Net Profit Fell 333.9%, La Natsu Bell Will Continue To Close Stores

Shanghai La Natsu Bell fashion Limited by Share Ltd was founded in May 23, 2011, mainly engaged in the design, brand promotion and sales of clothing products, the main public leisure wear for women. On 09 October 2014, it was listed on the Hong Kong Stock Exchange; and on 2017 09, 2017, it landed on the A shares of the Shanghai Stock Exchange's main board.

In September 19th, La Natsu Bell (603157.SH) released the 2019 interim report of H-share. According to the results of the report, La Natsu Bell (06116.HK) revenue during the reporting period was 3 billion 951 million yuan, down by about 23.2% compared with the same period last year. Net profit was -5.65 billion yuan, down 333.9% compared to the same period last year. Net profit from the parent company was -4.98 billion yuan, down 311.2% compared with the same period last year. Gross profit margin was 60.9%, down 7.7% from the same period last year.

Earnings report explained that gross margin declined mainly due to the increase in the proportion of quarterly sales of products during the current reporting period. The decrease in revenue was mainly due to the implementation of shrinking strategy and lower online revenue. Although 2470 stores have been closed, counters and stores are still the main source of income.
As of June 30, 2019, the number of retail outlets in La Natsu Bell dropped from 9269 at the beginning of the year to 6799. According to the financial report, La Natsu Bell plans to continue to close inefficient shops and reduce the stores below the line to 6000 by the end of September.
From a regional perspective, La Natsu Bell's consumers are mainly concentrated in second tier cities, contributing 1 billion 600 million of their revenue to 40.5% of the total. Meanwhile, during the reporting period, the net cash flow generated by La Natsu Bell's business activities was 1 billion 158 million yuan, and liabilities amounted to 7 billion 365 million yuan, up 43.62% from the same period last year. Financial reports explained that the main reason for the change in cash flow is to accelerate the payment and extend the payment cycle of some suppliers.
In addition, La Natsu Bell average stock turnover days increased 70 days, up to 313.1 days. In this regard, the earnings report said that the reason for the same decline in inventory turnover was due to the increase in the average balance of inventories and the decrease in revenues.