Brand Remolding Eventually Become Empty? 361 Degree Market Value Fell 3 Billion

For 361 degrees, many times, data comparison is a very interesting thing.

For example, in the first half of 2019, net profit of 361 yuan (01361-HK) was 356 million 400 thousand yuan (RMB, the same below), which exceeded the net profit of 303 million 700 thousand yuan in 2018. It looks great, but in fact, in the first half of 2018, it achieved a net profit of 335 million yuan at 361 degrees and a loss in the second half of 2018.

For example, in 2018, the brand reinventing into the second tier city was 361 degrees, the advertising cost was 557 million yuan, and the cost in 2017 was 506 million 500 thousand. However, in 2018, the number of stores in the second tier cities accounted for only 26% of the 5539 outlets, while in the first half of 2019, only 5444 of the 5444 brand stores were located in a second tier city.

There is also a strategic adjustment of the "main business card". After making frequent statements to force the platform of the electricity supplier, the "double eleven" in 2019, although the 361 degree did not publish the results of the war report, but according to the China service network report, on November 11th, the turnover could not be broken for a long time. Compared with the 2018 turnover of 56 seconds, the turnover of the outdoor industry exceeded 100 million.

Through these comparisons, it is easy to see that despite the formulation of strategic planning and adjustment one after another, the actual performance of enterprises is contrary to these plans and adjustments. However, the market value of the 361 degree advance is only about 3 billion Hong Kong dollars, which is far from that of Anta, the four largest brand of mainland sportswear and 200 billion of the market value. (02020-HK)

Why did KPMG, an accounting firm, be changed?

In addition to these "interesting" data, in November, the announcement of a 361 degree change of accounting firm and the chain reaction triggered by this announcement were also "very interesting".

In November 13th, the 361 degree announcement issued that the cooperation between the two sides was terminated because of the fact that KPMG failed to reach a consensus on the annual audit fees for the fiscal year ended December 31, 2019.

In short, the service charge KPMG wants is a little expensive, and 361 degrees think it is not appropriate.

Surprisingly, after the announcement of the report, in November 14th, the stock price of 361 degrees ended at HK $1.35 / share, down 15.62%. A careful analysis of the reasons why investors can react to such a notice of changing the accounting firm is not as follows:

First, in 2018, the service fee paid to KPMG at 361 degrees was 3 million 960 thousand yuan, which was unchanged from the 2017 service charge. If 361 degree really has reached 3 million 960 thousand yuan service charge is expensive, then 361 degrees in 2019 year's revenue performance can be seen.

However, for 361 degrees, this is almost impossible. In the first half of 2019, the advertising and publicity expenses for 31st degree were 274 million 900 thousand yuan, while the total sales cost at 361 degrees was about 508 million yuan. In contrast, the audit fee of less than 4 million yuan should not be a big problem. Besides, KPMG is still the four largest accounting service provider, and the industry recognition is very high.

In fact, some audit professionals pointed out that consensus on service costs is usually a common reason for a listed company to change its audit service institutions.

However, after terminating the cooperation with KPMG at 361 degrees, the new cooperative audit service is Dahua Ma Shi Yun. According to the survey data, Dahua Ma Shi Yun office is a registered enterprise in Hongkong.

Since August 2018, companies such as 01189-HK, 08307-HK, 08063-HK, 08320-HK, China Financial International (00721-HK), and Zhongda Group Holdings (00139-HK) have appointed Dahua Ma Shi Yun affairs office as its audit service institution.

However, all of these enterprises are all "1 wool shares" and "2 Gross shares", many of which are known as the "thousand shares" of the Hong Kong exchange, and Dahua Ma Shiyun's platform services can be seen one or two.

Combining these with 361 degree appointed Dahua Ma Shiyun for data audit services and taking into account the marketing data in recent years, it is not surprising that the sharp decline in stock prices at 361 degrees after the report of the audit service company was released. This shows that investors lack confidence in the 361 degree performance, market performance and financial status, and even the credibility of the data.

