Hai Lan'S Home Fell To The Altar: 9 Billion 500 Million Inventory 16 Billion 500 Million Liabilities And Less Than 50 Million Of R & D Expenses.

Introduction: on the one hand, investors are questioning the future development. On the other hand, the industry is accused of alleged plagiarism, which has led to the failure of Zhou Jianping, founder of Hai Lan home, at the general meeting of shareholders. Behind the constant negative public opinion, what is the problem in the field of the clothing industry in the past? Less than 5% of revenue and profit growth, up to 9 billion 500 million of inventory, 16 billion 500 million liabilities, less than 50 million yuan R & D expenses, this set of data should be the most objective explanation for the fall of the shrine.


"If you are strong enough, you are the chairman of the board."


"If the revenue does not exceed Hai Lan, it will not qualify us to question us. No one is allowed to question Hai Lan's inventory problem!"


"The highest level designers are at the home of Hai Lan. We can see the problem from sales. No one exceeds the home of Hai Lan, which means that we are the best now."


Following the 4 month Hai Lan home chairman Zhou Jianping, "angry" small shareholders, Hai Lan's family brand HLA JEANS suspected of plagiarism ROARINGWILD was fired again. Some netizens pointed out that HLA JEANS related products suspected of plagiarizing many brands, such as C2H4 and KAPPA's joint jacket, Paris family jacket, Have a good time short sleeves and so on.


As a benchmarking enterprise in the field of clothing, is Hai Lan's home in danger, or is it like his chairman's outsider worried about it? Why did you want to go to the home of Hai Lan, who has ever wanted to make a mark on QQ?


The fatal stock of Hai Lan's home


The management of garment enterprises is not a simple matter. Because of its long operation process, short popularity cycle and obvious seasonal characteristics, the garment industry has brought a lot of risks and instability to enterprise management.


General clothing has a sales period of about two months. When sales enter the trough, commodity prices decrease. This price fluctuation is the main cause of the threat to clothing profitability. Therefore, clothing giant UNIQLO, ZARA and so on all choose SPA (Specialty Retailer of Private Label Apparel) flexible supply chain, participate in the industrial design, production, logistics, sales and other industrial links all the time, its purpose is to enhance the responsiveness to inventory, reduce the shortage of goods and inventory backlog problem.


Metersbonwe, once a great hit, was defeated in the stock crisis. Metersbonwe pioneered the use of the virtual supply chain management mode to outsource production and sales links. It not only made use of the idle garment production capacity of the Yangtze River Delta, but also shifted the crisis to downstream dealers, leaving a huge profit margin for itself. The breakage, which is more flexible than the supply chain, gave Metersbonwe an early stage of rapid development, but then the inventory problem broke out and began to suffer losses and fall from the altar in 2015. Inventory problem has even become an important warning signal for the decline of clothing brand.


In order to achieve faster reaction speed, ZARA self store, independent design and production, independent logistics...... The self control of each supply chain link from production to sale has realized the miracle speed from design to clothing sales in the counter sales only 12 days. Through the digital system to control all the data of all stores in the world, so that only 15% of the pre season production is achieved, and the rest of the season is produced, thus greatly reducing the inventory risk.


In such a "fast fashion" rhythm, the inventory turnover time of Hai Lan's home simply can not be forgiven. In the fourth quarter of 2011, Metersbonwe had been criticized for its inventory turnover for about 130 days, while Hai Lan's stock turnover was as high as 249.28 days. The failure of Metersbonwe in the face of inventory pressure is obvious to all. Therefore, it is not difficult for small shareholders and media to question Hai Lan's home.


Moreover, Hai Lan's home has a long stock and a large stock. In the 2014-2018 year, the year-end ending inventory balances were 6 billion 90 million, 9 billion 580 million, 8 billion 630 million, 8 billion 490 million and 9 billion 470 million respectively, and the share of inventory accounted for 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%.


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".


The "downstream financial affiliate system" means that the downstream franchisee acts as the role of financial investor, who only takes charge of opening shop and personnel, and is not responsible for the management of the store. All the work of its commodity delivery, store management and operation mode are all standardized by Hai Lan's home, and even the location of stores is determined by Hai Lan's home. Hai Lan's home can also grasp the sales situation of various stores according to the digital system, flexibly deploy goods and avoid inventory problems. Sales revenue is the proportion of Hai Lan's home and the franchisee.


The "upstream credit sale system" means that the home of the Hai Lan receives goods from the supplier on credit, and when the goods are sold, the supplier pays the goods, and the goods that can be refunded are returned. If there is no sale, the stock can be returned to the supplier at the original cost price. For non returnable goods, Hai Lan's home is responsible for the corresponding risk of inventory depreciation.


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.


This leads to the huge number of accounts receivable and accounts payable in the balance sheet of Hai Lan home, two. According to the financial data in 2017 and 2018, the money collected by Hai Lan's home is 1 billion 661 million and 1 billion 321 million yuan, which is the capital that Hai Lan's family did not obtain from the downstream franchisee. Accounts payable amounted to $6 billion 711 million and $5 billion 769 million, which was funded by suppliers at home and not yet paid to suppliers. Prepaid and payable accounts are essentially liabilities of enterprises. Huge amounts of receivables and accounts receivable cause the liabilities of Hai Lan's home to be as high as 16 billion 500 million.


