On April 22, Xinjiang La Chapelle Clothing Co., Ltd. (hereinafter referred to as "La Chapelle") officially entered the delisting period.
From revenue exceeding 10 billion to A-share delisting, La Chapelle only experienced three years. The former women's clothing giant is no longer in glory, and its tens of billions of net worth has turned into nothing.
Prior to this, on March 30, La Chapelle, which was double hit by the negative assets and debt crisis, received a notice of planned termination of listing from the Shanghai Stock Exchange. The subsequently disclosed 2021 financial report once again confirmed the company’s precarious status quo - 2021 full year Annual revenue dropped sharply by 76.36% year-on-year to less than 500 million yuan, with losses exceeding 800 million yuan. Total assets were 2.4 billion yuan, a decrease of 30.95% from 2020, or even less than one-third of 2019, and liabilities were as high as 4 billion yuan.
La Chapelle stated in the performance report that even if the A-shares are delisted, it will not affect the company's normal operations. The company will still move forward, expand its business, and strive to achieve quantitative and qualitative transformation. However, in the extremely competitive women's fashion market, with the rise of a number of local designer brands, how much room is left for those who are left behind?
The five-year road to listing has ended in a hurry. It is sad that the once leading women's clothing company has reached this point. Recently, some domestic first-tier women's clothing groups announced their financial reports. Peacebird has become another women's clothing brand after La Chapelle to enter the tens of billions in revenue club.
The old king has retired, the new king has taken over, and a new round of reshuffle of domestic women's clothing has begun.
Falling from the altar: from great success to bleak end
La Chapelle - a women's fashion brand founded in 1998 by Fujian businessman Xing Jiaxing, has undergone twists and turns in the past 23 years. First, it changed its direct operation model to a joint-stock company in 2011. It was listed on the Hong Kong Stock Exchange in 2014 and listed on the Shanghai Stock Exchange three years later, becoming the first domestic apparel company to be listed in the form of "A shares + H shares".
While changing its business model, the group's brand matrix has also continued to expand. Before 2011, there were only three women's clothing brands: LaChapelle, Puella, and Candie's. In 2012, under the guidance of the "multi-brand, direct sales" strategy, two women's clothing brands, 7Modifier and LaBabité, and three men's clothing brands, POTE and JACKWALK, MARCECKō, were launched. Brand and 8EM children's clothing brand, etc. In 2021, a new brand USHGEE will be introduced.
In the first ten years, La Chapelle worked steadily, capturing consumers with trendy styles and affordable prices. However, its popularity was average and its market share was not high. The turning point occurred in 2010.
At that time, La Chapelle received an investment of 45 million yuan from Legend Capital, a subsidiary of Legend Holdings, and has since embarked on a path of rapid expansion. The number of stores and outlets has expanded from 900 in 2010 to 1,841 in 2011, and in 2018 It reached its peak at the end of June 2018, forming a huge number of 9,647 companies.scale.
The expansion of stores did work for a while. In 2017, the group achieved revenue of 8.999 billion yuan. In 2018, revenue exceeded 10 billion for the first time, rising 13.08% year-on-year to 10.176 billion yuan. This is rare in the entire women's clothing industry.
The outstanding performance has to some extent concealed the group's intricate hidden worries. Although the company's revenue of tens of billions in 2018 created a myth in the domestic women's clothing industry, its first loss is worrying. In 2018, the net profit attributable to shareholders of listed companies was -159 million yuan, while in 2017 it achieved a profit of 499 million yuan; the net profit attributable to shareholders of listed companies, excluding non-recurring gains and losses, was -245 million yuan, a loss of A surge of 164.43% over the previous year. In the following years, it continued to decline and intensify.
Revenue in 2019 decreased by 24.66% from the previous year to 7.666 billion yuan, and the net profit attributable to shareholders of listed companies was -2.139 billion yuan, a loss that surged 1241.01% from the previous year; revenue in 2020 dropped sharply by 76.27%, totaling 18.19 billion, and operating profit was -1.446 billion yuan. The full-year revenue in 2021 was only 430 million yuan, falling to the bottom.
Financial report data shows that from 2017 to 2021, the company's asset-liability ratios were 48.31%, 59.01%, 85.94%, 119.7%, and 162.7% respectively. As the debt problem worsens, lawsuits are pouring in.
