Chen's Inventory Of Hai Lan's Home, What Are The Problems?

With the slogan of "Hai Lan's home" visiting the streets for two times a year, Hai Lan's home has been firmly on the top of the National Men's wear brand. But after nearly 20 years of rapid development, the wind direction seems to change only overnight.

On the one hand, investors are questioning the inventory problem and the future direction of development. On the other hand, they are accused by peers and insiders of suspected plagiarism. What is the problem of Hai Lan's home after the frequent negative public opinion?

Awkward "shareholders" meeting

In April 19th, Hai Lan House held its annual shareholders' meeting in Jiangyin headquarters. Zhou Jianping, chairman of the board of directors, voted for the bill.

It was originally a routine process, and seven motions were deliberated through absolute superiority. However, a small interlude appeared in the exchange of shareholders directly pushed the "National Men's wear brand" to the cusp of the storm.

According to the annual report of Hai Lan home, in 2018, it achieved 19 billion 10 million yuan in revenue, an increase of 4.89% over the same period last year, a net profit of 3 billion 450 million yuan, an increase of 3.78% over the previous year, and a net profit of 3 billion 270 million yuan, down 0.63% from the same period last year.

Compared with 2017, the growth of three business indicators slowed down across the board. At the same time, inventory pressure has increased significantly. By the end of 2018, Hai Lan's home stock was 9 billion 470 million yuan, an increase of 980 million yuan from 8 billion 490 million yuan at the end of last year, an increase of 11.55% over the same period last year.

Since the development of Hai Lan home, the problem of high inventory has never been solved. At this shareholders' meeting, inventory problems once again became the focus of controversy, and even directly led to the incident of "Zhou Jianping's anger and small shareholders".

Zhou Jianping did not respond positively to the question raised by the small shareholders on the continuous inventory. It only defended that the mode was no problem, and its revenue continued to grow. He stressed that "if the revenue has not exceeded that of Hai Lan, it will not qualify us to question us." after that, another investor expressed Puzzlement on the direction of the next business of Hai Lan's home. Surprisingly, Zhou Jianping said, "if you are strong enough, you are the chairman of the board."

At the same time, in response to some shareholders' questions about the dissatisfaction of consumers in clothing design, the reply given by Zhou Jianping is mostly perfunctory in many people's eyes: "the highest level designers are in the home of Hai Lan, and we can see the problem from the sales volume. No one exceeds the home of Hai Lan, which means that we are the best now."

Zhou Jianping's "gaffe" at the shareholders' meeting was a big surprise, and the market immediately responded. Once the incident was revealed, the price of Hai Lan's home jumped down. During from April 19th to 26th, there were 6 consecutive Yin, six trading days accumulated 8.3%, and the market value evaporated nearly 3 billion yuan.

The inventory problem of imminent danger

For clothing chain enterprises, inventory is a normal phenomenon. However, inventory will also increase the risk of unsalable merchandise. Clothing should pay attention to seasonal sales. Once the best selling time is missed, or the trend of misjudgement will be misjudged, the price drop brought by the backlog will be very large. The negative effect will further transmit the whole downstream link, and increase the risk of operation. At the same time, it will also increase the turnover time of capital, and ultimately affect or even drag down the garment enterprises.

Insiders pointed out that inventory problems have become an important warning signal for the decline of clothing brands. Metersbonwe, once a great hit, was defeated in the stock crisis.

In the fourth quarter of 2011, Metersbonwe had been criticized for its inventory turnover for about 130 days, and according to the annual report of Hai Lan's 2018 annual report, the number of days of inventory turnover was as high as 286 days. The failure of Metersbonwe in the face of inventory pressure is obvious to all. Therefore, it is not difficult for the outside world and shareholders to question Hai Lan's home.

