Shanshan Brand Continues To Shrink Strategy After Its IPO Reorganization

After a reorganization and integration, Shanshan brand chose to return to capital in Hongkong.

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The prospectus of Shanshan brand operation Limited by Share Ltd (hereinafter referred to as "Shanshan brand") appears on the official website of Hongkong stock exchange.

Public information shows that the brand of Shanshan mainly operates FIRS, SHANSHAN, MARCO AZZALI and LUBIAM four men's wear brands.

The brand of Shanshan said that in view of the declining sales performance of MARCO AZZALI and LUBIAM brand products, "to redistribute our resources strategically to develop our two core brands (i.e. FIRS and SHANSHAN brand"), Shanshan brand decided to sell the two brands to the third party.

This is also from the 2016 business restructuring, Shanshan Group once again its strategic contraction of clothing business.

Shanshan Group is the largest shareholder of Ningbo Shanshan stock (600884, stock bar) Limited (hereinafter referred to as "Shanshan stock", 600884.SH).

In spite of the

But in 2016, Shanshan Group divest the garment business from the listed company.

The weekly newspaper reporter contacted Shanshan stock to interview the brand of Shanshan. The other side said that at present, Shanshan stock and Shanshan brand are no longer working together and are in an independent state.

Spin off clothing business

When Zheng Yonggang founded "Shan Shan Men's clothing" in 1989, it should be hard to imagine that in the future, he would leverage the industry to pry up the capital market and build a new energy across the country.

The business empire of many industries, such as investment, real estate, etc.

When Shanshan shares were first established, the main business of the company was business men's clothing.

Zheng Yonggang's unique brand awareness and the flourishing development of the clothing market made the Shanshan stock company develop rapidly and successfully launched the stock market in 1996.

In 1999, the headquarters of Shanshan Group moved to Shanghai.

Under the leadership of Zheng Yonggang, Shanshan shares began to develop in a diversified way.

Among them, the clothing sector implemented the strategy of "multi brand and internationalization", and Shanshan shares began to establish joint ventures with several famous foreign garment brands and launched MARCO AZZALI and LUBIAM brands in China.

At the same time, Shanshan shares also diversified around the clothing industry: in 2004, Norma was set up in Rui Ma brand. In 2005, she founded the Shanshan Burley, which was responsible for buying and selling fabrics, and was founded in 2007.

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Also in 1999, Shanshan shares officially entered new energy sources.

And other industries, and in the process of diversification, Shanshan shares have also completed the pition from clothing to new energy.

By the end of 2015, the net profit of Shanshan stock was 665 million yuan, while the net profit of clothing business was 17 million 623 thousand and 300 yuan, of which the net profit of Shanshan brand was 48 million 600 thousand yuan.

Shanshan Group made a decision to divestiture clothing business in early 2016.

According to the planning of Shanshan stock company, the company intends to reform the whole brand of Shanshan, and through the reorganization of the assets of the company's brand clothing business and other brand clothing businesses, the Shanshan brand will become the sole business platform for the company to run the brand clothing business, and will be listed on the H shares publicly.

Shanshan shares said that the spin off is conducive to maximizing the initiative of the subsidiary and broadening the subsidiary industry.

Channels to enhance independent financing capacity.

Integration and contraction

While splitting Shanshan brand, Shanshan stock also takes Shanshan brand as a platform to sort out the related assets of its clothing business, and sell and cancel some of its subsidiaries when loading related assets of clothing business into Shanshan brand.

Shanshan brand said the move was to streamline the group structure and streamline business and brand mix.

The buyer of a molecular company is Shanshan stock and its subsidiary company, but the times weekly reporter noted that the brand of the fashion clothing brand of the brand of Shanshan brand was pferred to the independent third party when the 51% of its Morton clothing was pferred to the independent third party at a cost of only $0.5.

After splitting and finishing, the brand of Shanshan does not produce products, instead of OEM production mode. Shanshan stock company says it is to concentrate resources on the core competitiveness of brand management, design and product development, sales and distribution management.

At the same time, the brand of Shanshan began to cultivate another sub brand, SHANSHAN.

Since its establishment in 1989, FIRS (that is, "Shanshan") has been the backbone of the brand of Shanshan. During that time, Shanshan stock has cultivated several brands, but it has not shaken FIRS's leading position in the clothing business of the company. In 2015, the company launched another sub brand, SHANSHAN.

The prospectus shows that FIRS is a business men's wear for 35-45 - year - old men, while SHANSHAN is positioned for business and leisure men for 25-35 - year - old men.

In the prospectus, Shanshan shares tried to explain that the operation of SHANSHAN had no effect on FIRS. "We believe that SHANSHAN brand entry into our product portfolio enables us to provide products with fashion design and keep pace with changing markets".

Shanshan brand says SHANSHAN is different from FIRS's target customers, and the gross margin of FIRS brand sales has increased from 43.8% at the end of 2016 to 48.8% at the end of 2017.

In fact, sales of FIRS increased from 396 million yuan at the end of 2015 to 429 million yuan at the end of 2017, while SHANSHAN sales increased rapidly under the careful management of the brand of Shanshan.

Despite the poor performance of the other two brands, the sales volume of Shanshan brand still increased during the 2015-2017 years, and its total revenue rose from 526 million yuan at the end of 2015 to 797 million yuan at the end of 2017.

Integration is continuing.

Due to the declining sales performance of MARCO AZZALI and LUBIAM brand products, the brand of Shanshan brand decided to sell the above two joint brands to redistribute resources strategically and develop the two core brands of the company.

Prospectus disclosed that the company has already found a buyer for MARCO AZZALI, but as of the prospectus disclosure, Shan Shan brand has not yet signed a formal agreement with the potential buyer.

In addition, the company is looking for suitable buyers to acquire LUBIAM business, but at present, another fashion brand of the brand of Shanshan brand is involved in a joint venture agreement with the LUBIAM brand's affiliate on the brand.

The LUBIAM brand company said the fashion clothing brand violated the joint venture agreement and demanded that the brand of Shan Shan compensate for the cost of about 10 million yuan.

As of the prospectus disclosure, the arbitration case is still in progress.

The prospectus said that the Shanshan brand is planning to raise funds to expand sales and distribution networks, carry out various promotional activities, and set up new warehouses and logistics centers, but the Prospectus has not yet disclosed the number of shares to be issued.