Seven Wolf Wholesale Pfer To Retail Strategy Began To Show Results

Fujian

Industrial Limited by Share Ltd (002029) first quarter

Year-on-year growth of 26.2% to 946 million yuan,

Increased 37.7% to 174 million yuan, corresponding to earnings per share of 0.61 yuan, higher than expected.

Revenue growth of 26.2% is basically in line with expectations.

The wholesale and retail strategy of the company began to show results. On the basis of the 12.8% increase in the number of terminals in 2011, the first quarter revenue grew by 26.2%, and the endogenous growth rate was about 12%, higher than the industry average.

Operating income increased by 26.2% over the same period last year, mainly due to the company's efforts to increase channels and brand building, deepen product design and R & D, and supply chain management, and have achieved good results in the expansion of sales scale and the corresponding increase in sales performance.

Gross margin increased by 3.1 percentage points.

Benefit from product price increases, product mix changes, higher prices of black label products sales increased, gross margin increased by 3.1 percentage points to 43.8%.

Inventory turnover decreased year by year.

Inventory turnover increased by 28 days to 102 days, less than 110 days in 2011.

Inventory balance dropped by nearly 100 million yuan compared with the end of 2011, and inventory level was relatively healthy.

The operating cash flow increased by 81% as income grew and sales returned in good condition.

China Merchants Securities Wang Wei and Sun Yu analysis pointed out that Fujian's seven wolf industrial Limited by Share Ltd performance exceeded expectations in the first quarter.

In the first quarter, the business situation was complex, but with the promotion of new stores, the overall sales were good.

In January this year, the impact of the Spring Festival in advance, coupled with the cold spring in February, made the same store grow relatively slowly. However, with the promotion of new stores last year, the overall sales volume has maintained a relatively good growth. In March, with the gradual recovery of weather, the sales resumption was more obvious in mid and late March, which ensured the overall business results.

The upgrading of product structure pushes up the gross margin level, fine management benefits continue to play, and the cost is well controlled.

Since last year, the company proposed the use of high value-added black label products to replace the green label products, the franchisee feedback was good, the proportion of orders increased gradually, and the gross profit margin was promoted significantly. The first quarter increased 3.12 percentage points year-on-year, reaching the 43.76% highest level in history.

At the same time, thanks to the flat improvement of the company in recent years, the fine management capabilities continued to increase. In addition to the increase in the cost of borrowing due to the increase in borrowing costs, the percentage of sales expenses and management fees showed a downward trend, resulting in a three percentage point reduction of 0.45 percentage points compared to the same period last year, except for 0.48 percentage points.

The increase of gross profit margin and the decrease of cost rate make the profit exceed expected performance, and the slower growth of net profit than the increase of operating profit is mainly due to the fact that the parent company is in the stage of high and new reappraisal at present, and the income tax rate is temporarily raised by 25%.

The scale of report inventory is decreasing, and the cash flow return is smooth.

The report shows that the stock size at the end of the quarter decreased by 15.18% to 545 million yuan compared with the beginning of the year, while the good recovery and settlement of the goods and bills made the operating cash flow increase by 81.08% compared to the same period last year, reaching 238 million yuan.

Annual performance growth was determined, and sales in the two quarter were slightly warmer. The two order will basically lock in the year-round growth: the proportion of the company's self production is about 20%. In March and September, the order meeting in autumn and winter and next spring and summer will be held. The two order will account for 80% of annual sales.

The two order meeting in 2012 has ended, and the order volume has increased by about 30% and 25% respectively, mainly due to the increase in orders for high priced products.

In the same month, the growth rate of the same store in 1~5 was lower than that of the same period: according to the monthly sales situation, the operating income in the first quarter was 946 million yuan, an increase of 26.22% compared with the same period last year, and the same store growth of about 10%. In April, sales rebounded and the same store growth rate rebounded to 15% to 20%. In May, due to the short pition time in spring, the sales situation was worse than that in April. The growth rate of the same store in April was about 10%, which was lower than that of the same store in the same period of 2011.