As a brand clothing company that has been on the market for 10 years, it is impossible for 361 degree to not know the revenue situation and reputation of the service company. In this case, 361 degrees still choose to cooperate with Dahua Ma Shi Yun, the motive of which can not be questioned by investors.

Where does the problem of 361 times wrong rhythm occur frequently?

If the 361 degree choice of Da Hua Ma Shi Yun office can be regarded as a "wrong trick", in recent years, the performance of 361 degrees can be described as "many wrong strokes", frequently stepping on the wrong rhythm.

During the 2008 Beijing Olympic Games, sports brands such as 361 degrees, Lining (02331-HK) and Anta opened the road of expansion. From 2008 to 2012, 361 degrees in the whole country to build a store, add stores, big advertising investment. This period can be described as the gold development period of domestic sports brand enterprises, and the market value of 361 degrees once exceeded 10 billion Hong Kong dollars.

In 2012, the domestic sports apparel industry tightened and corporate profits fell sharply. According to relevant statistics, in the first half of 2012, the total inventory value of more than 40 listed clothing enterprises including Lining, Anta, 361 degree, XTEP and other four brands amounted to 48 billion 300 million yuan.

According to corporate earnings data released in 2012, the 31st profit decline. In 2012, the total revenue was only about 4 billion 951 million yuan, down 11.10% from 2011.

In this case, the factory shop mode of 361 degrees is greatly reduced in sales promotion, reducing the inventory of enterprises. However, at the same time, the problem of frequent quality problems, the increasing number of consumer complaints and poor after-sales service experience, especially in the "double eleven" period in 2018, seriously affected the brand influence of 361 degrees.

At the same time, Anta and Lining, the leaders of the same industry, took the lead in changing the sales mode to get out of the development dilemma. Taking Anta as an example, adhering to the "high performance price ratio" at the same time, under the guidance of the strategy of "single focus, multi brand and full coverage", we will buy a lot of sports brands to meet the consumption needs of different consumer groups.

In the same period, Anta continued to invest heavily in research and development. First, we released high-tech equipment including elastic glue, energy ring and water repellent technology. At the same time, we continued to introduce new products in professional sports shoes and sportswear, which led to panic buying. At present, Anta accounts for more than 70% of new products, and R & D investment continues to rank first in China and ranks among the first tier brands in the world.

In contrast, the 361 degree is relatively weak in its own brand strategy adjustment and brand upgrading.

First, the brand's own innovation, compared to Anta's big acquisition of international brands, 361 degrees only "ONE WAY" and other very few high-end brand layout. Not only is the brand relatively scarce, but it is far weaker than Anta in terms of influence and attractiveness. For consumers after 80 and 90, the 361 degree product is almost unattractive.

In the earnings report, just as mentioned before, there are few shops with 361 degrees to squeeze into a second tier city. Up to the first half of 2019, only 25.1% of the 5444 brand stores of 361 degrees were located in a second tier city, with only 6.6% of the first tier cities.

In this case, only 14 stars were invited to endorse in 2018 and 361 degrees, and sponsored a series of high-end events. In this way, users in the three or four tier cities are doing a lot of high-end advertising, pushing the brand remodeling and entering the second tier cities, but ignoring the problem of brand promotion and the dislocation of existing customers.

The traditional channel of distribution is followed by too much cost pressure. 361 degree disclosed in the 2018 earnings report, the group still adopts the wholesale franchise distribution business mode. Among them, there are 31 exclusive distributors nationwide, choosing pricing and promotional activities in their respective districts, and then expanding to thousands of large and small retail outlets.

This "wholesale distribution" mode with price conduction will undoubtedly increase the cost of the circulation and dilute the profits of the franchised stores under each line.

In addition, 361 degree announced in the second half of 2018 to promote the reshaping of brand strategy, stressed the importance of online efforts. But in this process, no matter how the product is promoted or sold, it has hardly made any major changes in the 361 degree. In 2019, during the "double eleven" period, compared with Anta's live broadcast, brand theme innovation, and seven hot IP new activities such as the Olympic country's tidal wave, Huang Jing Yu FILA and Daniel Wu DESCENTE, the price was adjusted almost 361 degrees.

