Brand Clothing Was Seriously Affected By The Epidemic, And Semir Clothing Was Forced To Sell French Children'S Clothing Brand

On July 20, SEMAR apparel (002563) said it decided to sell sofiza, a French children's wear brand company that had just been acquired for two years, in order to reduce the company's operational risk and avoid greater loss of the company's performance.

Affected by the epidemic situation, the performance of brand clothing companies declined significantly in the first half of this year, and the loss of kidiliz in the first quarter was close to that of last year. Among the 17 listed textile and apparel companies that have released the performance forecast for the first half of the year, 10 companies are expected to decline their performance by 100% or more.

Sale of loss making subsidiary of SEMAR

SEMAR apparel announced on the evening of July 20 that the company intends to sell 100% of the assets and business of France's sofiza sas10, a wholly-owned subsidiary of SEMAR group.

According to public information, sofiza was founded in 2005, with its main business of holding, M & A and investment management. Sofiza owns 100% equity of the kidiliz group. Kidiliz owns a number of children's wear brands such as CATIMINI and absorba.

In 2018, Semir clothing completed the acquisition of kidiliz, a French children's wear group. However, according to the announcement, kidiliz's performance has been in a loss state, especially in the first half of this year, affected by the epidemic. Kiliz has a deficit of RMB 0.218 billion in the quarter of last year, 2018 and 2020, that is to say, the loss of kiliz in the quarter of 2018 is close to RMB 0.184 billion.

In recent two years, the company has integrated the business of kidiliz group, and actively carried out work from the aspects of organization and personnel, financial control, business development and cultural integration, so as to promote the coordinated development of domestic and overseas business. However, due to the continuous economic depression in Europe, the revenue of main brand business of kidiliz group has continued to decline, and the number of stores has decreased year by year. The loss of main business is serious, and the loss is enlarging, especially after the outbreak of new crown pneumonia in the world The major business areas of the group, France and Italy, as well as the whole European market economy, suffered heavy losses and far-reaching impact. The operation risk was further amplified, which had adverse impact on the company's performance and brought significant uncertainty to the company's future business performance. In order to avoid the continuous adverse impact of the business on the company's performance, the company intends to sell the assets and business.

However, the price of this transaction has not yet been determined. The board of directors of SEMAR clothing authorized the management to engage an audit and evaluation institution to audit and evaluate the assets and business of the underlying assets, and determine the transaction price according to the audit and evaluation results. In 2018, SEMAR clothing purchased all the assets of kidiliz group with 110 million euro (about 844 million yuan at that time). After the acquisition, SEMAR has become the second largest children's clothing company in the world.

In addition, the transaction involves related party transactions. Semma apparel said that the purpose of this transaction is to reduce the company's operational risk and avoid greater loss of the company's performance, not for the purpose of competition. Therefore, SEMAR group undertakes that during the period of holding the equity of the underlying assets, it will not carry out new business or expand its original business in China. In addition, within one year from the date of completion of this transaction, SEMAR group will solve any potential horizontal competition.

Clothing companies are seriously affected by the epidemic

Established in 2002, SEMAR clothing has developed into a leading company in leisure clothing and children's wear industry in China. As of December 31, 2019, SEMA clothing has established 10257 offline stores in all provinces, autonomous regions, municipalities directly under the central government and overseas, including 1310 Direct stores, 8677 franchise stores, and 270 joint stores. In terms of brands, the number of children's clothing stores such as balabalabala increased from 5293 to 5790, an increase of 497, an increase of 9.39%; The number of adult clothing stores such as SEMAR casual wear decreased from 3830 to 3766, 64 stores decreased by 1.67%; the number of shops in kidiliz group decreased from 782 to 701, with a decrease of 81, a decrease of 10.36%.

However, affected by this year's epidemic, the performance of SEMA clothing has declined seriously. According to the first quarter report released by SEMAR apparel, in the first quarter of 2020, its operating revenue was 2.74 billion yuan, a year-on-year decrease of 33.51%; and its net profit was 17.48 million yuan, a year-on-year decrease of 94.96%. SEMAR had previously predicted that the net profit in the first half of the year would drop by 70% - 90%, and the expected profit would be 72.2106 million yuan to 216 million yuan.

However, on July 14, the company revised down the performance forecast, and expected to make a profit of RMB 0-72.2106 million in the first half of the year, down 90% - 100% year on year. As for the reasons for the performance correction, SEMA clothing explained that: affected by the epidemic, the company's overseas business losses increased.

In addition, as of July 20, 17 textile and garment companies in a share issued half year performance forecasts, of which 13 showed a year-on-year decline. Among them, 7 companies, including St BUSEN, hinour, Sanfu outdoor, Meibang clothing, Saturday, Pathfinder and Huasi Co., Ltd., are expected to see their net profits drop by more than 200%.