The History Of China's Shoe King's Collapse: The Failure Of Daphne And BELLE's Death

80, after 90, familiar with shoe enterprises are gradually fading away. Recently, fortune bird failed to withdraw from the market, and the news of Daphne's huge losses caused concern in the industry. These shoes, which were born in the 80s of the last century in the -90 era and once dominated for a time, seem to be falling overnight.

However, looking back at the history of these enterprises, we find that there are early signs of turning points.

In 2012, BELLE, Daphne and fortune birds occupy the top three of China's casual footwear market share. After that, the performance of the three enterprises has entered a downward path. In 2013, Daphne's business revenue began to decline. In 2015, BELLE's performance fell sharply, and its revenue and net profit decreased.

In addition, the impact of electricity suppliers and sports shoes, the three companies have no return. In 2017, BELLE took the lead in delisting the privatization of Hong Kong stocks. At the end of August this year, the bird announced that it was bankrupt and was cancelled by the Hong Kong stock exchange. Daphne continued to lose a lot of money and close its stores. Compared with the peak period, Daphne has already closed down the 2/3 store.

　　 Daphne missed the electricity supplier

Among the three shoe companies, Daphne was the first to go public. Daphne international was founded in 1987 and listed on the HKEx in 1995.

After the initial rapid expansion, in 1999, Daphne welcomed the first crisis. Shoes are old fashioned, worn out, and inventory goes down for a long time. Daphne has become a discount brand in the minds of consumers. At the same time, the company's performance has declined, and executives have been working together.

Under many problems, Daphne passed the crisis of "welcome the new year". After taking office, Chen Yingjie, the second generation leader of the younger generation, recovered the defeat through a brand new image, a mid-range positioning, and a strategy of closing stores, promoting sales and destocking.

After that, Daphne turned to profitability and headed for the fast development road. In 2004, Daphne claimed that 1 out of every 5 pairs of women's shoes in China came from Daphne. In the best performance period, Daphne can sell 50 million pairs of women's shoes in 1 years, and sit firmly in the chair of the first brand of mainland women's shoes for nearly 5 years. The market share is nearly 20%.

2012 is the peak of Daphne. Daphne's operating income exceeded 10 billion Hong Kong dollars in the year to achieve a net profit of HK $956 million, and its market value reached HK $18 billion 900 million.

But the Daphne, who is in the limelight, has gone downhill ahead of time because of a wrong choice.

In the rapid development stage of the Internet, Daphne has also tried to seize the outlet for the development of e-commerce. In 2009, Daphne and Baidu jointly invested in the e-commerce platform to "shine 100." In order to support this platform, Daphne put all its eggs in one basket, closed Jingdong, Le Tao and other distribution channels, and three years later, in July 28, 2012, "Yao point 100" broke down because of the chain break.

Since 2013, Daphne's revenue has declined year by year. From 2013 to 2018, Daphne's operating income decreased by 0.78%, 0.87%, 19.09%, 22.4%, 19.86% and 20.8%, respectively. In the first half of this year, Daphne's revenue was HK $1 billion 403 million, down 37.9% compared to the same period last year.

Since 2015, Daphne's performance has been bogged down in losses and its losses have gradually expanded. In 2015 -2018, the net profit of shareholders of the company was HK $-3.79 billion, HK $-8.19 billion, HK $HK $100 billion and -9.94 billion HK dollars respectively. In the first half of this year, we lost HK $390 million again, and the cumulative loss has reached HK $3 billion 316 million since 2015. At present, Daphne's international market value is only HK $585 million, which has shrunk by 96.9% compared with its peak.

Daphne plans to save itself through reform. In this year's semi annual report, the company said that it will make structural adjustments to the sales channel strategy, focusing on the business of electronic commerce, while the offline stores should be supplemented to implement the light asset model. It includes increasing investment in the business of e-commerce, expanding the coverage on the online market, transforming more offline stores into partner systems or affiliate systems, and closing shops that are not performing well.

