Big Loss In Overseas Business! In The First Half Of The Year, The Net Profit Of SEMA Clothing Decreased By More Than 90% And Only Earned More Than 70 Million Yuan

Zhejiang Senma Clothing Co., Ltd. (hereinafter referred to as "SEMAR clothing") today (July 14) 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. The net profit of SEMAR clothing was expected to drop by 70% - 90% year-on-year, and the expected profit was 72.2106 million yuan to 216 million yuan.

As for the reasons for the performance correction, SEMA clothing explained that: affected by the epidemic, the company's overseas business losses increased.

According to the public information, SEMAR clothing was established in 2002 and has developed into a leading company in China's leisure clothing and children's wear industry. The company's brands mainly include adult casual clothing brand "SEMAR", children's clothing brand "balabalabala", "makalo", "minibalabalabala", etc., as well as several children's wear brands such as "CATIMINI" and "absorba" under French kidiliz. The company's main business is product design, brand management, supply chain management and channel development. In 2019, the income of children's clothing of SEMAR was 12.66 billion yuan (including the consolidated income of kidiliz group was about 2.97 billion yuan), with a year-on-year increase of 43.5%; the income of leisure clothing was 6.54 billion yuan, a year-on-year decrease of 3.6%.

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 has increased from 5293 to 5790, an increase of 497, an increase of 9.39%; the number of adult clothing stores such as SEMA casual wear has decreased from 3830 to 3766, with a decrease of 64 The number of kidiliz group stores decreased from 782 to 701, a decrease of 81, a decrease of 10.36%.

According to the financial report, from 2011 to 2019, the compound annual growth rate of the operating revenue of SEMAR clothing reached 12.09%, and the annual compound growth rate of net profit reached 3.0%. In 2019, the operating income of SEMAR clothing reached 19.337 billion yuan, an increase of 23.0% compared with the same period in 2018. The company's revenue growth slowed down year on year; the net profit was 1.549 billion yuan, 8.5% lower than that in 2018.

In terms of categories, the proportion of children's clothing business revenue continued to rise, and the growth rate of children's clothing business revenue continued to be higher than that of leisure clothing. The company's revenue mainly comes from leisure clothing business and children's clothing business. The CAGR of children's clothing business from 2011 to 2019 is 25.5%, with a sustained and rapid growth; that of leisure business from 2011 to 2019 is 2.0%, maintaining a stable growth. In 2019, children's clothing business accounted for 65.5% of the total revenue, an increase of 39.0 PCT compared with 2011; leisure business accounted for 33.8%, decreased by 38.2 PCT compared with 2011. In 2018, Semir clothing completed the acquisition of kidiliz, a French children's clothing group. In 2019, the consolidated income of kidiliz business was about 3 billion yuan, and the net profit loss was about 300 million yuan. The number of kidiliz group stores decreased from 782 to 701, which was a drag on the overall performance of the company. After excluding the negative impact of the parent company, the net profit of the parent company increased by RMB 2.56 billion in 2019, which was attributed to the stable growth of the parent company.

Lu Ming, an analyst at Kaiyuan securities, believes that the main reasons for the business development of kidiliz are as follows:

1) The poor economic environment in Europe, low economic growth rate and unstable social environment in France hinder business development.

2) The development of kidiliz's brands is uneven, and the poor performance of some brands has hindered the performance of major brands.

3) The impact of the epidemic in Europe is more serious than that in China, and stores have not yet recovered.

In the future, SEMAR will continue to improve the management of kidiliz business, split the business and personnel, optimize the store structure, reasonably plan the business development, and reduce the drag on the overall performance of the company. Lu Ming predicted that after the effective adjustment of French business, the company's performance will get rid of the negative impact and the profitability will be further improved.

With the steady development of children's wear and leisure business, the overall gross profit rate of Semia clothing has been steadily increased in recent years. In 2017, due to the company's accelerated processing of inventory, the gross profit rate decreased slightly. In 2019, the gross profit rate returned to a high of 42.53%, and continued to maintain a high level of 41.11% in the first quarter of 2020.

Industry insiders believe that with the weakening of the impact of the epidemic, clothing consumption is gradually warming. In the short term, we are optimistic about the marginal elasticity of the company's performance. In the second half of 2019, SEMAR clothing began to actively explore new retail, gradually implemented digital transformation and information construction, and online business developed rapidly. In 2019, the online revenue of leisure clothing will achieve high single digit growth, and the online income of children's clothing will increase by about 35%. During the epidemic period, the company accelerated online business innovation, optimized resource allocation, and carried out new business including live delivery and community marketing. With the continuous release of online demand after the epidemic, the online business of SEMAR clothing is expected to usher in a new round of growth.