How difficult is it for SEMAR to sell its overseas loss making subsidiarys domestic clothing brands to the sea?

category:Finance
 How difficult is it for SEMAR to sell its overseas loss making subsidiarys domestic clothing brands to the sea?


Only one day after the announcement of the transaction, the Shenzhen stock exchange immediately issued a letter of concern, asking semma apparel to make supplementary explanations on whether the transaction forms horizontal competition, whether it sells the assets to the persons acting in concert of the controlling shareholders after making a large investment in sofiza, and whether there is benefit transmission.

In October 2018, SEMAR clothing acquired sofiza for 110 million euros, which owns 100% of the equity of kidiliz group, a medium and high-end European childrens wear enterprise. In the announcement on the acquisition of sofizasas from France in 2018, the reporter found that the headquarters of kidiliz group is located in Paris, France, and the brand has been established for more than 50 years. It has 10 self owned childrens wear brands and 5 authorized business brands, providing product selection from mid-range to high-end positioning, from new children to young people of many years.

However, it is worth noting that at the time of the acquisition, the total liabilities of the kidiliz group had exceeded 200 million euro, and the net profit in 2017 was negative. According to the disclosure, in 2017, the kidiliz group achieved an operating income of 427 million euro and a net profit of - 27 million euro after tax.

Moreover, in the two years after the completion of the acquisition, the loss has not been reversed, but also expanded. According to the latest data disclosed by SEMAR, the net profits of sofisas in the fourth quarter of 2018, 2019 and the first quarter of 2020 are respectively - 48.8358 million yuan, - 307 million yuan and - 121 million yuan.

Prior to that, according to the 2019 annual report disclosed by SEMAR, the companys net profit decreased by 8.52% year-on-year in 2019. Several research reports of securities companies attributed the decline of net profit to the impact of the loss of kidiliz brand. During the reporting period, it not only reduced the number of stores, but also kept high expenses. On July 14, SEMAR clothing released a performance forecast. It is estimated that in the first half of the year, it will make a profit of RMB 0 million to 72.2106 million, down 90% to 100% year on year.

Established in 1996, SEMA clothing has the leisure clothing with SEMA brand as the main brand and the childrens clothing brand matrix based on Balabala brand. It is worth noting that in recent years, the childrens wear of SEMA has surpassed the leisure clothing and become the main engine of growth. In 2019, the operating revenue of childrens wear and clothing reached 12.663 billion yuan, a year-on-year increase of 43.50%, accounting for 65.49% of the operating revenue; while the revenue of leisure clothing decreased by 3.64%. According to Euromonitor data, the brand with the largest market share of childrens wear market in China in 2019 is barabala of SEMA, which accounts for 6.9% of the market share, far exceeding the 1.6% of Anta childrens wear.

There are also difficulties in going to sea

Observing the situation of the clothing industry, we can find that the expansion mode of enterprises in the past few years is generally manifested as: multi brand cultivation and large-scale opening of stores, both of which are high-rise and high-powered, so as to seize the share.

However, the current situation of the industry that can not be ignored is: close to the red sea fight. In the view of industry insiders, on the one hand, the offline expansion of enterprises is facing the ceiling; on the other hand, the online and offline dual layout has become very common in the industry, and online traffic is becoming more and more difficult to win.

In this context, internationalization has become another choice for enterprises to expand. Li Ning, Anta, taipingniao and 361 degrees have extended their tentacles to foreign markets. As early as 2015, SEMA began to go to sea. According to the data disclosed by SEMA, by the end of 2019, SEMAs two major brands have opened 30 stores and counters in Saudi Arabia, Mongolia, Indonesia and other countries.

However, the divestiture of loss making overseas assets to a certain extent reflects the unsatisfactory first battle of SEMAs internationalization. Previously, Cheng Weixiong, an expert in textile and garment brand management and general manager of Shanghai Liangqi Brand Management Co., Ltd., said in an interview with economic observer that going out is one of the strategies for every large-scale enterprise. However, there is still a large space in the domestic market. If the domestic market is not fully expanded and powerful, it can be explored in some ways when going out to sea. It is not recommended to march into overseas markets on a large scale Field. Overseas development needs a medium and long-term strategic planning. On the one hand, it should be based on the stability of the domestic market. On the other hand, the brand needs to have enough precipitation in creativity, R & D, organization, supply chain and transnational operation. Going abroad is an opportunity, otherwise it will become a challenge.

Yang Dayun, an investor in fashion industry and President of UTA Fashion Management Group, also pointed out that brand going abroad needs to be interpreted from two aspects. First of all, the premise of brand going abroad is the countrys going abroad. In recent years, China is constantly refreshing its brand-new influence, so clothing brands can obtain sales channels other than the domestic market. On the other hand, because foreign consumers are more mature, the consumption brand is relatively stable, but this is both an opportunity and a challenge. At present, when domestic clothing brands go abroad, most of them are testing water Accumulate experience.

Yang also stressed that it is wrong to think that if we make the scale bigger, the revenue and the market value better, we can lead the clothing market. Chinese enterprises want to become Chinas international brands, not international Chinese brands, which are two different things. If you want to see China from the global perspective, your brand must keep your own unique DNA. There is a saying that the national is the worlds, which reflects the soft power of the brand, you must have your content.

Yang Dayun believes that at present, the awareness and thinking of domestic clothing brands for soft power is far from enough. Soft power, in short, is the ability to tell stories behind a brand, including whether there is historical precipitation, whether it can arouse value recognition and emotional resonance, and to be a leading consumer enterprise rather than following a consumer enterprise. Yang Dayun believes that these are the places where local brands lack at present.