In early April this year, La Chapelle was listed as the person subject to execution by the People's Court of Wenjiang District, Chengdu City, Sichuan Province, with the case number (2022) Sichuan 0115 Execution No. 1380, and the execution target was 23.058 million yuan. Currently, the company is involved in 823 legal proceedings, with 181 records of high consumption restrictions and 14 records of persons subject to execution. It also faces the risk of litigation and asset freezing. Due to multiple litigation cases, a total of 151 bank accounts of the company and its subsidiaries were frozen, with a frozen amount of approximately 104 million yuan. The equity of 17 subsidiaries of the company has been frozen, the total amount involved in the execution of the case is approximately 681 million yuan, and 4 real estate properties have been sealed.
The company's reputation in the industry has been declining due to its declining revenue and high debt. According to a report by Southern Weekend in November 2021, the partner stated that its payment arrears could last as long as a year.
In the annual report, La Chapelle attributed the failure to the failure to make correct judgments on the external industry environment since the second half of 2018, as well as improper internal strategies, excessive expansion and imbalanced cost structure. The annual report stated, “Added to the impact of the COVID-19 epidemic since 2020, the company’s financing channels have been closed, capital chains have been broken, and maturing debts have been unable to be repaid. Lawsuits and asset freezes and seizures have also followed one after another, and the company has faced greater cash flow pressure and concentrated debt repayment. Risks will have a certain adverse impact on its production and operations."
What exactly do the mistakes of 2018 point to?
Behind the huge losses: InventoryChronic disease, it is difficult to recover
The problem of “increasing revenue without increasing profits” began to emerge in 2018.
Industry analysts pointed out that La Chapelle's operations have problems such as numerous stores but low square footage efficiency, rich brands and product convergence. In a store covering an area of 1,000 square meters, different brands gather together. Without looking at the tags, it is difficult for consumers to distinguish between these garments with similar styles. Not only does it reduce the shopping experience, it also makes it difficult to leave a distinct brand impression on consumers. The annual report disclosed that among the group's huge brand territory, only women's clothing LaChapelle performed well, bringing in more than 30% of the group's revenue. Homogeneous brands 7Modifier and Candie's performed poorly, and men's clothing brands were particularly sluggish.
Peacebird, which is also a domestic first-tier women's clothing group, has a significantly clearer brand layout than La Chapelle. Its brands include PEACEBIRD women's clothing, PEACEBIRD men's clothing, LeDing girls' clothing, PEACEBIRD children's clothing, MG material girls' clothing, and COPPOLELLA sports fashion brand. As far as women's clothing is concerned, there are obvious differences between the corresponding age groups and styles.
Looking at the front-line women's clothing industry, the mismatch between revenue and profit is not a dilemma faced by La Chapelle alone. 2021 will undoubtedly be a good year for Peacebird Group. Financial report data shows that the group achieved revenue of 10.921 billion yuan in 2021, recording a 16.34% increase. Although the revenue is encouraging, the profit is not ideal. The group achieved net profit attributable to the parent company of RMB 680 million, a year-on-year decrease of 5.0%; net profit after deducting non-attributable profits to the parent company was RMB 520 million, a year-on-year decrease of 7.3%.
From radical expansion to rapid shrinkage, there are currently only more than 300 La Chapelle stores left. While Peacebird Group will close 717 stores in 2021, it will open 1,315 new stores, with a current total of 5,214 stores.
Inventory issues are also a long-standing pain point for La Chapelle. Even in 2018, which ushered in brilliant revenue data, its product inventory was as high as 2.555 billion yuan, and has been rising year by year since then. In 2021, as the group stepped up its efforts to clear inventory and reduce the purchase of new goods, the inventory dropped to 61 million yuan. Another aspect of high inventory squeeze is slow inventory turnover. Analysts once pointed out that La Chapelle's inventory turnover days in recent years have exceeded 200 days, while other similar fast-moving clothing brands have turnover days of about 80-140 days.
In fact, inventory backlog is a problem plaguing the entire apparel industry. Peacebird's inventory net value in 2020 was close to 2.26 billion yuan, an increase of more than 400 million yuan from the end of 2019, an increase of 21.67%. The inventory turnover days were 166 days, 13 days less than the previous year. In 2021, the company's net inventory value at the end of the period was 2.54 billion yuan, an increase of 280 million yuan or 12.56% from the end of the previous year; the inventory turnover days were 168 days, an increase of 2 days from the previous year.
In addition, La Chapelle has been criticized for not putting much effort into the design of ready-to-wear, following the trend in style, and failing to form a highlight.An author named "Yiwei" analyzed and pointed out in 2019 that La Chapelle's design style is erratic. "It has been compared to the Korean Yilian Group and adopted a college style; it has also gone through hip-hop and street style; and later it became popular and followed the trend. , Fa Feng and ins are mixed, and it has become increasingly unclear.” The financial report shows that since 2019, the company will no longer invest in any research and development expenses.