Zhang Nan, a senior researcher at the Financial Research Institute, told China News Weekly that the failure of betting on the electricity supplier has actually been a step backward. At present, Daphne is in a very unfavorable position. Can we turn the corner to overtake or follow the follow-up operation of Daphne?

In fact, Daphne has closed over 2/3 stores in the glorious era. According to Daphne's annual report, by the end of 2014, the company had 6402 entity stores (of which 89.78% were direct stores and 10.22% were franchised stores). As of the first half of this year, there were only 2075 stores in the company, which closed 4327 stores in the peak period, down 67.59%, and closed 2.6 stores a day.

While a large number of stores are closed, the gross profit margin of Daphne is also declining. In 2012, the gross profit margin of the company was 59%, and since 2018, the gross profit margin of the company was less than 50%, and the gross profit margin was 46.4% in the first half of this year. In 2012 and 2013, Daphne had 27 thousand employees, and now there are only 6800 people left.

In the context of sustained performance losses, analysts said Daphne might be delisting as BELLE did. Shen Meng, executive director of Xiang song capital, also told China News Weekly that "Daphne with Taiwanese capital background will not exclude the transfer or delisting of controlling shares in the future, so as to reduce more non operating expenses".

Zhang Nan believes that there is basically no industry gap in China, or a new industry trend to replicate the successful mode of BELLE's comeback.

　　 BELLE born to death

At the time of the failure of Daphne and the failure of Daphne, BELLE came to the news. In September 8th, BELLE's international sports business line and its wholly owned subsidiary, Tao Po international, were listed on the Hong Kong stock exchange.

In the three shoe companies, BELLE was first established, but it was 12 years later than Daphne, and it did not arrive at the HKEx until 2007. In 2010, the total number of BELLE stores exceeded 10000, and joined the Hang Seng Index constituent stocks.

Of the three companies, BELLE has the best performance, but it can not escape the recession of the industry. In 2015, BELLE's performance fell sharply, with net profit of HK $2 billion 945 million, down 38.41% compared with the same period last year. In 2016, the net profit of the company fell by 18.09% again.

In April 2017, BELLE international accepted the offer from a major buyer of high leverage capital and CDH investment, and completed the privatization of Hong Kong stocks at a price of HK $6.3 per share and HK $45 billion 300 million.

In just two years, BELLE moved back to capital market in another way.

According to Tao Bo international prospectus, BELLE executives currently hold 46.36% of BELLE international, and 44.48% of high leverage capital.

"BELLE's bright business is the sport shoe and clothing business, which is the reason why it broke the international listing. With its huge offline sales network and sports market expanding rapidly, backed by two mainstream sports brands, Nike and Adi, Tao Bo has become the largest retailer in China, "said Zhang Nan.

According to Sullivan data, in 2018, retail sales accounted for 15.9% of the sports shoes market. In 2017 -2019, the international revenues of Tao Po were 21 billion 690 million yuan, 26 billion 550 million yuan and 32 billion 564 million yuan respectively, and the adjusted annual profits were 1 billion 538 million yuan, 1 billion 810 million yuan and 2 billion 237 million yuan respectively, achieving stable growth.

Is BELLE recovering? Shen said to China News Weekly that the listing of sports retail business does not mean the revival of BELLE's traditional manufacturing business. He believes that investors will only want to independently go out to the sports retail department with good performance. They will not be buried in the overall downturn of BELLE. From the perspective of business structure, BELLE's decline lies in the huge manufacturing end. "Retail business is more flexible than manufacturing, and it can reduce the risk of heavy assets in manufacturing industry when the economy is poor and consumption fluctuates."

In addition, the main source of international revenue is Nike and Adi, the two main brands. In 2017 -2019, the sales revenue of the two brands accounted for 90%, 89.4% and 87.4% of the total sales revenue respectively.

　　 Birds of fortune

The most obvious contrast with BELLE's return is the bankruptcy of rich birds.

Among the three enterprises, the birds are the most short-lived. When Daphne was listed on the HKEx in 1995, it was just established. From founding to bankruptcy this year, the rich bird is 24 years old, and it is still the year of the weak crown.

