CABBEEN Apparel Limited Releases Annual Report 2019

Today (March 11th) afternoon, the famous individual leisure men's clothing brand CABBEEN apparel Co., Ltd. (hereinafter referred to as CABBEEN) released the annual report of 2019. During the reporting period, the company achieved operating income of 1 billion 275 million yuan, an increase of 0.1% over the same period. Gross margin was 560 million yuan, down 3.2% from the same period last year. The profit in the year was 158 million yuan, a decrease of 24.8% compared with the same period last year. The basic earnings per share is 23.58 cents, and the final dividend will be 3 Hong Kong cents per share.

CABBEEN apparel said that the reasons for the change in performance during the reporting period were mainly due to macroeconomic uncertainties, slowing economic growth in mainland China and fierce market competition. In addition, the impact of promotional activities and retail discount growth and the continued slowdown in business growth also had a certain impact on the performance. The same mid-range brand will face greater challenges.

From January 28th to February 9th, distributors of CABBEEN clothing temporarily closed over 90% of retail outlets, and today, about 17% of retail outlets are still closed. In view of the continuous interruption of business and the reduction of customer traffic, CABBEEN apparel is expected to suffer significant adverse effects in 2020.

CABBEEN apparel said that the company has begun to cut purchase orders for the 2020 summer series products and shelved plans for new shops and other major investments. The company will also strengthen the control costs and extend the credit period to distributors. In view of the unforeseen impact of the development of the epidemic and the impact of the epidemic on the operation of the company, the company will maintain a high level of liquidity for its business development. Therefore, the dividend payout ratio in 2019 has been adjusted to about 40%.

In addition, in view of the fact that the new brand's orders and volume of operation are generally small, CABBEEN is facing challenges in the fight for reasonable cooperation prices and achieving predictable delivery cycles. Therefore, it has begun to develop its own production facilities to solve the obstacles of supply chain management. CABBEEN apparel said that the smaller production cost is usually higher and the company needs to manage the plant. Therefore, CABBEEN apparel has invested in upstream garment production since November 2019 and focused on producing its own core products.

As of December 31, 2019, CABBEEN has 6 wholesale distributors, 19 distributors and 135 two level distributors. In mainland China, there are 887 retail outlets and 1 retail outlets in Kampuchea. In addition, the company also sells products through micro mall and Tmall, Jingdong, vip.com and other e-commerce platforms. Meanwhile, CABBEEN WeChat fans and membership numbers were 2 million 400 thousand.

Everbright Securities analyst Li Jie said that during the epidemic, garment industry retail was inevitably dragged down, but for a long time, the SARS epidemic in 2003 only brought about 1-2 of the development of the garment industry. The annual disturbance did not change the growth trend of the industry. However, judging from the important influence factors and core concerns of the long-term development of the garment industry, the development stage of the industry is different from that of 2003. In 2003, the apparel industry is in the growth stage and 20 After more extensive growth, inventory adjustment and normal operation, it has grown more mature and has stronger correlation with macroeconomic. In the two quarter of 2018, the industry was depressed by the downward pressure of macroeconomic growth. Drawing on the experience of SARS in 2003, it is also difficult to make substantial changes in the overall development characteristics and stages of the industry. However, after the current round of epidemic, the garment industry is expected to have some trend and structural changes, such as homeopathic optimization of sub industry structure, transformation of channel and marketing mode, etc.

? ? CABBEEN clothing also believes that the electricity supplier will continue to become the mainstay of its own business development. For this reason, the company will invest mainly in the whole channel and the electricity supplier field, develop CRM capabilities, enhance the store experience and investment brand building, and be cautious about the expansion of physical shops. It is reported that CABBEEN clothing has 4 studios and teams in Guangzhou, Hongkong, Milan and Paris respectively. A total of 84 members, including 48 designers from mainland China, other Asian countries, Hongkong and Europe, are also working with design institutes and contract designers around the world. In 2019, there were over 4600 new products.

Wang Liping, an analyst at Shenyang Wanguo Securities, pointed out that along with the continued slowdown of domestic economic growth, the growth of clothing consumption is still lower than that of last year, and the market competition has become more intense. Many domestic clothing Brand Company have contracted, and the "single brand operation + multi brand layout" has become the successful way of clothing brand. The main points of single brand operation include several aspects: one is upstream: by stabilizing the supplier's ex factory price and stabilizing the cost; the two is the middle reaches: by creating excellent brand image, expanding core consumers, enhancing product strength and market share, and so on, to control the distributor's discount rate; at the same time, meticulous supply chain management, reasonably control logistics warehousing, marketing publicity. And so on all kinds of expenses; the three is terminal: on the one hand, we should upgrade the new retail mode, improve store efficiency, stabilize terminal discounts and increase revenue; on the other hand, we must strictly control the cost of store rents, personnel salaries, and expand profit margins.

? ? ? In addition, Wang Liping also believes that "capacity" determines the ability to receive orders and cost control of clothing brands. In particular, the number of production lines, the level of automation and the number of production staff are particularly important for enterprises. This is because, first, the capacity determines the company's ability to receive orders from large customers. Only high capacity manufacturers can undertake the urgent list and the large list of brand hot products. Docking with international leading brands; two, the scale effect is conducive to cost control, even in the manufacturing field, even the weak cost advantage is enough to make the company stand out in the competition. In addition, if capacity expansion is achieved by internationalization, the global resources can be effectively collected to cope with the upward pressure on domestic production costs.

In Wang Liping's view, under the background of the current terminal consumption of clothing industry, the rise of e-commerce channels, and the maturity of young consumer groups after 90, the relevant brand enterprises emphasize the creation of brand tonality to break through homogenization, impress consumers through more design and personalized products, and deepen consumer identification through brand culture marketing. Companies that are actively transforming in hot areas are expected to gain significant relative returns.

Public information shows that CABBEEN is a designer brand in China. It mainly provides men, women and children's clothing and accessories. Its brands include CABBEEN, CABBEEN City, Cabbeen Love and two o'clock in the morning. Most of its brand sales are designed by the group and all products sold are produced by independent manufacturers in mainland China. CABBEEN closed at HK $1.340 / share, or 0.74%, at HK $896 million.