Septwolves, which was born in 1990, was one of the absolute champions of the menswear industry. In the 1980s, Zhou Shaoxiong, the founder of Septwolves, set up a clothing factory with three brothers, a precursor to Septwolves today.
In addition, Septwolves also “harvest” Zhang Hanyu, Hu Jun, Zhang Zhen, Sun Honglei and many other male god spokesmen, making the “man, more than one side” tough guy image deeply popular. From the year 2000 to 2012, Septwolves has indeed taken the No.1 position in domestic business men’s wear.
Unfortunately, the king of men’s seven wolves, has been gradually abandoned by men. The impact of the Internet’s reduction of dimensions, the huge impact of fast fashion brands, traditional brands suffered major setbacks, Septwolves also fell into the quagmire of declining performance, it is difficult to get out.
Proposed asset impairment of 340 million yuan, the general manager resigned during the period
On the evening of March 9, Seppitolves disclosed that the company plans to set aside 340 million yuan of impairment provisions for various assets in 2020. Among them, the receivables are 9,057,100 yuan, accounting for 2.61% of the audited net profit attributable to the owner of the parent company in 2019; The inventory was 332,098,500 yuan, accounting for 95.62% of the audited net profit attributable to the owner of the parent company in 2019.
After taking into account the impact of income tax and minority shareholders’ gains and losses, the provision for impairment of assets will reduce the net profit attributable to the owner of the parent company by 257 million yuan in 2020. Septwolves’ performance is not ideal, the provision of impairment of the company’s performance is undoubtedly worse.
In recent years, the company’s performance growth is relatively low. During the three years from 2017 to 2019, Septwolves’ annual revenue was 3.08 billion yuan, 3.52 billion yuan and 3.62 billion yuan respectively. The attributable net profit was 317 million yuan, 346 million yuan and 347 million yuan respectively, with a compound annual growth rate of 3.06%, slightly weak.
After entering 2020, due to the influence of the epidemic and other reasons, the performance of the company has a trend of further decline. According to the third quarterly report, the company achieved revenue of 2.175 billion yuan in the first three quarters of 2020, down 12.25% year-on-year, and net profit of 59.785 million yuan attributable to the parent, down 69.81% year-on-year.
In the fourth quarter again large increase in the provision of impairment, the company will appear after the listing of the first loss to be announced.
On the evening of March 9, Septwolves also disclosed an announcement about the change of its general manager. Li Shujun resigned as general manager and no longer served as the company’s legal representative for personal reasons, according to the Daily Financial Reports. Meanwhile, Mr. Zhou Shaoxiong, chairman of the board of directors, is appointed as the general manager of the company. The term of office shall start from the date of approval by the board of directors to the date of expiration of the seventh term of the board of directors of the company.
Li Shujun’s departure was a surprise. She was hired by Septwolves to run day-to-day affairs because of her extensive experience in the clothing industry, especially her senior position at Tmall, which may be beneficial to the company’s transformation. He was hired as general manager of Septwolves Industries in 2019 for a three-year term, and is only a year and a half into his current tenure.
Clothing main industry encounter bottleneck, rely on investment income increasingly
In those days Qi Qin’s song “Wolf from the north” fire is all over the country, since then Zhou Shaoxiong will establish a clothing brand named “seven wolves”, after the brand is founded, Qi Qin also became the first spokesman of seven wolves.
In 1991, Septwolves, a groundbreaking brand for men’s wear in China, introduced “color-changing jackets” that change in response to light and Angle of view. With this innovative product, Septwolves became a national hit, leading the market share of Chinese jackets for 17 consecutive years, and was awarded the title of “the king of jackets”.
In 2004, Septwolves listed on the small and medium-sized board in Shenzhen. Information shows that Septwolves is mainly engaged in the design, production and sales of “Septwolves” brand men’s clothing and knitwear products, including shirts, suits, trousers, jackets, sweaters and men’s underwear, underwear, socks and other knitwear products.
Since its listing, Septwolves has maintained its performance growth for eight consecutive years, and in 2012, Septwolves’ performance reached a double high: annual revenue of 3.473 billion yuan, net profit of 563 million yuan.
In 2013, China’s garment industry suddenly turned to the cold winter, and the garment industry ushered in a major reshuffle. Many clothing brands in China fell into the destocking crisis, Septwolves was also affected, the main business encountered a bottleneck, performance began to decline gradually.
In 2013, Septwolves saw its first overall decline in performance, with the net profit attributable to its mother dropping by 32.44%. Since then, Septwolves net profit to the mother for 4 consecutive years appeared year-on-year negative growth.
Around 2013, many clothing groups chose the business structure of “industry + investment”, while Septwolves started to invest around 2010 and increased its investment business after 2015. Since then, Septwolves’ profit has been increasingly dependent on investment income.
The investment income of Septwolves in 2017 was 104 million yuan, accounting for 26.31% of the total profit. In 2018, the investment income was 154 million yuan, accounting for 44.50% of the total profit. In 2019, the company’s investment income reached 111 million yuan, accounting for 25.72% of the total profit. From January to September in 2020, Septwolves achieved a total investment income of 51.9056 million yuan through financial products, accounting for 86.82% of the net profit.
In the past few years, only two projects have been withdrawn publicly. Although the investment income looks good, Septwolves is not an investment company after all. As a clothing enterprise, more efforts should be made in clothing.
The decline of old men’s clothing, research and development investment rate is not more than 2%
Changes of The Times, once the king men’s seven wolves, has been gradually abandoned by men. The rise of Internet shopping has gradually changed consumers’ consumption habits, leading to the rapid development of online brand business. Traditional clothing brands that have not been transformed in time have suffered a huge blow.
At the same time, international fast fashion brands such as Uniqlo, ZARA and HM flooded into the Chinese market. Uniqlo and ZARA built a “flexible supply chain” and quickly launched products to meet the needs of users.
On the one hand from the impact of the electricity business industry, on the other hand from the challenge of foreign invaders from the enterprise, in the new play, Septwolves such “old” players need to inject fresh blood.
Septwolves also wants to join the fashion team and enrich its own fashion brand. In 2017, Septwolves acquired Karllagerfeld Greater China, a French light luxury brand of the same name owned by Galeries Lafayette. However, this company did not create a fashion path for Septwolves, and its business in China did not develop very well.
Septwolves is trying to make its products young and fashionable, and wants to gain recognition from young people. The R&D investment of Septwolves dropped from 109 million yuan in 2013 to 55.2 million yuan in 2019, and the R&D investment rate also dropped from 3.92% to 1.52%.
At the end of September 2020, the R&D investment of Septwolves was 42.85 million yuan, accounting for 1.97% of the operating revenue, still less than 2%. If we don’t pay attention to innovation and research and development, how can we compete with others?
With the departure of electricity business operation master Li Shujun, Septwolves want to return to the peak of that year, it is not easy, the market competition environment and the change of mainstream consumer groups, these are Septwolves need to consider and face the reality.