Management opinion and sharing
Lixindar Management will hold a teleconference with us on January 22 to share recent statistics and future development plans.
Market said that retail revenue in the third quarter of 2013 (September-November 2012) increased by 17.2% year-on-year, while same-store sales increased by 9.1%, all of which were higher than those in the first half of the year (13.4% in the first half of the year, while same-store sales grew in low units). Due to I) the weather was cold last year, which is conducive to the sale of winter shoes, ii) the discount has been strengthened. At that time, the discount rate for new products is only 40%. The number of same-store sales in December was lower than that in November, but still higher than that in the first half of the year.
Of course, the discount rate is still high, but the gross profit margin in the third quarter should be no more than one percentage point lower in the first half of the year. The raw materials are stable, and the expected gross profit margin is not high. In terms of labor costs, due to the rising labor costs of senior staff in China, it is estimated that the labor costs will still increase at a rate of 10-20% in the next administrative year. In terms of rents, the rental market in Hong Kong has been relatively flat recently, but the rent increases of the hotels located in the tourist areas are still high. the collection shows that they are willing to maintain a reasonable level of rent expenditure at other locations in the vicinity. In the Chinese region, the commission rate granted to 100 companies has increased by 1-2 percentage points, so there is still a certain degree of strength in the estimated cost of collection in the future.
The collection said that the clean-up of 600,000 pairs of stocks has made great progress, and that it has completed 230,000 pairs (that is, about 400,000 pairs). Maintain the target that the number of weekly days will be reduced to less than 200 days within 2 years.
In terms of sales network, as of the third quarter, there were 948 stores, of which 785 were self-made stores and 163 were special outlets. Looking forward to the future, the total number of stores is expected to reach 980 by the end of February 2013. in the future, the total number of stores will reach 2000 to 2500 in five years. At that time, multi-store stores are located in hundreds of companies in first-tier cities. however, with the expected rapid growth in second-and third-tier cities, coupled with the low rate of commission in the rental of shops, more stores will be set up in second-and third-tier cities in the future. The proportion of special stores will be maintained at 17% of the total number of stores. On the other hand, Jisheng opened about 50 stores within two years for its high-profile brand Linea Rosa launched in 2011. The estimated expenditure on capital for the next financial year is HK $48 million, which is mainly spent on rechargeable stores.
The fair has reached an agreement with the spokesperson, Gu Tian, and the contract period will be extended to the end of 2013.
Our views.
The collection is still in the process of cleaning up the inventory, and with the support of the gradual improvement of China's retail market, we expect to complete its inventory liquidation plan in the first half of the year. We believe that the valuation mainly reflects the gap in size (as of the end of 2012, there were 12090 and 6369 stores respectively). We believe that there is still a lot of room for development, but we still need to implement the marketing strategy, including the promotion of brands (especially new brands) and the expansion of sales networks (especially into new areas). I believe that the valuation at the time of the collection is at a reasonable level.