Jinhong Group's Net Profit Fell By 78% In The First Half Of The Year. How Long Will It Depend On The Acquisition Of High Gloss?

The high growth brought by M & A has not been sustained in Jinhong group.

Recently, Jinhong fashion group Limited by Share Ltd (hereinafter referred to as: Jin Hong Group) issued 2019 first half results announcement, net profit pre operating income has declined. Data show that the operating income during the reporting period reached 1 billion 287 million yuan, down 6.53% from the previous year, and the net profit attributable to shareholders of listed companies was 25 million 100 thousand yuan, down 78% from the previous year. The net profit after deduction is 10 million 830 thousand yuan, down 87.4% compared with the same period last year.

By brand:

VGRASS business income reached 390 million yuan, down 6.70% compared with the same period last year, and the gross profit margin was 68.37%.

Cloud brocade business income realized 10 million 760 thousand yuan, grow 5.92% compared to the same period, gross profit margin is 75.86%;

TEENIE WEENIE revenue reached 883 million yuan, down 6.44% compared with the same period last year, and the gross profit margin was 69.04%.

By sales channel:

Online business revenue reached 170 million yuan, an increase of 0.81% over the same period, with a gross margin of 65.71%.

Offline business revenue to achieve 1 billion 114 million yuan, down 744 million yuan, gross margin was 69.38%.

In view of the decline in performance, Jinhong group said that the company's economic environment changes are expected to be inadequate, the effect of countermeasures is not yet obvious.

In the first half of 2019, the economic environment was complex and changeable, and the total retail sales of consumer goods continued to decline. Under the line, the retail entities had been greatly affected. From the data, we could see that the sales under Jinhong group were greatly affected, resulting in a downward trend in offline sales. In addition, the number of entity stores under Jinhong group decreased from last year.

During the reporting period, there were 1392 brand stores in Jinhong group, 63 new outlets, 57 stores closed, and 1437 stores in the same period last year, down 3.13%. Among them, there are 160 VGRASS stores, 10 new outlets, 3 closes, 1231 TEENIE WEENIE stores, 53 new outlets, and 54 closes.

Jinhong group's performance declined in the first quarter, and its operating income and net profit decreased by 8.71% and 79.59% respectively. In this regard, Jinhong group started a series of adjustments in the two quarter, upgrading brand development departments from product development, pricing strategy, promotion strategy, channel strategy, joining and direct business policies. In addition, Jinhong group closed down the loss shop, reduced and controlled non operating personnel and expenses, and reduced the cost.

Jinhong group, formerly known as Vigna S fashion Limited by Share Ltd, was officially renamed the Jin Hong fashion group Limited by Share Ltd in late May. The change of name has also prompted the revision of the scope of business, in addition to retaining the original clothing, clothing, accessories, design, production, development and sales, it has increased equity investment, technical services, business management services and consulting, information technology services, cultural and creative services.

Jinhong group received a high degree of attention from the "snake swallow" merger case. In March 2017, Jinhong group bought the assets of the "TEENIE WEENIE" brand in China at a price of over 5 billion 500 million yuan, while the Jinhong group's stock price was about 4 billion 500 million yuan at that time, and was considered to be a desperate purchase.

However, after the acquisition, "TEENIE WEENIE" is more competitive, and has brought great growth to the group performance. In 2017, "TEENIE WEENIE" performance was consolidated and the total revenue of the group increased by 244.5% to 2 billion 564 million yuan. The total revenue in 2018 increased by 20.34% to 3 billion 86 million yuan, while "TEENIE WEENIE" accounted for 70.06% of the total revenue. It can be said that the acquisition of "TEENIE WEENIE" will successfully reverse the business dilemma of Jinhong group.

However, Gao Guang's time did not last for a long time. In the first quarter of 2019, the performance of Jinhong group declined.

Since 2019, clothing sales have been growing, but the growth rate has dropped sharply due to factors such as consumer confidence, consumption concept, consumption classification and matching degree of supply. In this regard, Jinhong group's business has also been hit by a certain blow, Teenie Weenie brand has faced the problem of women's clothing business growth decline.

Whether the Jin Hong group can reverse the decline growth in the future competitive environment needs more tests.