The biggest problem in the 361 degree brand remolding strategy is not able to grasp the needs of consumers after 80 and 90. This is also the root cause of the decline in sales of "Waterloo", which has suffered 361 degrees.

On the one hand, 361 degrees did not catch up with the rising trend of fashion sports brand in the young market. Compared with Anta's emphasis on individualization, youth and quality in product polishing, Lining hired high-end designers to design new models, and even held several fashion weeks in New York and Paris. The 361 degree had almost no strong moves in fashion and quality.

Although the product of 361 degrees covers many sub fields such as adults, children, clothing, shoes and hats, backpacks and so on, and even has its own high-end brand "ONE WAY", its products lack characteristics, not to mention the appeal of high-end brands such as ADI, Anta and so on.

On the other hand, in the case of weak product attractiveness, 361 degree launched a series of detailed brand promotion strategy, for example, after the brand remolding strategy was launched in 2018, investment sponsorship "cross fire line" and other competitive games, became the first domestic mobile brand to enter competitive games.

Just like the promotion strategy of sponsoring the game and game, it can only be exposed in the minority group, and even it is difficult to find enough match points with the game, and it is even impossible to realize the spread and share of the competition fans.

361 degree transition pain: no transformation will die, transformation is not good.

This is the dilemma facing 361 degree now: no transformation will die, and transformation will not work well. In fact, there are many enterprises with the same 361 degree situation, such as La Natsu Bell, who is on the verge of bankruptcy, such as 01819-HK, which has been auctioned off by assets. 06116-HK

Compared with La Natsu Bell and the birds of fortune, it is not easy to live at 361 degrees.

In 2018, the 361 - cent revenue grew by only 0.6%, almost to a standstill. Among them, the group's revenue was 5 billion 187 million yuan, but the net profit of the company fell by 33.5%, which was only 304 million yuan.

Especially noteworthy is that although the first half of 2019, the company achieved revenue of 3 billion 237 million yuan, an increase of 7.3% over the same period, but taking into account the first half of 2018, 361 degrees also achieved a 7.8% increase in corporate revenue, but the annual revenue growth was only 0.6%. In the second half of 2019, no one can guarantee that the company's performance is not released, and the negative growth of revenue will not occur again at 361 degrees.

In fact, the analysis of earnings data disclosed at 361 degrees shows that the situation is not optimistic.

Since the end of June 2011, the number of stores under 361 degrees has dropped from 7681 to 5444 in the first half of 2019, and the total number of outlets has been over 2200.

In 2016, the number of employees in the enterprise was 9500, and in 2017 it was 8555; in 2018, the number of employees disclosed in the earnings report had dropped to 7992, a decrease of 15.87% compared with the peak period in 2016.

In 2018 alone, the total receivables at 361 degrees totaled 3 billion 120 million, accounting for 54.09% of the company's net assets ratio, while the enterprise's financial expenditure was 211 million, accounting for 69.4% of the net profit of the year.

Large scale shops, layoffs, tight capital chains, big financial expenses. The current problem of 361 degrees is almost the same as that of La Natsu Bell, who is already on the verge of bankruptcy. Then, a very realistic question, whether 361 degree will repeat the mistakes of La Natsu Bell? At present, this result will have great probability.

As far as sports apparel brands are concerned, the industry market has been highly concentrated. Apart from Nike, ADI and other international brands in the head, domestic brands such as Anta and Lining have been close to completion of transformation, and show a monopoly of high-end market situation. In such a background, it is very difficult to tear a hole or even get a slice of it.

With the advent of the new retail era, the traffic market has gradually become the focus of competition among the major brands. Take Anta as an example to promote the new retail experience store across the country, draw up the multi tier KOL resources, and win the traffic resources through various channels. These are important ways for Anta to compete for traffic resources.

By contrast, 361 degrees is still in the stage of product upgrading. Moreover, in the channel promotion, advertising endorsement and sponsorship are still valued. It is difficult to get traffic concerns. And the biggest feature of the traffic market is "dependence". Once the consumption habit is formed, users will be integrated into the brand ecosystem, so it is difficult to change the consumption habit easily.

