La Chapelle loses more than 2 billion yuan, ZARA closes stores worldwide
Where does fast fashion go under the trend of closing stores?
The annual report of the fashion brand La Chapelle was late, and it attracted market attention as soon as it was issued. The annual report showed that in 2019, La Chapelle's revenue was 7.666 billion yuan, a year-on-year decrease of 24.66%, and a loss of 2.166 billion yuan, an increase of loss compared with the same period in 2018. 2.01 billion yuan. After the financial report was released, La Chapelle, who had lost money for two consecutive years, put on the "hat" of the delisting warning, and the code was changed to "ST La Chapelle". If it continues to lose money, La Chapelle will face the risk of termination of listing.
The "China Zara" scene no longer exists, and the real Zara life is not easy. Zara parent company announced the closure of 1,000-1200 physical stores. GAP's brand OldNavy also withdrew from the Chinese market early this year. Both domestic and foreign, fast fashion brands are caught in the crisis of closing stores. Behind the crisis is the fact that fast fashion brands are losing their youth market.
Not keeping up with the pace of adjustment in the apparel industry
In 2014, La Chapelle was listed on the Hong Kong Stock Exchange and landed on the Shanghai Stock Exchange three years later. It was also the first apparel brand to be listed in Shanghai and Hong Kong. La Chapelle, La Chapelle, Puella, Candie's, 7 Modifier and La Babite have many brands under the umbrella of La Chapelle Group. There are currently 4878 offline stores, mainly distributed in second-, third-, and fourth-tier cities, with second-tier cities accounting for 36.3% of revenue .
At the peak, La Chapelle had nearly 9,000 offline stores, and now the number of stores is almost "cutting". It can be seen from the data that La Chapelle is mainly based on direct sales channels, and fixed rent and manpower have caused great profit pressure. Since 2019, La Chapelle has actively contracted to accelerate the closure of losses and inefficient stores. The annual report pointed out that due to the company's closing of stores and other factors, the annual sales revenue declined. The gross profit during the reporting period decreased by about 1.62 billion yuan. The overall gross profit in 2019 decreased by about 2.22 billion yuan from the same period of the previous year. The expenses incurred in decoration caused a loss of RMB 150 million. In order to return funds, La Chapelle began to clear inventory and significantly discounted the clearance of seasonal clothing, which reduced its gross profit margin from 65.3% in 2018 to 57.7%, and the asset impairment reached more than 700 million yuan.
Regarding the current situation facing La Chapelle, the founder Xing Jiaxing once reflected: "There are both external causes and internal causes. The external cause is the low-end masses of women's wear has been greatly challenged, and residents' consumer confidence is also insufficient. The internal cause is that we have not kept up with the clothing industry The pace of adjustment has not been well prepared in advance."
Fast fashion brands accelerate the pace of closing stores to stop losses
For future development, La Chapelle's strategy is to continue to shrink non-strategic businesses, focus on women's brand development, and reduce fixed cost expenses. The revenue data of each brand under La Chapelle is almost a loss across the board. According to its future plans, the store closure plan will continue, while non-strategic businesses such as menswear and childrenswear may be abandoned.
Not only is La Chapelle known as "China Zara", the real Zara is also facing a crisis of closing stores. Spanish brand Inditex, the parent company of fashion brand Zara, announced its three-month results as of the end of April this year. During the period, revenue was 3.3 billion euros, a net loss of 409 million euros, and profit of 734 million euros in the same period last year. At the same time, Inditex decided to close Zara 1000-1200 physical stores in 2020 and 2021, equivalent to 13% to 16% of its global stores.
"Due to the adjustment of international business strategy, we plan to withdraw from the Chinese market. All OldNavy offline and online stores are expected to cease operations on March 1, 2020." American fast fashion group GAP also withdrew its children in the Chinese market early this year. Brand OldNavy. The data shows that as of May 2 in the first fiscal quarter, its sales were $2.107 billion, a year-on-year decrease of 43%, and a net loss of $932 million.
On June 24th, British tide brand Superdry announced that it would temporarily bid farewell to the Chinese mainland market. From July, the extremely dry self-operated stores and brand e-commerce flagship stores will be closed one after another.
In fact, since 2018, many fast fashion brands have successively withdrawn from the Chinese market: in 2018 TOPSHOP announced the early termination of cooperation with Chinese franchise partners and closed Tmall flagship stores; in 2018 NewLook announced the closure of Chinese stores and Tmall Flagship store; In 2019, the American brand Forever21 announced on the official website that online and offline Chinese stores have been closed one after another, and they have simultaneously withdrawn from the European and Japanese markets.
Weak originality and unattractive products are flaws
Industry insiders pointed out that the withdrawal of these international fast-moving consumer brands has encountered localization problems. The Chinese figure is quite different from that of Europeans and Americans, and the aesthetic differences make these fast-fashion brands lose some young consumers.
Judging from the composition of La Chapelle's brand, the name is basically French, and there is no obvious age distinction between styles and clothing styles, and the positioning is vague. Ms. Chen, who is often shopping in malls, told reporters that in the past two years, she has bought fewer and fewer clothes of La Chapelle. One is that the style design is fatigued, and the other is that there are fewer and fewer stores. It seems that you can’t see them in the mall. According to a report previously released by fashion agency Thredup, 25% of female consumers said that they will no longer buy fast fashion clothing from 2019, most of them young consumers.
Dua Xuefeng, chairman of La Chapelle, said that the Chinese apparel industry has entered the mature retail stage of consumer-driven industry integration. Under this background, the brand can use digital empowerment to enhance its comprehensive strength, use big data and new technologies to upgrade the industry chain, and use online Under the integration and omni-channel system to improve operational efficiency and consumer experience has become a new boost for the development of the industry.
However, La Chapelle’s annual report shows that in 2018, La Chapelle’s capital expenditure for R&D totaled 110 million yuan, a decrease of 11.5% year-on-year. The number of R&D personnel was 527, with a per capita of 200,800 yuan, and all the R&D investment disclosed in the company’s annual report In order to invest in cost-based R&D, the amount of real R&D expenses incurred by the Shanghai Stock Exchange is zero.
At present, the national tide has risen. After La Chapelle, will there be domestic fashion brands to make up for it?
Nanfang Daily reporter Peng Ying