Although Hai Lan's home has passed the risk to the upstream suppliers and downstream franchisees skillfully, and with the rapid growth of Hai Lan's home in the past, this risk has been partly digested. However, according to 2017-2018 years of earnings data, the sales revenue of Hai Lan's home is 18 billion 200 million and 19 billion 90 million, respectively, with net profit of 3 billion 329 million and 3 billion 455 million, the growth is lower than 5%, and the performance has slowed down sharply. Over the same period, the total number of all its brand stores increased from 5792 to 6673, an increase of 15.2%, indicating that the profitability of single stores is declining.


As Hai Lan's home has entered the bottleneck of growth, the risk of shifting to upstream suppliers and downstream franchisees will probably 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.


The war of stock self defense in Hai Lan's house


From the brand business composition, the company's main revenue from the "Hai Lan home" men's brand driven, accounting for 80%. The brand positioning of Hai Lan's home is the brand of "high performance price ratio and fast fashion". Since it is fast fashion, the industry logic of fast fashion is bound to follow.


In order to solve the problem of brand aging, in 2014, Hai Lan's home started the way of product innovation. Under the development of strategic commodities such as "color cattle series", "Madagascar series" and "Chinese wind series", the products of Hai Lan home are more fashionable and younger. The fatal index of fast fashion brand turnover speed and turnover rate poses a higher challenge to the supply chain of Hai Lan's home.


Although Hai Lan's home is similar to that of Metersbonwe, it has outsourced garment production and distribution, but he has done some homework on the missing links of terminal channels and supply chain management. In 2014, we built the most advanced digital management system in the country and managed all sales information in an all-round way, so as to avoid inventory problems.


In February 2017, Zhou Lichen, the son of Zhou Jianhua, served as president of Hai Lan group, and was committed to "flexible supply chain", aiming at the decline of inventory and turnover days. The brand spokesperson of Hai Lan home chooses younger star Lin to update, and the brand gradually becomes more young and fashionable from the basic fund. Hai Lan's home also opened cross-border cooperation with Tencent and the US group, sponsoring the variety show "wonderful fifth season", "running the bar, brothers", "next station legend", attracting the attention of young consumer groups.


Hai Lan's home, like UNIQLO, has been working closely with several IP to launch the theme products like "fat West Tour Series", "Pacific Rim series", "stimulating battlefields series" and "Transformers series", so as to expand the influence of brands on young people and attract more and broader consumer groups. Hai Lan home's "brand youthful" has indeed achieved outstanding performance, and even once been praised by the market. But younger and more fashionable, the problem of inventory and turnover that is not fatal before may pose a fatal threat to the company.


In order to avoid inventory problems, Hai Lan's family continues to expand and expand the shopping mall channel. Hai Lan's home in the three or four tier cities, many businesses are facing a crisis of closing time.


As the main brand of Hai Lan's main revenue, the number of stores in the first quarter of 2017 was 4305 and its revenue was 4 billion 374 million. In 2017, there were 266 new stores, and 4523 stores and 4 billion 789 million revenue in the first quarter of 2018. There were 594 new stores in 2018, 4523 in the first quarter of 2019 and 4 billion 993 million in revenue.


In the past 2017-2019 years, Q1's single store revenue was 1 million 16 thousand, 1 million 103 thousand and 1 million 104 thousand. From the current point of view, expansion has not led to a reduction in single store revenue. The main brand profitability of Hai Lan's home has been relatively stable, but it has apparently stagnated. If the market environment changes or the competition intensifies, the inventory sales will slow down and the selling price will fall, the risk of the company will be highlighted.


The business mode of Hai Lan's home is no longer exclusive. Many local brands are imitating and following up. In addition to the impact of the electricity supplier market, Hai Lan's home has launched a diversified strategy, attempting to replicate the success of the menswear brand and gradually cover the market segments of men's clothing, women's wear, children's wear and home. In 2017, the total store of Harean's home increased by 549, of which 419 belonged to the women's clothing brand.


On the basis of the three or four line city, it is not easy to move to the fast lane. The fast fashion brand Forever21 has lost its way to China, and the operation of ZARA and H&M has also declined. It is a question to be discussed whether it is a good time to choose the home of Hai Lan, a diversified business such as women's clothing.


In October 2017, Hai Lan's subsidiary, Hai Lan investment, invested 660 million yuan to acquire 44% stake in Ying Shi baby, and officially entered the infant consumption market. In addition, Hai Lan's home has quietly opened its "one-stop shop" under the line of MUJI, and launched more parity products. But these new brands are far from mature at present, and the total revenue accounts for about 20% of total revenue in 2018, which is far from enough to support the scene. Large scale shops failed to boost revenue, but the increase in the stock of Hai Lan's home seemed inevitable.


