Is investment unreliable? Men’s clothing “big guys” are gradually returning to their main business. As of May 5, various business men’s clothing companies have successively disclosed their 2021 financial reports. Among them, Jiumu Wang, known as the “Men’s Pants Expert”, saw its net profit fall by 47.25% due to unfavorable investment; Youngor, once known as the “King of Suits”, saw its net profit fall by 29.15%, also due to investment business.
Industry insiders said that as a traditional clothing company, when it falls into a bottleneck period of development, it will expand its business, such as arranging investments, to find new growth. Although investment has a high return rate and quick results, it also comes with greater risks. Non-professional investment institutions should be cautious about investment business and not invest too much.
Performance decline
Investment business is becoming an important factor affecting the performance of men’s clothing companies.
According to financial report information, in 2021, Jiumuwang’s revenue will be approximately 3.05 billion yuan, a year-on-year increase of 14.15%; net profit will be 195 million yuan, a year-on-year decrease of 47.25%. Youngor’s revenue was 13.606 billion yuan, a year-on-year increase of 7.69%; net profit was 5.127 billion yuan, a year-on-year decrease of 29.15%. On the contrary, Septwolves achieved positive growth, with revenue of 3.514 billion yuan, a year-on-year increase of 5.52%; net profit of 231 million yuan, a year-on-year increase of 10.65%.
Regarding the changes in performance, Jiumu Wang stated in the financial report that it was mainly due to the year-on-year decrease in profits and losses from changes in fair value generated by the investment business. Financial report data shows that Jiumuwang’s trading financial assets reduced its profits by 71.1192 million yuan in 2021.
Youngor also attributed the decline in performance to the impact of investment business. According to Youngor’s financial report information, from August 2020 to February 2021, Youngor reduced its holdings of a total of 296 million shares in Bank of Ningbo. The sale of Bank of Ningbo’s shares led to a decline in net profit.
In addition, Youngor previously disclosed in its 2021 semi-annual report that the decline in semi-annual performance was mainly due to the cyclical impact of development and construction. The company’s real estate sector had no centralized delivery projects in this period, which affected revenue by 4.046 billion yuan year-on-year. A decrease of 94.5%; net profit decreased by 968 million yuan year-on-year, a decrease of 81.66%.
Cheng Weixiong, an independent analyst in the footwear and apparel industry, said that the return on investment is high, but it also comes with greater risks. Non-professional investment institutions should be cautious about investment business and not invest too much.
Regarding relevant performance and future layout, reporters from Beijing Business Daily interviewed Jiumu Wang and Youngor, but no reply was received as of press time.
Side jobs are unreliable
Judging from the development of men’s clothing companies in recent years, investment once became a new way out for many companies.
As far as King Jiumu is concerned, he has made a lot of money through the layout of his investment business. According to public information, Jiumu King’s financial assets exceeded 2 billion yuan during 2017-2018, accounting for more than 30% of total assets. At its peak, Jiumu King’s available-for-sale financial assets and other comprehensive income totaled more than 3 billion yuan. , accounting for more than 50% of total assets.
However, the layout of investment business is not a way for a company to make long-term profits. In 2021 and the first quarter of 2022, Jiumuwang’s performance fluctuated due to unfavorable investments.
The same is true for Youngor. In the early days, he made a lot of money through investment, but in the later period, the instability of investment affected corporate profits. It is understood that Youngor successively invested in CITIC Securities, Guangbo Shares, Yike Technology (later renamed Hemp Industry, Lianchuang Electronics), Bank of Ningbo, etc. from 1999 to 2005. In 2010, Youngor’s side business reached its peak by investing in the real estate industry. At that time, Youngor’s real estate sales reached 11.8 billion yuan. In addition, from August 2020 to February 2021, Youngor cashed out 10 billion yuan by reducing its stake in Bank of Ningbo.
It is worth mentioning that investment disadvantages also come with it. Around 2011, due to the instability of the property market, Youngor Real Estate’s side business was greatly affected. In 2011 and 2012, both revenue and net profit declined. In 2016, the share price of CITIC Co., Ltd. invested by Youngor fell sharply, causing the net profit of Youngor’s investment business, which held 145,500 shares, to fall by 39.24% year-on-year. At the same time, it also allowed Youngor to make a provision for asset impairment of CITIC Shares of 3.308 billion yuan in 2017, affecting the current net profit of 3.308 billion yuan.
Wu Daiqi, CEO of Shenzhen Siqisheng Company, said that companies make diversified investments in the hope of increasing their operating income and improving their ability to resist risks. Due to the certain seasonality of clothing companies, offline physical store rentals, personnel and other operating costs and expenses are relatively high. In addition, the rise of online e-commerce has affected online sales to a certain extent. When it comes to store business, due to various factors, companies will consider other investments in order to gain development and profits.
Return to the main business
Perhaps due to the instability of the investment business, all men’s clothing companies have mentioned returning to their main business in their strategic development.
Although Youngor has invested in a lot of real estate in recent years, it still continues to emphasize that clothing is its main business. Youngor issued the “Proposal on Adjustment of Investment Strategy” in mid-2019, stating that in order to achieve the goal of maximizing value, the company plans to make major adjustments to its development strategy. In the future, it will further focus on the development of its main garment industry. In addition to strategic investments and continued implementation of investments, Youngor In addition to its commitments, the company will no longer carry out financial equity investments in areas other than its main business, and will choose opportunities to dispose of existing financial equity investment projects.
At the same time, Youngor also disclosed in its 2021 financial report that the company’s core business is the fashion industry with brand clothing as the main body, and building a world-class fashion group is still Youngor’s future strategy.
Based on the strategy of returning to the main business, Youngor established Youngor Fashion (Shanghai) Technology Co., Ltd. and settled in Shanghai T8 Fashion Center to promote cooperation with international brands. At the same time, it cooperates to operate Helly Hansen, S+G and other brands, and the consumption scenarios have been extended to outdoor sports fields such as sailing, skiing, golf and so on. In 2021, Youngor also acquired 40% equity of the American fashion brand Undefeated and established a joint venture in Greater China to accelerate the layout of young people. consumer group market.
King Jiumu also said that he will return to his original intention, consolidate the brand positioning of “men’s pants expert”, and carry out strategic upgrades from three aspects: brand, product and channel. For example, it has entered many shopping malls and promoted the launch of the new tenth-generation store image in terminals to accelerate channel layout; and at the research and development level, Jiumu Wang said that as an independently developed men’s clothing brand, the company has always focused on product research and development and will continue to increase its efforts. Large investment in R&D.
Although Septwolves did not explicitly state the return theme, the relevant person in charge of Septwolves told a Beijing Business Daily reporter that in the future, the company will continue to focus on the development strategy of “industry + investment”, continue to build Septwolves fashion industry group, and promote the youthfulness of the brand internally. To develop globally, focus on the core category of jackets, provide users with fashion products with attitude and quality, and become a fashion leader.
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