If we say that products, ecology and promotion are only "internal strength", the grinding of such external power in distribution channels will take more time.

Just as previously said, the 361 degree traditional "wholesale distribution" mode, the intermediate link occupied a lot of expenses and expenses, greatly increased the sales cost of offline stores. And the transition to a Anta like "flat" distributor system will not be completed overnight.

It is not difficult to see that in this competition, 361 degrees have missed the opportunity and basically been thrown away. It can be said that when 361 degrees of product upgrading, sales system upgrading, promotion and upgrading, other brands have begun to build the ecosystem and divide the traffic volume. When 361 degrees begin to build their own product ecology and traffic ecology, Anta and Lining are already beginning to innovate the VR experience and the Internet of things experience, so that every piece of data on clothing and shoes can be transmitted to mobile phones, so that the clothes and shoes that can not be spoken can be communicated with data and consumer groups.

It can be seen from the above that in the process of upgrading, the demand for technology is getting higher and higher, and the demand for R & D investment is increasing. As a pursuer, the competitive advantage of 361 degree will be weaker and weaker, and the probability of being eliminated will be bigger and bigger.

Industry enlightenment of 361 degree development: industry development enters "Red Sea"

Generally speaking, after the power of the platform, the brand remolding is weak, the brand promotion and the original customers are misplaced, the marketing system lacks vitality, and the lack of bright spots in product innovation and other factors, the 361 degree has fallen behind in the market competition with other sports brands, and even there is a risk of bankruptcy.

In the development process of 361 degrees, there are many revelations for the domestic apparel industry, especially the sportswear industry.

One obvious revelation is that the industry is developing into the Red Sea. In the stock market competition, it is difficult for the enterprises without innovation to achieve rapid development.

In terms of innovation, technological innovation is fundamental, and the innovation of marketing system is also an indispensable part. The innovation of marketing links for customer needs is the key. Only products with strong competitiveness, high marketing efficiency, reduced cost, and a complete set of innovations that can meet the needs of consumers' personalization and scene are the two ways to reinventing the brand.

As the importance of innovation in sales links has become increasingly prominent, the traditional marketing mode of "innovation + mass production + advertising + shipment" is being replaced by the demand for R & D, flat distribution and scene selling. This requires enterprises not only to have enough R & D capability and promotion ability, but also to be able to take care of the experience of sales.

In this way, the demand for capital strength, R & D strength and marketing ability of enterprises is higher, and market competition is more intense. Once the enterprise falls in the competitive process or even lags behind, it will be difficult to catch up in the future.

In fact, whether the market leading enterprises, or enterprises such as 361 degrees, are gradually lagging behind in the competition, it is very important to identify their market position and choose the direction of development. For example, XTEP's main brand is running shoes, targeting the running needs of the masses; Anta also focuses on its main brand in the multi brand matrix.

On the contrary, just like the previous analysis, the next big problem at 361 degree is that the product matrix is not clear enough to choose the market positioning with its own market characteristics.

Especially when the big data and the Internet of things accelerate the integration of traditional industry resources, as long as we can get enough market information and make corresponding marketing decisions according to data analysis, even if we locate small businesses in a certain field, we can make outstanding marketing results.

Conclusion:

The current problem facing 361 degree is the inevitable situation in the process of upgrading domestic industries and upgrading consumption: enterprises that adapt to change will get faster development and greater development space, and enterprises that are not suited to change can only be eliminated.

After all, consumption upgrading and industrial upgrading must be built on the basis of their own strength. Only powerful and innovative enterprises can have enough financial, material and R & D capabilities to meet the market development trend, meet consumer demand and help social and economic progress.

For those enterprises that are lagging behind or even being cut down, we should keep a rational view. If an enterprise can improve its own technology and adapt to market competition, there is still potential for development. If it can not adapt to competition or even be cut down, it is just the optimal allocation of social resources. Of course, with the gradual spread of 5G technology, the leaping development of enterprises such as 361 degree is still in the air.