The new round of the epidemic has affected the domestic consumer goods industry to varying degrees, but the down jacket industry is relatively lucky.
At the performance briefing held on June 24, the management of Bosideng (03998.HK) stated that the new round of epidemic will have limited impact on sales in the peak season in early 2022, and it is expected that the performance of the new fiscal year will maintain double-digit growth.Industry experts said that the current impact of the epidemic has not ended, and the long-term impact remains to be seen.
Avoid the short-term impact of the epidemic
According to the financial report, as of March 31, 2022, Bosideng's fiscal year 2021-2022 revenue was 16.21 billion yuan, a year-on-year increase of 20%, and the revenue growth rate hit a new high in the past three years. 20.6%, gross profit margin increased by 1.5 percentage points to 60.1%.
From the perspective of specific business, Bosideng's core business down jacket revenue was 13.22 billion yuan, accounting for 81.6% of the total revenue, an increase of 21.4% year-on-year, of which the main brand Bosideng brand revenue was 11.62 billion yuan, a year-on-year increase of 16.3%; OEM business, women's clothing The revenue of business and diversified clothing business was 1.9 billion yuan, 900 million yuan and 190 million yuan respectively, a year-on-year increase of 23.8%, a decrease of 4.5% and an increase of 28.3%.
The growth of Bosideng's performance was mainly due to the increase in the overall selling price driven by the upgrade of the brand and product structure, as well as the optimization of channels and efficiency.By March 31, 2022, the number of Bosideng down apparel retail outlets decreased by 341 to 3,809 from the end of the previous fiscal year.Due to the adoption of flexible production methods, Bosideng's inventory turnover days were 150 days, a decrease of 25 days compared with the same period of the previous year, which was also the first drop in the past five years.
Since March this year, a new round of epidemics has occurred in many eastern provinces and cities in China. Some provinces and cities have adopted stricter epidemic prevention and control methods. Local business, outdoor and other consumption scenarios have been affected to varying degrees.
In this regard, Zhu Gaofeng, chief financial officer and vice president of Bosideng, introduced that the new round of epidemic mainly began in March, and markets such as Shanghai, Shenzhen, Beijing, and Northeast China were all affected, but the main sales of down jackets were in November every year. January of this year accounts for about 70% of sales, and March to September is the off-season, accounting for only about 15% of sales, so the impact on performance is limited.
The situation was similar for two other well-known international down jacket brands during the same period.
The first quarterly report of 2022 (January-March 2022) released by Moncler in May shows that the Moncler brand has a single-season revenue of 470 million euros, a year-on-year increase of 29.7%, of which the Asian market achieved revenue of 230 million euros, an increase of about 17.4% year-on-year. In March, due to the outbreak of the epidemic, some stores in China were closed, and they still achieved double-digit growth year-on-year.
The previous results of Canada Goose's fiscal year 2022 (as of April 3, 2022) showed that revenue in the fourth quarter was 220 million Canadian dollars, a year-on-year increase of 6.8%. Due to the shutdown of some businesses in China, revenue in the Asia-Pacific region fell in the fourth quarter. 9 %, but it is expected that sales in the Chinese market will recover as the epidemic improves in the second half of the year.
Bosideng's management also stated at today's performance meeting that the current epidemic has not completely dissipated, and there are still many uncertainties in the development of the industry. However, the epidemic is well controlled. It is expected that the overall performance from 2022 to 2023 may still have double-digit growth.
As of the close of the day, Bosideng's share price was HK$4.37, up 4.8%.
Long-term challenges remain
It is worth noting that the impact of the epidemic on the domestic clothing retail industry has caused practitioners to worry about the recovery of the subsequent market and consumer purchasing power.
Affected by the epidemic, from March to May this year, the retail sales of domestic clothing, shoes, hats, and textiles turned negative year-on-year. Among them, the retail sales of clothing, shoes, hats, and needles in April was 79.1 billion yuan, a year-on-year decrease of 22.8%, which was lower than the data for the same period in 2020. It fell 16.2% in May, showing a weak overall performance.
Wen Zhihong, general manager of Hehong Consulting, told the First Financial Reporter that there is still great uncertainty about whether the impact of the epidemic on the clothing chain industry is temporary or long-term.In the previous market visit, although the impact of the epidemic has improved significantly, the offline passenger flow of shopping malls and shopping malls has decreased significantly, which has also brought pressure to store operations.Clothing chain companies are also faced with a dilemma. Suspending store expansion may affect performance, but blind expansion may bring new risks.
The reporter noticed that Bosideng has also adjusted its store opening and market expansion plans. Previously, Bosideng’s store openings focused on first-tier and new first-tier cities, as well as high-end product markets priced above 1,800 yuan.According to the new plan, in the new fiscal year, Bosideng will mainly open concept stores and pop-up stores in the first-tier and super-first-tier markets, while a large number of new stores are mainly concentrated in the 3rd and 4th tier markets, and mid-range price products will be added. (900 yuan -1500 yuan) share.
According to Zhu Gaofeng, the number of newly opened stores is about 300. This move mainly hopes to reduce the gap between Bosideng's self-operated store business and wholesale business income.
The financial report shows that in the core down jacket business, Bosideng's self-operated retail outlets only account for 45.3% of the total retail network, but contribute 73.8% of the total revenue, while the wholesale business accounts for 54.7% of the total revenue. The proportion is only 23.2%.
This is related to the adjustment of Bosideng's store strategy since 2018. After closing 8,000 stores in 2013, Bosideng's store-opening strategy has mainly moved closer to 15 first- and super-first-tier cities since 2018. ” approach, settled in major business districts and shopping centers, etc., in order to improve the efficiency of the store floor.
According to Rui Jinsong, senior vice president of Bosideng, Bosideng’s revenue in mainstream shopping malls has increased from 1% in 2017 to 22% in the last fiscal year, but there is still a lot of room for development in the third- and fourth-tier markets. After focusing on the brand, it will further reap market dividends in the 3rd and 4th tier markets.
Zhu Danpeng, a researcher at the China Brand Research Institute, told the First Financial Reporter that under the epidemic, the consumer market is showing a polarization between high-end and people-friendly consumption.Bosideng’s move is to quickly realize the accumulated brand power in the third- and fourth-tier markets, so as to increase performance revenue. At the same time, opening stores in multiple locations can also reduce risks under the epidemic.