In order to improve the turnover of commodities, Hai Lan's home is actively developing the business of electronic commerce, promoting the integration of online and offline channels, and the proportion of online sales has increased year by year. In the 2014-2018 years, the sales volume of Hai Lan's home market was 270 million, 590 million, 850 million, 1 billion 50 million and 1 billion 150 million respectively, and the proportion of revenue in total revenue was 2.24%, 3.80%, 5.17%, 5.91% and 6.14% respectively. Although online revenue has continued to grow, the growth rate of online revenue in the past five years has continued to decline, from the 118.5% high growth rate in 2015 to 9.5%. Although the sea Lan's home has tested the water to send clothes to the US regiment, there has not been much improvement.


From appearance, the increasingly fashionable and younger home of Hai Lan, and the flagship of the basic fund, do not seem to have a very clear age. So even in the same inventory situation, the brand of Hai Lan's brand may bring different results. What's more, the gap between Hai Lan's home and UNIQLO is not simply a simple difference in type.


Innovation dilemma and gradual decline


Recently, the sales market of FMCG has been gradually depressed. In contrast, UNIQLO has been frying hot because of a joint dress, which is actually the wisdom of UNIQLO. First of all, compared with the fast fashion brands in Europe and America, UNIQLO advocates basic funds, and can be combined with any brand's clothing without any violation. What is more important is the practicality of "ten thousand years unchanged" and the quality that is comparable to the big card. What supports all this is UNIQLO's intentions in style, design, cloth and so on.


HEATTECH, BLOCKTECH, Ultra Light... These solid basic skills enable consumers to buy clothes in UNIQLO, which are very practical and can not even wear out for more than a decade. In contrast, the quality of European and American brands is very rough, and the problems such as thread and color fade make consumers even wonder. After a season, costumes and outmoded clothes are gradually replaced by uniforms of cheaper and cheaper products. UNIQLO and ZARA brands have chosen to hide their strategies without exception. There is almost no logo on clothing, so that consumers can wear other brands at random, without any violation. But in contrast, UNIQLO and his representative factory Shenzhou International are more capable of supporting this world.


In September 3, 2013, at the investor meeting of the Hai Lan home, chairman Zhou Jianping publicly called UNIQLO, and stressed: "I am serious." But from the actual business operation, we did not see the determination of Hai Lan's home, which is reflected in its poor research and development expenses.


2017, 2018 earnings data show that the cost of research and development of Hai Lan's home is only 25 million 40 thousand and 49 million 20 thousand, accounting for only 0.14% and 0.26% of the 18 billion 200 million and 19 billion 90 million revenue. Watch out for the home of Hai Lan. The rapid expansion of the "sequelae" article pointed out that Hai Lan's home, like many online brands, does not depend on its own design, but relies on buyers to select goods from ODM suppliers, thereby saving a lot of design costs. 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.


Compared with the marginal cost of research and development of Hai Lan's home, the advertising cost of Hai Lan's home in 2018 was as high as 627 million yuan, which was 5-10 times that of the seven wolves and nine herds in the same period. Focusing on publicity rather than upgrading of supply chain and R & D capability is a lesson from Metersbonwe's declining blood.


Earlier, Hai Lan's home moved the mature business model of UNIQLO to China, laying a leading position in the domestic industry. In order to maintain healthy development, we should urge suppliers to improve product reputation with suppliers, improve stock turnover, improve product differentiation, reduce inventory, improve upstream and downstream supply chain, enhance fast response capability, optimize marketing network, expand product lines to maintain market leading position, increase R & D investment, promote innovation, and build core brand competition. Force... And so on, this series of measures has gradually changed flavor.


The unique mode of innovation has become a means of risk sharing. The return mechanism has become the method of stock pressure sharing. The financial pressure of new store opening has been passed on to downstream franchisees, so in the face of high inventory, Hai Lan's home is not so worried. The original pursuit of supply chain reaction speed, inventory reduction and R & D investment promotion is gradually marginalized in the "good" operation of enterprises.


Therefore, the killing of Hai Lan's home is not just inventory, but the beginning of its business.


epilogue


On the one hand, investors are questioning the future development. On the other hand, they are accused of alleged plagiarism by the industry, which has led to the failure of Zhou Jianping, the founder of Hai Lan's home, in the general meeting of shareholders. Behind the constant negative public opinion, what is the problem in the field of the clothing industry in the past?


There is no negative information in the world, such as less than 5% of revenue and profit growth, up to 9 billion 500 million of inventory, 16 billion 500 million of debt, and less than 50 million of research and development expenses. This set of data should be the most objective explanation for the fall of the shrine of Hai Lan's home.


No one in the world can rely on a business model for long-term stability. It is undeniable that the unique mode of Hai Lan's home has played a major role in its historical development. However, it is an indisputable fact that this model exposes huge risks in the new business environment. Reducing the risk of low inventory and paying attention to the design and development of independent original is the problem that Zhou Jianping, the founder of Hai Lan home, should face squarely.