In 2011, the company's sales terminals increased by 451 to 3976.

There were less than 100 new stores in the first quarter of 2012, but the 2-3 quarter is the peak season for shops, and the new stores in the whole year are expected to maintain a healthy level of around 10%.

Everbright Securities Li Jie analysis pointed out that the two orders of the seven wolves in 2012 have been all convened, the order of spring and summer will increase by 30%, of which the price increase will be 15~20%; the order amount will be increased by 25~30% in the autumn and winter orders, the increase will be 30% in the direct battalion, exceeding the market expectation; the two order will lock the performance growth margin.

As the first listed brand apparel company of A shares and the leading enterprise of men's clothing industry, the company has been operating steadily, precipitated, and conservative in style for many years, and its performance has exceeded expectations.

Seven wolves require all business activities of enterprises to develop around the demand of terminal consumption, improve customer entry rate and purchase rate. In 2012, they will continue to promote the strategic pformation of "wholesale" to "retail", improve management and strengthen services, and focus on management and service from agents to distributors, so as to ensure that management is optimized to sink to every terminal.

For example, in 2011, we improved the evaluation index database for agents, joined the terminal retail indicators such as flat effect, store efficiency and sold out rate to the agents, and assessed them directly and linked them with their orders discount.

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Strengthen the fit between channel and product: according to different product systems, the company sells the mainstream products in the core area according to different channels for different product systems, instead of setting up factory stores to sell stock products in the core area. At present, the company's channels have been formed according to the product subdivision plan, and there are 8 factory shops in Xiamen and other places.

Accelerate the construction of direct operation system: This is an important goal of company's channel construction in the next few years.

The company's direct operation system started late. As of 2011, there were 530 Direct stores, accounting for only 13.3% of the total number of stores.

In 2012, the company increased the number of projects by adding 1200 new products in 2.5 years. There were 200 new flagship stores and 1000 stores, and 40 flagship stores and 50 franchised stores were planned to purchase their own stores.

This is consistent with the current development of many business circles in cities, the continuous sinking of the urbanization process, the market competition pattern of "strong Heng Qiang" in clothing industry, the mainstream trend of shopping center formats, the sales terminal image and the upgrading of consumer demand. By improving the proportion of direct sales and optimizing the layout and structure of sales terminals, it is conducive to strengthening the control of the terminal and consolidating the stability of the channel.

The growth of online channels is good, mainly for handling inventory: the scale of e-commerce expansion of the company is rapid, and its discount is generally 5~6 fold. At present, it only deals with inventory products.

Sales revenue in 2011 was about 106 million yuan, an increase of 4 times compared to the same period, accounting for 3.6% of the total operating revenue. It is estimated that its revenue will exceed 5% in 2012.

It is expected that the future expansion rate will be 10%: by the end of 2011, the number of stores will be 3976, with a net increase of 451 (309 stores and 142 outlets), and the stores will cover two or three cities. The direct management system is managed by 14 subsidiaries under the company's management, mainly distributed in the North Guangzhou first tier city, the market blank area and the weaker market of distributors.

The company's future expansion is still dominated by two or three line cities, and the expansion rate is expected to be 10% in the next 3~5 years, that is, 400~500 new stores.

Everbright Securities Li Jie analysis pointed out that in 2012, the terminal price remained high and the cost decreased, which was conducive to raising gross margin. At the same time, in 2011, the red label and green label products accounted for about 70% of the company's product mix, and the black margin with the highest gross margin was more than 20%. The company plans to raise the black mark to 50% in 2012, and the product structure adjustment is expected to further increase the gross profit margin.

In the first quarter of 2012, the gross profit margin of the company increased by 3.13 percentage points to 43.76% over the same period. The gross domestic product of the Limited by Share Ltd is expected to remain at around 44% of the gross profit margin.