Bankruptcy Of The Subsidiary Company, The "Multi Leaf Strategy" Of The Brand

The "China Version ZARA" Shanghai La Natsu Bell dress Limited by Share Ltd (hereinafter referred to as "La Natsu Bell") announced in the evening of January 21st that the bankruptcy liquidation application of the subsidiary Jack Walker (Shanghai) Garments Co., Ltd. (hereinafter referred to as "Jack Walker") was accepted by the local court, and the ruling was effective immediately. Insiders said that in the context of continuous losses in performance, La Natsu Bell began to seek transformation and development, stripping off the development of weak brands, selling marginal businesses and focusing on the core brand development, which has become the development track of La Natsu Bell in the past year. From the original "multi brand + all channel" expansion strategy to the current strategic contraction, it may be a way to revive the life of rash bell, but in the process of constant adjustment, it will inevitably undergo transformation pains.

　　 Re peel

On the evening of January 21st, La Natsu Bell announced that his subsidiary Jack Walker received the "civil ruling" of the third intermediate people's Court of Shanghai in January 20, 2020. The ruling shows that Jack can not repay the debts due to maturity, and the assets are not enough to repay all debts. He has already had the cause of bankruptcy. The court accepted Jack Walker's bankruptcy and liquidation application, and the ruling came into effect from now on.

About abandoning the subsidiary company Jack Walker and La Natsu Bell's explanation, "the brand is still in the early stage of cultivation and development, and its brand competitiveness is not strong. In the future, it still needs a lot of capital investment, and the profit outlook is not optimistic. In addition, La Natsu Bell is currently in a critical period of transformation and development. For the non core businesses with uncertain growth prospects and businesses that are expected to make significant losses or need more capital in the future, they will substantially reduce or stop the input of resources according to the current operating situation.

It is understood that Jack Walker was founded in 2009, positioning international casual men's clothing, was acquired in May 2015. At that time, La Natsu Bell said that the acquisition is conducive to the development of La Natsu Bell do's brand strategy.

In fact, Jack and Walker are not the first brands La Natsu Bell gave up. In May 2019, La Natsu Bell sold his controlling subsidiary, Hangzhou, 54.05% stake in Agel Ecommerce Ltd at a price of 200 million yuan, and its online clothing brands such as seven grid, OTHERMIX and OTHERCRAZY were also stripped off.

In June 2019, La Natsu Bell, a wholly owned subsidiary of La Xia, transferred its share of Tianjin star Kuang 98.04% share with a transaction price of 275 million yuan. In December 18th of the same year, the 60% equity interest held by La Xia management will be transferred to the Blue Lake investment management consulting (Shanghai) Limited company at a transaction price of 1 yuan. For many transactions, La Natsu Bell said that in order to further reduce the company's business burden, focusing on the development of the core women's clothing brand.

　 Strategic collapse

Cheng Weixiong, general manager of textile and clothing brand management and Shanghai Liang Qi Brand Management Co., Ltd., analyzed: "debt laden, poor management, selling subsidiaries or bankruptcy applications of subsidiaries are La Natsu Bell's way to turn losses into profits."

Reporters combed its years of financial reports found that behind La Natsu Bell's "multi brand + all channel" strategic development, there is a contradiction between expansion scale and profit. Data show that in 2011, only 1841 stores under the La Natsu Bell line were expanded to 9540 in the first half of 2018.

Along with the expansion of scale, its performance is also declining and losing money. Data show that in 2018, La Natsu Bell realized operating income of 10 billion 176 million yuan, a decrease of 269 million yuan compared with the same period last year, and net profit loss of 160 million yuan, down 132% compared to the same period last year, the first loss since the listing. In the first half of 2019, La Natsu Bell's revenue was 3 billion 951 million yuan, down 9.78% compared to the same period last year, and net profit loss was 498 million yuan, down 311.23% compared with the same period last year. The 2019 performance forecast shows that net profit in 2019 will be lost by 1 billion 600 million -21 billion yuan.

Lai Yang, executive vice president of the Beijing business economics society, said: "enterprises are always expanding in the process of development, and there is a marginal effect between the expansion of scale and the expansion of income. That is to say, when the existing mode reaches a certain limit, unless there is a good model innovation, the operating cost will be higher and higher, and profits will gradually show negative growth, and profits will not get corresponding returns, so the scale will rise but profits will decline.

Besides the pressure of performance, the lack of sub brand development has also hindered its multi brand development strategy. It is understood that La Natsu Bell sold the drmGalaxy (dream aesthetics) life aesthetics home brand at 1 yuan, the net profit in 2018 was 19 million 377 thousand and 300 yuan, and the net profit in 2019 was 37 million 116 thousand and 400 yuan.

　　 Focus brand

Faced with weak performance, La Natsu Bell has begun to take the initiative to adjust the strategy. Statistics show that La Natsu Bell Natsu, founded in 1998, is a multi brand and all channel fashion group positioned in the mass consumer market. It is engaged in the design, brand promotion and sales of clothing products, and is mainly engaged in women's casual wear.

At the beginning of 2004, La Natsu Bell launched the multi brand development strategy. The category was gradually extended from women's clothing to men's wear and children's clothing. Its brands have 12 brands, including LaChapelle, Puella, UlifeStyle, 7.Modifier, Candie 's, LaBabit and so on. In 2014, La Natsu Bell was listed on the main board of the stock exchange of Hongkong, and was listed on the Shanghai stock exchange in 2017.

In 2016, La Natsu Bell promoted the strategy of full channel construction. At the same time, there were more than 9000 traditional stores under the transformation line, and plans to add 3000 new retail intelligence stores in 3 years to find new growth points.

In 2019, La Natsu Bell began to implement the strategy of shrinking strategy, constantly stripping ionic brands, closing down stores and focusing on core women's clothing business. Data show that as of the first half of 2019, La Natsu Bell closed 2400 stores. In this regard, La Natsu Bell called the "strategic contraction strategy", that is, to shut down inefficient and loss retail outlets, but this strategy also reduced operating revenues accordingly.

The Beijing Commercial Daily reporter interviewed La Natsu Bell on the issue of constantly stripping out ionic brands and specific plans for strategic contraction. However, as of press release, no reply was received.

The industry said that with the development of strategic turnaround, from the development of multi brand + full channel to the strategic contraction of constantly losing its brand, closing stores and selling the fringe business, focusing on the core women's clothing business, it may be a path for development to rebound. Especially when the overall development of the garment industry is lagging behind, the strategic contraction and the main business will become the general trend of the industry. However, there will inevitably be some pains in the adjustment process.

Cheng Weixiong believes that focusing on the main business shows that the sideline industry has not developed well, and sideline has seriously affected the development of the main industry. La Natsu Bell should learn to be small, fine and specialized according to the characteristics of women's clothing.