In fact, Hai Lan's home has a long stock and a large stock. From 2014 to 2018, the year-end ending inventory balances were 6 billion 90 million yuan, 9 billion 580 million yuan, 8 billion 630 million yuan, 8 billion 490 million yuan and 9 billion 470 million yuan respectively, and the proportion of inventory accounts for revenue was 49.3%, 60.5%, 50.7%, 46.6% and 49.6% respectively. Similarly, the seven wolves and the wedding birds, known for their men's clothing, were two and 27.44% respectively in the end of 2018, and 26.37%.

The larger the inventory of an enterprise, the less cash available to the enterprise, which will obviously affect the efficiency of fund utilization. Similarly, the more inventory, the worse debt repayment ability of enterprises.

Although the inventory is large, Hai Lan's home has not yet launched a more serious business crisis, which is related to its trust selling mode of "upstream credit sale + downstream financial affiliate system". This model cleverly solved the problem of the source of capital expansion of Hai Lan's home, and shared the inventory risk and financial risk between the upstream suppliers and the downstream franchisees.

Although the risk is transferred skillfully through this model, the risk has been digested to some extent with the rapid growth in the past. However, according to 2017-2018 years of earnings data, the sales revenue of Hai Lan home is 18 billion 200 million yuan and 19 billion 90 million yuan respectively, net profit is 3 billion 329 million and 3 billion 455 million, the growth is lower than 5%, and the performance has slowed down sharply.

It is undeniable that "men's Wardrobe" has gradually entered the bottleneck of growth, the risk of such a shift will likely erupt. Once the upstream suppliers and downstream franchisees face risks, Hai Lan's home will also be unavoidable. On the one hand, the upstream suppliers refuse the credit sale mode of Hai Lan's home. On the other hand, the downstream franchisees will also reduce the enthusiasm of the advance payment. This may make the Hai Lan home's proud business model impossible to maintain.

Negligible R & D costs

The problem of inventory has caused Hai Lan's home to be criticized. It has been repeatedly accused of being suspected of plagiarism and embarrassing the brand.

In order to break the inherent impression of the dull old man's wardrobe, Hai Lan's home is developing towards "younger age" in recent years. In 2017, it launched the fast fashion brand black whale HLA JEANS, and won the sponsorship of the popular web ensemble "wonderful flower". The advertising word "HLA JEANS, a fashionable brand that wanted to be red" was once popular among young people.

What I didn't expect was that the tide brand was completely red by the other brands' direct plagiarism and public diss.

In May 9th, Shenzhen designer Chao Roaringwild WeChat public issued the article "plagiarism is an art of art, and the home of Hai Lan makes people jealous". It is pointed out that the new 2019 black whale HLAJEANS is highly similar to that of Roaringwild in 2018. But Roaringwild didn't say anything about it. Instead, she used HLAJEANS's new open box video, rap and PS pictures and other ways to ridicule the metaphor. In the comparison of several products displayed by Roaringwild, apart from the text and part of the printing on the clothes, the color, fabric and plate type can hardly be distinguished from the naked eye.

OVV, also known as the light luxury women's brand, launched by Hai Lan's home in 2017, was also accused of openly copying H&M, Tibi and HelmutLang.

In addition to clothing, the HeiLan Home, which is built by Hai Lan's home, is also suspected of plagiarism. It is ridiculed "copy and paste Muji". Not only is the shop decoration furnishings similar, even the products inside the store are strikingly similar.

As early as 2013, Zhou Jianping publicly called UNIQLO at the shareholders' meeting, and stressed: "I am serious." But from the actual business operation, we can not see the determination of Hai Lan's home, which is evident in its poor R & D expenses. 2017, 2018 earnings data show that the cost of research and development of Hai Lan's home is only 25 million 40 thousand yuan and 49 million 20 thousand yuan, relative to 18 billion 200 million yuan and 19 billion 90 million yuan of revenue, accounting for only 0.14% and 0.26%, very little.

