Children’s clothing goes to sea miscalcularly

The annual reports of A-share listed companies in 2020 have been released one after another. In the evening of April 12, Senma clothing also disclosed the report card of the annual report in 2020. From the data disclosed, in 2020, the revenue and net profit of Senma Clothing Co., Ltd. will double drop, and the net profit of Senma Clothing Co., Ltd. in 2020 will be almost “cut by the waist”.

According to the financial report of Senma clothing, the operating revenue of the company in 2020 is about 15.205 billion yuan, a year-on-year decrease of 21.37%; the corresponding net profit is about 806 million yuan, a year-on-year decrease of 48%. During the reporting period, the net profit of semma clothing after deducting non-profit was about 757 million yuan, a year-on-year decrease of 49.01%.

On the main reasons for the decline of the company’s performance in 2020 and other related issues, a reporter from Beijing Business Daily called Senma clothing securities department for an interview, but no one answered the phone.

童装出海失算 森马净利“腰斩”

According to the annual report, Senma clothing, founded in 2002, is an enterprise group with virtual operation as its characteristics and leisure clothing and children’s clothing as its leading products. It has two brand clusters: adult leisure clothing represented by Senma brand and children’s clothing represented by Balabala brand. Among them, Senma brand was founded in 1996, positioning as a popular daily lifestyle brand with leisure clothing as the main part, and Balabala brand was founded in 2002.

According to the financial reports disclosed, the business income of leisure clothing and children’s clothing of Senma clothing will decline in different degrees in 2020. Specifically speaking, children’s clothing is an important source of revenue. Financial data show that the operating revenue of children’s clothing of Senma clothing in 2020 is about 10.132 billion yuan, accounting for 66.64% of the current operating revenue, and the product revenue is 19.99% lower than that in 2019. In addition, the gross profit rate of children’s clothing products of Senma clothing in 2020 is 42.44%, which is 3.62% lower than that in 2019.

Cheng Weixiong, an expert in textile and clothing brand management and general manager of Shanghai Liangqi Brand Management Co., Ltd., said that under the influence of the epidemic situation, traditional clothing enterprises, mainly offline, have been greatly impacted. Although Senma clothing and children’s clothing business accounts for a relatively high proportion in the whole children’s clothing market, due to the pressure of the continuous expansion of physical stores, coupled with the impact of the epidemic on the offline, as well as the online e-commerce mainly focuses on discount sales business and low gross profit, its performance is declining.

In response to the performance decline, Senma clothing said that the impact of the epidemic was the main reason. However, some people in the industry believe that in addition to the impact of the epidemic, the loss of performance of Senma clothing may be more due to the failure of children’s clothing business.

In July 2020, Senma clothing announced that it plans to sell 100% of the assets and business of its wholly-owned subsidiary sofizasas (sofizasas owns 100% equity of kidiliz group) to Senma group, the third largest shareholder of the company, in order to reduce operational risk and avoid greater loss of performance.

It is understood that kidiliz group is the overseas children’s clothing business of semma clothing. On April 28, 2018, in order to promote the high-end development of children’s clothing business and expand overseas markets, Semir International Group (Hong Kong) Co., Ltd., a wholly-owned subsidiary of Semir clothing, acquired 100% equity and creditor’s rights of sofizasas in cash for about 110 million euro (about RMB 844 million), thus achieving the goal of acquiring all assets of kidiliz group.

After the acquisition of the group, Senma clothing hopes that the layout of the group can drive the expansion of its children’s clothing business overseas and invest huge energy. It is reported that after the acquisition of kidiliz group, Senma clothing introduced its two major brands of “CATIMINI” and “absorba” into the Chinese market, and successively opened flagship stores in key cities and tmall platform. At the same time, some data show that in the first year after the acquisition of kidiliz group, that is, in 2019, the management cost of Senma clothing reached 1.029 billion yuan, a year-on-year increase of 97.13%.

However, the development of kidiliz group has not been in line with the hope of semma clothing. According to the data, kidiliz group has suffered continuous losses after being acquired by Senma clothing. According to the financial report data, at the end of 2018, affected by the French yellow vest incident, kidiliz company, which has a large number of stores in France, is facing difficulties in its operation. In the fourth quarter of 2018, kidiliz group lost 49 million yuan, 307 million yuan in 2019 and 121 million yuan in the first quarter of 2020.

Under the huge loss, Senma clothing had to sell the group’s business at a low price. In July 2020, Senma clothing sold at a low price of 680 million yuan, a difference of 160 million yuan from the original purchase price. This also means that only in the process of buying and selling, Senma clothing has lost 160 million yuan, not counting the number of losses in two years.

Affected by the epidemic situation and the low price transfer of kidiliz group, the children’s clothing business, which Senma clothing is proud of, also declined, and the number of stores closed is more than that of the leisure clothing industry. According to the data, by the end of 2020, the number of children’s clothing business of Senma has closed 1426 stores.

In addition to the overseas business of children’s clothing, its second largest business, leisure clothing, is also underdeveloped. According to the data, from 2019 to 2020, the revenue of leisure clothing decreased by 3.64% and 24.26% respectively. With the development of the business is not ideal, Senma clothing gradually weakened its position. According to the financial report data, in 2016, the proportion of semma’s leisure clothing business was 52.51%, and by 2020, the proportion of leisure clothing business will drop to 32.6%.

Although the business income of Senma clothing and leisure clothing declined, the gross profit rate of the product increased slightly. The data shows that the gross profit rate of Senma clothing and leisure clothing in 2020 is 35.88%, with a year-on-year growth of 0.28%.

Beijing Business Daily also noted that since 2019, the performance of Senma clothing has been weak. According to the financial data, the operating revenue of semma clothing in 2019 was about 19.337 billion yuan, a year-on-year increase of 23.01%; the corresponding net profit of the current period was about 1.549 billion yuan, a year-on-year decrease of 8.52%.

Although the performance suck, but did not affect Semir’s clothing bonus plan. According to the announcement disclosed by semma clothing, according to the profit distribution plan approved by the board of directors on April 9, 2021, the company will distribute 2.5 yuan cash dividend (including tax) to all shareholders for every 10 shares based on the share capital on the equity registration date determined when the company’s future profit distribution is implemented, and give 0 bonus shares (including tax), instead of increasing the share capital from accumulation fund.

In the view of investment and financing expert Xu Xiaoheng, continuous and stable cash dividends are the embodiment of the investment value of listed companies. Especially in the context of regulatory encouragement of cash dividends, listed companies want to boost investors’ confidence by increasing dividends. However, it is not worth encouraging to pay dividends for the declining performance. The company should act according to its actual situation.

Beijing Business Daily reporter Qian Yu, Zhang Junhua, Liu Fengru

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