70% Shops Have Resumed Business! Lee Lang Released 2019 Earnings Report

In March 19, 2020, the Chinese men's wear brand named HK1234, a Chinese menswear brand listed in Hongkong, released its year-round results for the 2019 fiscal year ending December 31st, with sales revenue rising 15.5% to 3 billion 660 million yuan over the same period.

At the same time, LILANZ announced the impact of the new crown epidemic on enterprises, and introduced the positive and practical measures taken by enterprises. In the first quarter of 2020, the total retail sales of LILANZ were expected to fall by more than 40% over the same period last year, which will affect the financial performance in the first half of the year. The group has already resumed production in a comprehensive way, and 70% of LILANZ in March. Brand stores have resumed business, and the total retail sales target in the second half of this year is no less than the number of units in China.

2019 highlights

In fiscal year 2019, the key financial data of China's Le Lang are as follows:

Revenue rose 15.5% to 3 billion 660 million yuan, operating profit rose 11.1%, to 980 million yuan net profit rose 8.1%, to 812 million yuan earnings per share of 67.82 yuan, an increase of 8.1% over the past year, the retail business over a 18 month, the average number of sales in the same store during the year increased.

Wang Dongxing said, "the transformation of retail channels continued during the year. With the increase of shopping malls, the diversion of consumption, coupled with the high temperature in the traditional retail season in the fourth quarter, made the garment retailing industry more challenging. The competitiveness of brands and products, the management capabilities of zero sales, and the location of shops were more important for business efficiency. China's implementation of the strategy of "providing goods with superior value for money" strengthens the product's fashion and design sense so as to open up differences with competitors and maintain steady growth in the year.

In order to reduce the inventory pressure of distributors in the autumn and winter due to the warm winter, China will provide sales rebate subsidies to distributors in order to enhance the enthusiasm of discount sales promotion. In addition, China has also continued to expand its sales network, supporting distributors to open new stores or move shops to better locations as needed. As of the end of fiscal year 2019, there were 2815 retail outlets in the country, and 145 new stores in the year. The total area increased by 7% to about 406 thousand and 400 square meters by the end of last year, and the total number of shopping malls increased to about 780, accounting for nearly 28% of the total number of stores in LILANZ. The independent business of light business series increased by 78 in the year to 290.

In the 2019 fiscal year, China's sales performance in various regions is as follows:

　　 North China (Beijing, Hebei, Shaanxi, Tianjin and Inner Mongolia) sales amounted to 291 million yuan, an increase of 19.5% over the same period last year.

　　 Northeast (Heilongjiang, Jilin and Liaoning) sales volume was 153 million yuan, down 7.1% compared to the same period, mainly due to the negative impact of outflow.

　　 Sales in East China (Jiangsu, Zhejiang, Shanghai, Anhui, Fujian, Shandong and Jiangxi) were 1 billion 280 million yuan, an increase of 22.4% over the same period last year, mainly due to the promotion of light business series.

　　 Central South (Henan, Hubei, Hunan, Guangdong, Guangxi and Hainan) sales amounted to 961 million yuan, an increase of 17.6% over the same period last year.

　　 Southwest (Chongqing, Sichuan, Guizhou, Yunnan and Tibet) sales amounted to 648 million yuan, an increase of 5.3% over the same period last year.

　　 Northwest (Shaanxi, Gansu, Qinghai, Ningxia and Xinjiang) sales amounted to 332 million yuan, an increase of 21.6% over the same period last year.

To better manage the inventory level, the group will begin to reduce the subscription ratio of light business series since the autumn of 2019. The group will start ordering this measure in the autumn of 2020 to reduce the order ratio and prepare sufficient production capacity to meet the demand. In addition to adjusting the proportion of orders and reducing the risk of backlog, the group also plans to start opening stores in outlets and department stores in 2020 in order to clear channel inventory in a more timely manner.

China continues to take the new retail as one of the focuses of future business development, actively combining online services, offline experience and improving logistics to promote the business of the main and light business series. In addition to setting up main and light business series online shops on major online shopping platforms, the group has continued to strengthen customer relationship management services through WeChat platform. During the year, various drainage activities were strengthened through various promotional activities, such as launching online special edition products, using portals to distribute widely, promoting red net sales, and working with Baidu, especially using the double eleven online shopping festival. Sales promotion increased significantly over the past year, helping distributors to clean up inventories, while driving up the volume of passenger traffic.

The board recommended a final dividend of HK $21 per share and a special final dividend of HK $10 per share, together with the interim dividend paid, the annual dividend payment of 57 Hong Kong cents per share to maintain a high dividend payout ratio.

