Daphne'S Dilemma: How To Innovate And How To Innovate

Recently, Daphne released its 2019 annual performance bulletin, which showed that the Group recorded a loss of HK $1 billion 19 million 500 thousand in 2019, compared with a loss of HK $786 million 600 thousand in 2018. The loss attributable to shareholders of the group in 2019 was HK $1 billion 70 million 100 thousand.

According to public information, Daphne was founded in 1990, mainly engaged in the manufacture and sale of women's shoes. It was once one of the most successful domestic brands in China. In 1995, Daphne went public. Known as "the king of popular shoes".

Decline in performance for many years

It is understood that in the best performing period, Daphne can sell 50 million pairs of women's shoes in 1 years, with a market share of nearly 20%. In 2013, Daphne's market value had exceeded 17 billion yuan, but its revenues declined year by year. At present, the plight of Daphne is not a case. Last year, the "China shoe king" was declared bankrupt.

From 2015, Daphne's performance began to drop rapidly. Data show that in 2015 -2017, the losses of Daphne International were HK $380 million, HK $838 million, HK $742 million, while direct losses in 2018 amounted to HK $1 billion. However, in the first half of 2019, Daphne International's losses narrowed, and the share loss of shareholders was HK $389 million, narrowing 20.9% compared with the same period last year.

According to the 2019 annual performance announcement, as of December 31, 2019, Daphne's operating income reached HK $2 billion 126 million 400 thousand during the reporting period, down 48.5% from the same period last year, and the share loss of shareholders increased by 8% to HK $1 billion 70 million. The gross profit margin reached HK $781 million 100 thousand, down 13.2% from the previous year, and the gross profit margin decreased by 13.2% to 36.7%.

For losses, Daphne said it was mainly due to the sharp decline in the number of stores from 2820 in December 31, 2018 to 425 in December 31, 2019, and the core brand business chart was not as good as expected.

At the same time, in order to cope with the increasingly serious business environment and rising cost pressures, Daphne will accelerate the pace of structural adjustment so as to achieve the asset light business model. In order to cooperate with the business transformation, Daphne has intensified efforts to clean up the over season stocks. The inventory level dropped by 84% from HK $992 million 300 thousand in December 31, 2018 to HK $162 million in December 31, 2019. The average stock rotation days decreased significantly by 41 days to 157 days in 2018, and 198 days in 2018.

In addition, in order to attract more young consumers, Daphne continues to strengthen cooperation with emerging e-commerce and social networking platforms. In addition to maintaining close cooperation with key online platforms, it further expands strategic cooperation with online distributors to expand the business layout of the online market.

In this regard, insiders said that with the continuous expansion of Daphne's losses, if we do not seek new, no change, and out of the current consumer, continue to follow the old road, the long run will be gradually declining, and ultimately can not survive in the market.

Transformation to save oneself

The market value of Daphne in 2013 exceeded 17 billion yuan. But in 2015, Daphne's performance encountered "inflection point", Daphne's performance was in the mire of loss, and the loss scope gradually expanded.

With the continued decline in performance, Daphne launched a series of transformation initiatives, including through cooperation to expand product lines, increase coverage of the crowd, closing the loss shop and other practices. In the mid 2019 earnings report, Daphne said it was increasing investment in product development and launching more stylish sports shoes. Various measures failed to save Daphne from losses.

In fact, these changes and adjustments of Daphne do not match with the era of Internet big data, and do not take effective strategies against the changes in the modern market. Daphne's losses are related to its early follow up trend and unequal changes in the market.

Moreover, if Daphne's old leather shoes enterprises want to become winners in the market through transformation, they need to develop their own unique market competitiveness in the process of transformation, so as to improve the sustainability and stability of the transformation.

epilogue

Daphne has intensified efforts to clean up its over season stocks in line with the business transformation. In view of this transformation, there is also a certain risk. According to Daphne's performance report, clearing inventory is necessary for light assets, but also seriously eroded gross profit margin during the reporting period.

Xiaobian believes that the biggest predicament of Daphne is how to change, how to innovate, and how to cater for the current consumers.