Like many online brands, Hai Lan home does not depend on its own design, but relies on buyers to pick up goods from ODM suppliers, thus saving a lot of design cost. Therefore, the source of Hai Lan's home is the big suit merchandiser, that is, the supplier has made a shirt for a brand, and the sea Lan's home has several tens of thousands of pieces to carry out the OEM operation. Or, suppliers who develop their own money can watch their own cards. Under such circumstances, the plagiarism of Hai Lan's home is not difficult to understand.

Weak performance growth

The rise of Hai Lan's home is quite smooth.

At the end of 1988, Zhou Jianping, who was 28 years old, set up the Xinqiao third woolen mill in Jiangyin with a personal deposit of 300 thousand yuan. There were only 18 workers in the factory. Six years later, it was renamed the Jiangsu San Mao Group. In 1997, the sale of San Mao Group broke through the 1 billion yuan mark for the first time, and was successfully listed after three years. In 2001, it changed its name to Hai Lan group. After a year, it launched the brand of "Hai Lan Jia" and announced that it would enter the field of men's wear sales.

After that, Hai Lan's home is advancing by leaps and bounds. Not only does it occupy the first place of the Chinese apparel brand list in 2014 and 2015, it has become the first Chinese clothing brand whose brand value has broken through billions of dollars, and has attracted international attention. Standard & Poor's released the 25 largest market clothing company in December 29, 2015, and Hai Lan's home ranked fourteenth in the market value of about 60000000000 yuan.

But the fatigue began to show itself. In 2014, the market value of Hai Lan's home market exceeded 40 billion yuan. Just when people thought that Hai Lan's home was going to be worth billions of billions of dollars in value, Hai Lan's home was like a sudden fire. It remained stagnant in the following years.

Over the past few years, Hai Lan's family has drastically adjusted the brand operation strategy, changed the "men's Wardrobe" positioning, and gradually developed into a market layout covering men's wear, women's wear, children's clothing and home furnishing, trying to become "the wardrobe of the whole family". But in fact, the main brand revenue development is also not smooth. In 2018, the main brand revenue of Hai Lan home was 15 billion 140 million yuan, a slight increase of 2.62% over the same period last year.

In addition to marching into tide cards and multi line operations, Hai Lan's home also took the lead in developing new retail businesses. In February 2018, the company announced that Tencent bought about 5% of Hai Lan's home at a price of 2 billion 500 million yuan.

In addition, the two sides set up a clothing industry investment fund of 10 billion yuan. In July 2018, Hai Lan's home announced that it had been formally taken to the US group to take away the food. After the takeover of the US delegation, it was announced that the group would take the goods to the next store of the Hai Lan home line and deliver it to the users within one hour.

However, the new giant retailer did not achieve immediate results. In 2018, the business income of Hai Lan home line was 1 billion 151 million yuan, an increase of 9.25% compared with the same period last year, while online sales accounted for only 6.14%, an increase of 0.23 percentage points over the previous year.

In April 30th, Hai Lan House released its first quarter report in 2019. Its net profit rose 6% to 1 billion 207 million yuan over the same period, and its revenue rose 5.2% to 6 billion 88 million compared with the same period last year. The increase was 12% slower than that of the same period last year.

A sharp contrast to the slow growth of performance is the pace of shop opening. In April 2014, Hai Lan's home was reorganized and listed. At the end of the year, the number of stores was over 3000. Data show that in 2018, there were 1181 new stores in Hai Lan's home, 300 outlets and 881 net growth. At present, the total number of stores is 6673, of which 5097 are Hai Lan's brand, 1281 are AI Chu's brand, and 295 are other brands.

In the context of weakness in performance, rapid expansion of stores needs strong financial support, and it is also worth exploring whether store profits can support its opening costs.

Hovering around 5% of revenue and profit growth, up to 9 billion 500 million yuan of inventory, less than 50 million yuan of R & D costs, as a benchmark business in the field of clothing, Hai Lan's home is already in danger.