Esprit Authorizes GXG Parent Company Joint Venture To Operate Or Plan To Withdraw From China.

In December 1st, Si Jie Global Holdings Limited (00330) announced the establishment of a joint venture to operate its business in China, which also indicates that the company will withdraw from the Chinese market further.
Over the past few years, the group's brand Esprit has been shrinking China's market business. Although the group claims to be an important position in the Chinese market, the analysis shows that China's importance is mainly due to its Hong Kong share listing status.
According to the HKEx data, Xing Li and his two wives, Zhang Tianai and Brigitte Lin, have three daughters, Xing Jiaqian, Xing AI Lin and Xing Yan, who still share 211 million 800 thousand shares or 11.22% of Si Jie world. Group Chairman Ke Qinghui holds about 11 million 450 thousand shares or 0.60%.
Xing Li and Ke Qinghui are good friends. Even though they quit the Si Jie world in 2008, as chief shareholder, he was still considered to be under the influence of Xing Li.
According to the announcement, the Fortune Global Resources Limited will set up a registered capital of 100 million yuan with Mulsanne Group Holding Ltd. (1817.HK) mosang Group Holdings Limited, which is a joint venture with 6:4.
The three board members of the joint venture are nominated by the mochan group, and the most important directors and managers are nominated by the mochan group. The premise of a joint venture requires tens of thousands of resources to enable Si Jie to authorize and transfer the trademark to the joint venture company, so that the joint venture can operate Esprit business in the Chinese market.
GXG, a brand that has operations such as GXG, has just landed at the Hongkong stock exchange.
In its announcement, it is still known that China has been an important pillar of the group's strategic plan. It said that the group business will be completed in June 30, 2020. As a transition, the group will close some shops or transfer the remaining Chinese shops to the joint venture company. The Board believes that this transaction creates a sound foundation for Esprit brand to improve brand relevance and speed up growth.
For the transaction, No Agency analyst Tang Xiaotang said, does not mean that at the same time do not optimistic about the prospects of the joint venture. He said that although the transaction is in line with the interests of both sides, Si Jie can make the final investment, while Mu Shang as the Hong Kong stock "new Chai" can expand the scope and scale of business. But in the face of the current downturn in the clothing consumption environment and the loss of the younger generation consumer base of Esprit, the final result is that Si Jie completely withdraws from the Chinese market. As for the Esprit brand, it may authorize other companies or withdraw from the global market.
At the beginning of this year, another Chinese sportswear brand, Mango, was also authorized by China to take Hangzhou's amazing clothes Co., Ltd.
Local retail watch (micro signal: retailinsider) and no fashion Chinese network (micro signal: nofashioncn) data show that as of the end of June, in the 2019 fiscal year, the Asia Pacific region accounted for only 9.5% of the revenue of Si Jie global group. In the first quarter of fiscal 2020, Asia's market revenue further cut, 44.4%, fixed exchange rate decreased 43.4%, less than 26.7% of the sales area, a quarter decline of 33.2% over the previous year, and only 175 million Hong Kong dollars in single quarter Asian income.
In the past ten years, the Asian Pacific market's multiple impairment has been the main reason for the huge losses of the group.
At the beginning of October, Sijie global announced that Deng Yongyong, the chief financial officer of the group, was leaving. It was a sign that the glorious Chinese history of Esprit was officially closed.
In 2012, Deng Yongyong joined the Spanish company "Zara Gang" to join the Hongkong company and shouldered the heavy responsibility of Hongkong company turning losses into profits. During the seven years in office, he mainly assisted in the time as chief executive officer Jos e Manuel Mart Nez Guti e rrez and Ke Qinghui, chairman of the company.
After Deng Yongyong leaves office, Ke Qinghui will become the only "Chinese management" of the global management company, while the number of "Chinese" in the management of the actual operation will be officially cleared.
Si Jie world is the most famous agent in the clothing industry.
In 1964, the brand Esprit was founded by Susie & Doug Tompkins couple in San Francisco. In 80s, it took Hongkong, Germany and China as the core. It achieved great success in late 80s and early -90. In 1972, Hongkong Regal Xing Li Li became Esprit Hongkong agent and joined Hongkong company two years later.
In 1993, Xing Li packaged the Si Jie Global Asia Pacific business on the Hongkong stock exchange and listed it at the HK $3.7 issue price, and then unified the European and North American businesses through acquisitions.
At the end of the fiscal year ending June 2008, Si Jie reached its peak, earning HK $37 billion 227 million, making a net profit of HK $6 billion 450 million, and in HK $175 billion in HK $6 billion 450 million in the financial year. It has only recently been broken by Anta Sports (2020.HK).
However, as we all know, after the financial crisis in 2008, the global retail industry suffered a great impact. The income of Si Jie global has declined continuously since 2009. In the past 2019 fiscal year, its revenue has only recorded HK $12 billion 932 million, of which the Asia Pacific market income is HK $1 billion 102 million, which is only less than 1/4 of the peak period. The income of HK $102 million in Hongkong market is only 12.2% of 836 million HK dollars in 2008 fiscal year.
What is more serious is that after the financial crisis, the recession of Si Jie global increased year by year. Finally, in the 2013 fiscal year, it was dismissed as CEO Ronald van der Vis, and reluctantly reorganized, with a huge loss of HK $4 billion 388 million.
However, in the process, Xingli Lee reduced its holdings sharply, and gradually reduced the price of Si Jie global shares at a high price. At the same time, he accepted low price rights issue and cash in excess of HK $23 billion, which reduced the number of shares from over 40% to around 10%. However, as of Thursday's closing, the market value of Si Jie is now only HK $2 billion 831 million.
The Spanish "Zara Gang" led by Ma Hao Si, with the help of Ke Qinghui and Deng Yongyong, once made Si Jie global record low profit in the 2014, 2016 and 2017 fiscal year three degrees, but it is just the change of retail industry from offline to online.
Despite continuous shutting down and constantly withdrawing from the deficit market, the total losses in the past two fiscal years were nearly HK $5 billion.
By the end of June, the number of outlets in the Hongkong market, which was once known as Esprit brand, was only five. In fiscal year 2018, the company ended two flagship stores in Tsim Sha Tsui and Leighton center.
The rental cost of Hongkong headquarters was reduced by 75% last year, and the total number of non store staff was also reduced by 28%. Ke Qinghui pointed out that the rent in some parts of Hongkong was adjusted due to social events, so if the situation subsided, it might consider opening a shop in Hongkong. He also stressed that the group had no plans for further layoffs.
The new chief executive, Anders Christian Kristiansen, stressed that they attached great importance to the Asian market, and now the design of products that exceed 3/4 caters to Chinese consumers. However, joining the tragic experience of New Look, a high street brand in the United Kingdom, it is hard for investors to believe that Anders Kristiansen can shoulder the heavy responsibility of reviving the global network.
As of Friday closing, Si Jie Global Holdings Limited (00330) had a market value of HK $2 billion 925 million, only 1/60 of its peak value of nearly HK $180 billion.