During the period from 1998 to 2012, the products of rich birds were awarded many titles and awards of "genuine leather shoes Wang" in China. In December 2013, fortune bird landed at the Hong Kong stock exchange.

Although the listing was 18 years later than Daphne, the turning point of fortune bird performance was only 1 years later than Daphne's. Since its operating income and net profit reached a new high in 2014, the company's performance declined all the way to a loss in 2017.

From 2014 to 2016, the net profit of rich birds was 450 million yuan, 392 million yuan and 163 million yuan respectively, and 10 million 887 thousand yuan in the first half of 2017. After that, rich birds did not disclose their earnings reports, and investors were ignorant of their business status. The company's stock was suspended at the end of August 2016, and was terminated by HKEx in August this year.

Unlike Daphne's decline, the short life of rich birds lies in the blind crossing of management. In April of 2015, Fu Fu bird invested in Fu Ying financial information service (Beijing) Co., Ltd. (referred to as "Fu Yin finance"), and invested in P2P platform win win society and Ding Dong wallet.

According to media reports, because of the huge investment and poor management, the capital chain of Ding Dong wallet was soon broken. In order to solve the urgent need, from 2015 to 2016, the fortune bird issued 3 bonds, amounting to about 2 billion 500 million yuan, two of which have already been defaulted. In March 21, 2018, the lucky bird was sent to the CSRC "Notice of investigation" for suspected information disclosure and illegal use of bond raising funds.

According to the eye of heaven, the rich bird became a wealthy financial investor in 2015 and quit in 2017.

Recently, the bankruptcy of the bird of fortune was rejected. The bankruptcy notice shows that the total debts of the birds are 3 billion 82 million yuan and 349 creditors. A generation of shoe king Fu Fu bird has come to an end.

　　 Sports become fashion

As a representative of traditional shoe enterprises, Daphne, fortune bird and 100 Lido have gone from glory to recession to dark time.

For their downfall, Shen Meng believes that the three enterprises are facing the middle and low level consumer groups, so they are greatly affected by the economic fluctuations, and the three have relatively low added value in terms of design and brand.

Zhang Nan believes that the decline of these three shoe companies is due to the rapid expansion of the scale of the past, the number of stores has increased, but the overall level of business has not kept up, the core is not handling the relationship between inventory, quality and price. "Inventory brings the pressure of capital chain, quality brings the pressure of sales volume, while low price increases sales volume in the short term, but it hurts the value of the brand," Zhang Nanru said.

Behind the crisis of the three shoe companies, not only the competition brought by the rise of the electricity supplier, but also the change of consumer preferences, the current sports become fashionable, and the scale of the domestic sports shoes market is gradually improving and gaining market share.

According to China industrial information network, in 2014 -2016, the total consumption of domestic sports shoes increased from 68 billion 600 million yuan to 92 billion 800 million yuan, the compound annual growth rate reached 16.31%, and footwear consumption increased from 20.1% to 25.7%.

It can also be seen from the operating income of listed companies. Since the first half of 2015, Lining's revenue has exceeded Daphne, and the gap has been widening.

Guosheng securities research report said that in 2018, the overall size of the footwear market in China was $377 billion 100 million, and footwear accounted for 10.6% of the total footwear market, compared with 7.6% in 2014, indicating that the penetration rate of sports products in China is gradually improving, and it is expected to reach 11.7% penetration in 2023.

The international management consulting firm, Roland Berger, said that the traditional Chinese shoes and clothing retail brands generally adopt the growth driven mode with the expansion of stores as the core. Therefore, the thinking of supply chain, the thinking of bulk goods and the expansion of the number of stores have dominated the business philosophy of shoes and clothing retail brands in the past 10 years. But in fact, the change of the external environment requires that the brand of shoes and clothing must be comprehensively remodeled and reformed in the business philosophy. In the future, supply chain pull thinking, user and market oriented thinking and lean thinking will become an important development direction for the next 5-10 years.