What's even more fatal is that the quality of clothing is deteriorating, and consumers have repeatedly complained about it. A Zhihu user said, “I first learned about La Chapelle in 2009. At that time, it was still an inconspicuous small brand in the mall, and it was more popular among young white-collar workers who had just started working. His clothes are especially suitable for those in their 20s and 30s. Girls in this period can relax and age, and can stay at home and commute...At that time, the workmanship and clothing materials of Rasha were very worthy of the price, and occasionally it felt like finding a treasure. "The workmanship was worthy of the price." The impression has been almost completely dispelled by the endless quality problems that have emerged in recent years. Browsing the comments from users on the Taobao platform, there are many negative comments such as pilling, snags, and disconnection.
La Chapelle sadly delisted, and Peacebird Group’s revenue exceeded the 10 billion mark for the first time. The rise and fall of winners and losers reveals the metabolism of the women's clothing industry.
Making women's clothing is not easy, but national fashion brands are rising against the trend
Accenture reports show that in recent years, China has nearly 400 million female consumers aged 20-60, who control up to 10 trillion yuan in consumer spending every year. Women play an important role in consumer decision-making, and more than 60% of Chinese household consumption is dominated by women. Guotai Junan estimates that in the past five years, Chinese women's overall spending has reached US$670 billion, an increase of 81%. The continuously rising "her economy" has attracted the attention of countless entrepreneurs and investors, and the women's clothing field is regarded as a growth point with unlimited potential.
The analysis pointed out that women's clothing is the largest sub-industry in the clothing industry, and its market size is growing year by year. In 2019, the domestic women's clothing market size was approximately 1,057.3 billion yuan, with an increase of 8.56%. Affected by the epidemic in 2020, it fell below the trillion mark, but the scale is still twice that of the men's clothing market. As the epidemic situation improves, the women's clothing market will return to a trillion-dollar scale in 2021. The size of the mid-to-high-end women's clothing market accounts for approximately 14% of the overall women's clothing market. The growth rate of the mid-to-high-end women's clothing market is approximately 7.5%, which is 2.3 percentage points higher than the growth rate of the overall women's clothing market. The market penetration rate has increased year by year.
Although the women's clothing industry is a rich mine, achieving profitability is not easy. The unpredictability of demand is the biggest challenge facing the women's clothing industry today. Some analysts pointed out that "the core contradiction in the women's clothing market at this stage is the contradiction between the demand for multiple varieties and the rapid changes in demand and the slow supply." The rich ore behind the "her economy" is not so easy to tap, and practitioners need to accurately Grasp the identity, value choices, and emotional belonging of women in the new era during the transition period, and how these factors are externalized into consumption concepts, motivations, and fashion.
In the "2019 Mid-term" released by the China Garment Association in 2020In the list of "Top 100 Enterprises in China's Apparel Industry", Heilan House, Semir International, and Jihua Group top the revenue rankings of listed companies, and there are few women's clothing companies in the top ten. According to Youzan & Bojun Technology's "2021 Clothing Retail "Industry Insight Report", only Peacebird is among the top 10 listed apparel companies in China in 2020.
In the ever-changing women's clothing consumer market, brand changes are not surprising. The Korean clothing brand, which has been in the country for nearly 30 years, was once the "dream of 900 million girls". Now it cannot escape the fate of being left out by the younger generation. Not only did the group's sales decline in double digits for the first time in 2020, but it also sold out crazily before. Launching brands such as Teenie Weenie to alleviate the high debt ratio.
The fast fashion giants that were once widely sought after by Chinese people have also suffered from decline in recent years, and their domestic market share has shrunk significantly. In the current clothing market, which pays more and more attention to individuality, consumer experience, and identity expression, fast fashion, which blindly promotes cost-effectiveness without distinctive design features, has gradually withdrawn from the stage and been abandoned by the younger generation.
"Clothes are a language, and you carry a pocket drama with you." Even today with the rapid development of the Internet, clothing can hardly be said to be the externalization of a person's aesthetic taste and life sentiment, and a new way of social interaction. The rise of some niche clothing brands has benefited greatly from Generation Z’s pursuit of individuality in clothing.
Surveys show that nearly 90% of Chinese style enthusiasts are young people of Generation Z. For this reason, Peacebird Group will continue to interpret the national trend culture through joint branding and pioneering designer cooperation in 2021, while breaking down category barriers. Creating national fashion IP has become one of the ways for domestic brands to revitalize themselves. At present, more and more local fashion designers are beginning to export original brands and explore new territories on live streaming platforms such as Douyin, Kuaishou, and Taobao to find target audiences.
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