Youngor began to work on the main business of clothing for many years after "not doing business"

As the first-line brand of men's wear in China, Youngor said in the latest statement that it will invest 10 billion yuan in the next five years to innovate new materials, new fabrics, new processes, new brands and new services. At the same time, signed a cooperation agreement with the top five international top fabric brands, costing 30 million yuan to build the Youngor House... Recently, Youngor began to work on the main business of clothing for many years after “not doing business”. In this regard, Youngor Securities staff revealed that with real estate policy tightening and unstable investment income, Youngor intends to revive the apparel sector. However, in the eyes of the industry, in recent years, the domestic apparel industry is quite sluggish, and various menswear brands may face a crisis of survival or seek transformation. In such a big environment, Youngor’s return to the road is not smooth.

Frequent action

In recent years, real estate and financial investment have long been the main source of Youngor's revenue, and the apparel sector has long been on the verge. According to the three quarterly report released by Youngor this year, the apparel sector realized operating income of 2.956 billion yuan and net profit of 323 million yuan. In the same period, the real estate development business realized operating income of 7.433 billion yuan, net profit of 1.214 billion yuan, and investment income of 2.919 billion yuan. Net profit reached 1.654 billion yuan. Real estate and investment income is much higher than the net profit brought by the apparel sector.

According to the announcement, Youngor signed a strategic cooperation agreement with five top fabric manufacturers from Europe, indicating that it wants to build China's high-end ready-to-wear and custom brand MAYOR, and will invest 10 billion yuan to strengthen new materials, new fabrics and new in the next five years. Innovation in craftsmanship, new brands and new services. For the generous investment, Youngor further disclosed that the company has raised 3 billion yuan through non-public offering of shares in April, and will raise 5 billion yuan in the next five years. In addition, the company will invest 2 billion yuan to implement the "member strategy" and "multi-brand strategy".

At the same time, Youngor also added the code to the next store. At the end of September, the company spent about 30 million yuan in Wuxi to purchase the building officially opened under the "Youngor House" brand. Last year, Youngor invested in the construction of the country's first "Youngor House" in Shanghai, also cost 20 million yuan. Such a "Youngor House", with an area of ​​more than 2,000 square meters, is also an important measure for Youngor to promote the "big store model."

In the first half of 2016, Youngor invested a total of 506 million yuan to promote the "big store strategy." Youngor publicly stated that in the next five years, the existing 3,000 stores will be reduced to about 1,000 stores, and at the same time, the business volume will double, reaching an annual income of about 10 billion yuan.

Liu Xin, a member of Youngor Securities, said in an interview that increasing the investment in the apparel sector and re-energizing the apparel business, in addition to the chairman Li Rucheng always attaches importance to the company’s garment production business, and the country’s real estate industry in the past two years The tightening policy is also relevant. Since the beginning of this year, the country's real estate policy has been tightening, which has had a great impact on Youngor's real estate sector revenue. Real estate development business realized operating income of 7.433 billion yuan, down 17.88% from the same period of the previous year, which directly led to operating income of 10.519 billion yuan in the first three quarters of this year, down 14.95% from the same period of the previous year.

Going downhill

As early as 2011, in the clothing sector, Youngor has proposed a “production-to-brand operation transformation” plan, and for five years, there has been no obvious action. Although Youngor is full of ambitions in clothing, the impact of the development of the entire apparel industry cannot be underestimated.

In the first half of this year, the sales growth rate of China's garment industry continued to slow down, and the performance of apparel listed companies continued to decline. Youngor’s annual report for the past five years also shows that the performance of its clothing sector is not very satisfactory.

Youngor brand clothing business has been downhill since 2013. In the same year, the clothing realized operating income of 4.269 billion yuan, but due to the combination of rising labor costs and increased income tax burden, its net profit was only 643 million yuan, a sharp drop of 21.37% over the same period of the previous year. In 2014, the apparel sector continued to decline, with operating income of 4.133 billion yuan, down 3.21% from the same period last year.

Last year, Youngor's apparel business revenue increased slightly compared with last year. Revenue reached 4.461 billion yuan, up 1.48% from the same period of last year, but net profit declined, down 0.23% year-on-year.

In the third quarter report released by Youngor in 2016, its apparel segment achieved operating income of 2.956 billion yuan, down 5.5% from the same period of the previous year; net profit was 323 million yuan, down 42.45% year-on-year, compared with 395 million yuan net profit in the second quarter of this year. Also fell.

This time, Youngor will take the high-end route, and in the short term, it will inevitably increase the cost input, and it will not be able to help the performance of the falling clothing. Kang Lanxin, dean of the School of Fashion and Fashion, believes that the development of “big store model” for clothing enterprises and the creation of high-end brands is a correct direction, but this kind of business built by huge amounts of money cannot achieve good revenue in the short term.