Four directions for development in 2020

In 2020, China made the following four development strategies:

Channel management: in 2020, China will adopt a prudent strategy to focus on optimizing the existing store network, focusing on improving retail management and increasing store efficiency. The group will continue to push distributors to set up shop in high quality shopping centers and strive for better store efficiency. However, considering that weaker franchisees or lower benefit street shops will be closed, the number of target stores will remain at the end of 2019.

The main series will continue to encourage first tier distributors to increase direct outlets and enhance management of multi-channel channels. In light of business, the group plans to operate in direct selling mode in the autumn of 2020, instead of the current consignment mode, in order to strengthen management inventory, market development, brand marketing, and training of retail talents. In the long run, it is expected to increase the profit contribution of light business series to the group. The light business series will continue to focus on developing Zhengzhou, Xi'an, Hefei, Changsha, Guiyang, Nanchang and other provincial capital markets in 2020. Other Hangzhou, Wenzhou, Suzhou, Nanjing, Nanjing and Nanjing regions choose to open their stores in the core consumer market; in the first tier cities such as the first tier cities, they will not vigorously open stores, but promote brand image and cooperate with other regions.

Product positioning: the group will appropriately enhance the fashion and design sense of the light business series, so as to enhance the pricing ability of the series, ensure that the product quality can get customers' favor, and at the same time help to enhance the profitability of the brand.

New retail development: in addition to further strengthening drainage and online promotion activities, the group will continue to promote e-commerce sales through the launch of online special edition /IP joint products. The first 2020 spring and summer IP joint products have been launched and related promotional activities are being launched.

Brand promotion: China will continue to promote its brand through Baidu, micro-blog, Jo, and other different activities and channels. On the other hand, the main series of seventh generation shop renovation work will be extended to 100 to 200 existing stores, according to different market positioning shops to adjust the grade of decoration materials, in order to achieve better cost effectiveness.

Enterprise strength to cope with new crown epidemic situation

For the new coronavirus outbreak that began in January this year, the group said that the retail sales of spring products in 2020 were seriously affected, reducing the production of autumn products to meet the digestion of spring channel inventory, and considering sales rebates to individual affected distributors to subsidize the discount sale of spring products. In spite of strong retail sales before the Spring Festival in January, the total retail sales of LILANZ in the first quarter were expected to fall by more than 40% over the same period. The Group expects the financial performance in the first half of this year to be adversely affected.

Wang Dongxing said: "the impact of the epidemic on China's retail industry in the first half of the year, but I believe it will only have a temporary impact on the business of the group. In March, about 70% of the "LILANZ" shops were resumed and the business was expected to return to normal as soon as this autumn and winter. The total retail sales target of "LILANZ" in the second half of the year is no less than the number of units in China.

Wang Liangxing stressed that the epidemic will have a small impact on China's real estate in the short term. But thanks to early technology reserves and data construction, it can help itself through online micro mall, small programs and social marketing channels. It can also save about 40% of the original sales during the epidemic period, and try to reduce business losses in a very short time.

In the long run, the epidemic has also brought some opportunities for China's young people: it can change the situation that it used to rely too much on the offline channels, and put the online and social business providers into the main channels as far as possible.

In late January, he donated 3 million yuan of cash to Wuhan, which was directed to comfort the family members of the family who died because of the new crown pneumonia. At the critical juncture of the protective clothing, Li Lang, with many years of independent research and design capabilities and the reserves of the backbone team, was the first to switch to protective clothing quickly, and quickly introduced 35 new special equipment, which was installed in one day and finished on the same day. The production of the sample garment is in mass production within three days.

In March 18th, at the critical moment of the global epidemic situation, in the spirit of keeping watch, helping to overcome difficulties and sharing the same boat, Li Lang worked with Jinjiang enterprises to help Philippines Federation of Chinese businessmen and Philippines Jinjiang fellow townships to donate 7000 medical protective clothing and 100 thousand disposable respirators to front-line health care providers.

Wang Liangxing stressed: "an enterprise must adapt itself to changes in the social environment and change itself and innovate and develop continuously. The challenges and opportunities that the age brings to enterprises is to train basic skills and to have a keen sense of smell and to be able to respond at all times. From the perspective of corporate brand values, we need to reflect on the fact that our compatriots are suffering from disease and enterprises must exert their strength. It is difficult for a country to grow up. Protect your employees, do not cut salaries, do not lay off staff, so that employees in Hubei epidemic area at home. In their own work, within the scope of competence, converge the humanistic concern of the enterprise, take it to the consumer, use it to the consumer, take it to the country and use it to the country.