Men'S Wear Brand: Lilang Announced Its Full Year Performance In 2021

Chinese men's wear brands listed in Hong Kong on March 18—— Lilanz (China LiLang Co., Ltd., stock code: hk1234) announced its full year performance in 2021, Group revenue increased by 26.1% to rmb3.38 billion.

What is remarkable is that this 35 year old Chinese men's wear leading enterprise is experiencing all-round innovation and transformation of sales mode involving products, channels and brands. Under the shock of reform, LiLang still made outstanding achievements. More importantly, it has proved with powerful data that the transformation and upgrading of Chinese garment enterprises is the general trend.

      Mr. Wang Dongxing, chairman and executive director of China LiLang, said: Through the reform of the sales model, we have successfully implemented the strategies of channel optimization, product rejuvenation and Internet plus. The sales performance is ideal, and the total retail value of the group exceeds the expectation.

From this latest annual report, Huali Zhi has observed four key indicators, indicating that in the process of LiLang's sales channel reform, instead of slowing down, it has accelerated the collection speed of accounts receivable, improved the inventory turnover rate and the sold out rate, and the contribution proportion of diversified online channels to the group has also increased significantly, LiLang realized the healthy transformation through "combination fist", which laid a solid foundation for the enterprise to enter a new development stage.

　　 The effect of LiLang marketing channel reform from four key indicators

Indicator 1: the annual average turnover days of trade accounts receivable decreased significantly from 101 days to 57 days

The two main driving factors behind the great acceleration of payment collection speed are: about 40% of the stores in LiLang main series are sold on commission, and the stores of light business series are self operated.

LiLang has two brand series: lilanz main series and less is more light business series. Among them, the main series are mainly aimed at consumers aged 25 to 45, which are very popular in traditional third and fourth tier cities, and will gradually increase their distribution in the first and second tier markets. Light business series aims at the market of the first and second tier cities, focusing on consumers aged 20 to 30.

From the second half of 2020, the light business series will be transformed into self operated mode, and by the end of 2021, the total number of stores will be 290 , a net increase of 3.

Since the introduction of the "consignment mode" in the spring and summer of 2021, the main series have been jointly owned by the end of 2021 966 The store is transformed into a franchise store, equivalent to the total number of main series stores 40% 。 After the transformation, under the consignment system, LiLang head office uniformly "distributes goods", and the franchisee is responsible for sales, and can check the central online warehouse in real time for quick replenishment, so as to make the product deployment more flexible, thus reducing the pressure on the franchise stores to prepare a large number of goods, and keeping the inventory at a healthy level.

　　 Indicator 2: inventory turnover days decreased from 168 days to 145 days

Indicator 3: the seasonally sold out rate increased from 65% to 73%

The main driving factors behind the optimization of these two important indicators are: optimization of store mix, emphasis on original design and product rejuvenation

-- optimize store mix

In the past year, LiLang has significantly improved the store efficiency by optimizing the offline store mix: on the one hand, the group's new stores during the year were mainly concentrated in self operated stores, shopping malls and outlets stores, which improved the store efficiency; on the other hand, it closed several stores with less than ideal operating benefits. As of December 31, 2021, The total number of retail stores decreased by 28 to 2733, of which the number of shopping malls increased to 852 (2020: 807), accounting for about 31.2% of the total number of stores.

The group said that in 2022, it will carefully plan its nationwide shop network. The total number of stores is expected to increase by 50 to 150 in 2022. It will continue to open stores in high-quality shopping malls in provincial capitals and prefecture level cities, and open stores in outlets stores as the usual channel to clear inventory. As of December 21, 2021, the group has 49 outlets (36 in 2020), which together with the e-commerce platform has become an effective channel for standing inventory clearance.

　　 ——Emphasis on original design and product rejuvenation

In 2021, LiLang will continue to improve product personalization and original design, and the proportion of original products sold in this year will increase to about 77% The proportion of products with unique fabrics developed by the group is about 50% 。

Among them, the light business series further improves the fashion and design sense of products. While continuing to implement the strategy of "providing value for money products", the price increase rate of products is increased according to product design and market competitiveness, thus the gross profit rate of light business is improved.

At present, the R & D Department of the group has about 440 Since the opening of the new headquarters in Fujian in early 2001, designers have also had a better platform for creation and communication.

In 2021, the group will continue to launch IP co branded series with China Daily and the science fiction "Santi", and develop dozens of cooperative products with artist Su Xinping, which will be sold in the exhibition of Shenzhen contemporary art and Urban Planning Museum; In December 2021, LiLang hosted the "three sports" art exhibition in Beijing Wukesong Huaxi live · times art museum. (for details, please see the report of "gorgeous records": a close-up of the "three body" art exhibition sponsored by LiLang to see the new direction of cooperation between clothing brands and classic IP)

The light business series joined hands with two new designers, LV Dianlin and Fang Fang, to integrate the unique charm of Quanzhou ancient city into men's fashion design. The spring and summer series of 2002 with the theme of "city of light" was unveiled at the closing show of Shanghai Fashion week. (for details, please refer to the report of "luxuriant annals": feature "bright city" appears in Shanghai Fashion Week

Han Han, a well-known writer, racing driver and film director, has become the spokesman of LiLang brand since the fourth quarter of 2020. In 2021, LiLang launched a series of related brand promotion activities, including sponsorship of Han Han's New Year speech talk show "2021, have a say one", and sponsored variety shows like "cutting through the thorns" and "this is the trend", which are popular among young people. In addition, the group continued to focus on the new generation of creativity. In 2021, the group again participated in the China College Students' Advertising Art Festival to solicit publicity programs designed by college students for the group's brands and products, enabling the younger development of corporate brands.

