Half year loss of HK $414 million, what happened to Sijie global, the former “king of fashion”

Beijing business daily (reporter Qian Yu Baiyang) on April 1, Esprit’s parent company, Sijie global, released the results for the six months ended December 31, 2020, which showed that the company’s revenue from continuing operations was HK $885 million, and its shareholders should have a loss of HK $414 million. For the year ended June 30, 2020, the income from continuing operations was HK $9.216 billion, and the loss attributable to shareholders was HK $3.992 billion.

The performance of Sijie global has been in the doldrums for a long time. In 2007, after the stock price of Sijie reached its peak of HK $133, it began to decline. In 2009, Sijie global ended 15 consecutive years of double-digit growth, and its net profit fell by 27.4%. In 2018, the net profit loss of Sijie global was HK $2.554 billion, a year-on-year decrease of 3911.94%. In 2019, although the net profit increased by 16.05% year on year, it still suffered a loss of HK $2.144 billion.

In order to make the business return to profitability, in November 2018, Sijie global put forward a strategic plan to enhance Esprit’s brand image, improve its product portfolio and pricing, and optimize the company’s distribution and cost base by closing some loss making businesses and transforming to a more streamlined structure. However, the development of these strategic plans was interrupted by the outbreak in early 2020. By mid March 2020, in order to slow down the spread of the global pandemic, local governments ordered to block some stores. Therefore, the physical stores of Sijie global in Europe almost need to be closed temporarily.

In April 2020, global stores will be reorganized and the remaining staff will be reduced. With the gradual lifting of the blockade in Europe in the summer and autumn of 2020, the operation of Sijie global has been interrupted again due to the outbreak of the second wave of global pandemic in Europe. Since December 2020, many major European countries have further implemented the blockade measures. Sijie global said that although it is expected that the blockade measures will be relaxed before the end of February 2021, due to the worsening global pandemic in some countries, Sijie global noted that during March 2021, many countries announced the extension of the blockade period or other isolation measures.

In the restructuring plan, China is also one of the important pillars of Sijie global strategic plan. On February 27, 2020, Sijie global announced that it would spend HK $55 million to prepare for restructuring its business in China. On the evening of December 1, 2019, SJ global and M & S announced that they would establish a joint venture to further improve Esprit. At that time, Sijie global said in the announcement that the transition from Chinese business to joint venture mode is expected to be completed on June 30, 2020. As part of the transition, Sijie global will close some stores or transfer the assets of the remaining Chinese stores to the joint venture.

In an interview with Beijing business daily, Yang Dayun, the founder of sustainable fashion in China, said that the reason for the continuous loss of Sijie Global’s performance is the brand aging, from a first-line leisure brand in the 1990s to a third rate brand today. In this development process, Sijie global ignored the changes of Chinese consumers, the growth of competitors and the market In the constant update iteration.

In the announcement, SJ global said that in view of the fact that the economy, especially the fashion industry, is not expected to recover rapidly and the blocking time is not clear, SJ Global’s directors decided to protect the solvency and liquidity of the going concern business, and applied for property protection proceedings for six major German operating subsidiaries in the bankruptcy court of Dusseldorf on March 27, 2020. On November 30, 2020, the court passed a final ruling to terminate the property protection proceedings and finally awarded debt relief of about HK $1.365 billion.

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