fact, the clothing industry is vulnerable to macroeconomic impact. Macroeconomic instability may affect consumer clothing consumption demand, thereby affecting the company's sales performance. In addition, personalized consumer demand drives the development of men's clothing market segments, thereby giving birth to a number of competitive brands. As the traditional men's wear brand, the seven wolves have limited extension, and the market competition may lead to a decrease in the market share.

According to this, the seven wolves said that in the future, they will constantly optimize and adjust their business strategies according to the macro environmental changes, and will continue to consolidate the operation of existing brands, and actively cultivate new brands. At the same time, efforts should be made to increase the extension of acquisitions, expand the consumer groups of the company's brand coverage, and strive to improve the market share.