　　 Indicator 4: online sales increased by 20% to about 500 million yuan

At the beginning of 2021, LiLang's online stores will be self operated, replacing the previous mode of operation by distributors, and further improve the group's control over online business.

In response to the production of new pants e-commerce special products launched in online stores during the 6.18 e-commerce shopping festival, the group made use of the group's ability of rapid small batch production by setting up its own factories to quickly respond and increase seven production lines, A new mode of selling new products through e-commerce has been started.

In addition, the group has opened stores in the wechat Mall for main series and light business series respectively. It has actively used the business of wechat platform, provided customer relationship management services and opened stores in the wechat mall. It has used the interactive characteristics of social platform to promote brand promotion and promote sales. During the year, the group increased retail sales by 20% to about $500 million through online channels.

　　 Looking to 2022: the new sales model has been verified, and sustainable long-term growth is the key

Zililang's less is more light business series and online stores will be self operated in 2020 and 2021. By 2021, the principal series of lilanz will introduce the consignment mode. Within two years, the group's channel reform work has been basically completed. At present, the Group operates 2733 stores in 31 provinces, autonomous regions and municipalities directly under the central government with three main modes of self operation, consignment and distributor. At present, the Group operates 2733 stores in 31 provinces, autonomous regions and municipalities directly under the central government with three main modes of self operation, consignment and distributor.

At the same time, the Group continues to improve the personalized and original design of products, and layout the "circle" and e-commerce platform where young people gather. Inventory turnover, sell out rate, accounts receivable cycle, online sales and other key indicators to measure the enterprise's "internal strength" continued to improve.

In 2021, LiLang cultural and Creative Industrial Park, LiLang logistics park and other key projects will continue to advance. Under the condition of large investment expenditure, the group remains financially sound, with net cash of RMB 1.51 billion as of December 31, 2021. The board of Directors proposes to pay a final dividend of HK $11 per share and a special final dividend of HK $5 per share. Together with the interim dividend paid, a total of HK $34 per share will be paid for the whole year to maintain a stable dividend ratio.

In May 2022, LiLang Logistics Park The first phase of the project will be put into operation to make the best preparation for the logistics distribution in the peak season of e-commerce. In May 2020, the first phase project of LiLang logistics park will be started. The project is located in Quanzhou export processing zone, Fujian Province, with an area of about 60000 square meters. The intelligent system is expected to help realize the delivery of goods to single stores and further strengthen inventory control.

Based on the fact that the transformed sales system model has been properly verified by the market, the group has decided to devote itself to giving full play to the advantages of the existing sales channels, aiming to further promote sustained and healthy growth on the existing basis. The main series plans to upgrade more than 500 stores to the image of the seventh generation stores; Light business series plans to list Zhengzhou, Shaanxi Xi'an, Jiangsu Suzhou Wuxi and other provinces and cities with relatively high consumption capacity and LiLang brand widely recognized by consumers as key target markets, strengthen the expansion of new stores, and strive to become the model of other light business stores. The Group expects total retail sales of products to grow by no less than 10% in 2022.

　　 Wang Dongxing Conclusion: in the long run, China LiLang will continue to focus on bringing fashionable and cost-effective men's clothing to customers. We firmly believe that unique product design, high originality and diversified varieties can enhance the brand competitiveness, widen the difference with competitors, and help the group further consolidate its leading position in the men's wear industry, To consolidate business sustainability and long-term growth.

　　 Main financial data in 2021:

Revenue increased by 26.1% to 3.38 billion yuan

The net profit attributable to the parent company was 468 million yuan, down from 557 million yuan in 2020. This was mainly due to the decision to stop the development of professional sports shoes during the year and plan to clear the off-season inventory as soon as possible, so the provision for product inventory was 120 million yuan

The gross profit margin is 41.9%

Operating cash flow: 599 million

　　 About China LiLang

LiLang was founded in 1987 and became the first Chinese men's wear brand listed in Hong Kong IPO on September 25, 2009, and took the lead in proposing "business leisure" men's wear category in China. After 34 years of exploration and development, LiLang focuses on business, fashion and leisure men's wear. It is a national well-known comprehensive fashion enterprise integrating independent research and development, production, retail, fabric, printing and dyeing, design and testing.

The group has two main line products, lilanz and less is more. Adhering to the brand spirit of innovation and daring, LiLang adheres to the quality of originality, advocates simple life style, and constantly transmits minimalism and boundless art to the outside world, so that more and more new business people can see themselves and find resonance in LiLang's brand value of "simplicity is not simple".