In 2023, the menswear circuit seems to present a more definite structural opportunity.

Overall, the recovery trend in the apparel industry is relatively obvious. According to data from the National Bureau of Statistics, in January-July, total retail sales of clothing, shoes, hats, and knitted textiles increased 11.4% year-on-year, far exceeding the zero growth rate of the Society (5.9%). Moreover, the increase in business commuting and outdoor activity scenarios is driving the menswear category to recover faster, and its performance is superior to that of the industry as a whole.

At the same time, the menswear industry has an excellent pattern, and some menswear brands are actively transforming. By adjusting product styles to make them more suited to the needs of young people, achieve resonance between external and internal forces, and stimulate more performance vitality.

Judging from the disclosed semi-annual report,The performance of most listed menswear companies is picking up. In particular, the profit side has increased significantly. Looking ahead to the whole year, the market has also reached a certain consensus: menswear is expected to continue its positive trend.

Source: Edited by Glonghui

In the current environment, the market's focus on marginal performance improvement and certainty is also expected to increase, and the investment appeal of the menswear sector is expected to increase accordingly.

In this sense, the Musang Group, which has the highest net profit growth rate, is also an excellent sample for observation.

A strong core emerges behind a strong recovery

According to financial reports, in the first half of the year, Musang Group achieved revenue of 1,085 million yuan, an increase of about 3.50% over the previous year; net profit of 298.99 million yuan, an increase of 419.62%; gross margin was 53.2%, an increase of 2 percentage points over the same period in 2022, and an increase of 3.5 percentage points over the same period in 2019 before the pandemic.

Since then, the Musang Group has maintained profits for three and a half years in a row, and the profit scale has gradually expanded, reflecting its return to a steady development path.

At the same time, the latest results of the dismantling of the Musang Group can be found:1) Revenue from the main menswear business increased by double digits year on year, outperforming the group as a whole, or above the industry average; 2) The gross margin of the main brand GXG was the highest for the same period since 2019; 3) The efficiency of offline channels, especially self-operated channels, increased, and gross margin also reached the highest level in the same period since 2019.

And these are the core fundamentals of the Musang Group.It shows that its development core has been further stored, and there is an opportunity to speed up the jump on the menswear track.

Looking at the details below, GXG achieved revenue of about 922 million yuan in the first half of the year, an increase of 10.6% over the previous year; the new brand Mode Commuter achieved revenue of 18.526 million yuan, an increase of 22.9% over the same period; the overall revenue growth rate fell short of its main business, mainly due to Musang Group reducing the business scale of core brands in China and Africa through online channels.

Source: Company Financial Report

At the same time, the gross margins of both GXG and Mode Commuter have increased markedly.Among them, GXG's gross margin reached 56.5%, an increase of 2.6 percentage points over the same period last yearThis is also the highest level for the same period since 2019.

Behind this, Musang Group adopted relatively restrained discount marketing, effectively controlled product costs, increased sales efforts through offline channels, and worked together to drive an increase in gross margin.

Focusing on channels, the total number of offline stores of the Musang Group fell further to 1,047, 75 stores were reduced during the period, while the revenue share rose to more than 60%. It can be seen that the operating efficiency of individual stores has improved. Among them, the revenue of self-operated stores was about 444 million yuan, an increase of 22.0% over the previous year, and the revenue of dealerships was about 132 million yuan, an increase of 10.3% over the previous year.

Gross profit marginfacets, offline self-operated stores maintained an absolute lead,Reached 73.4%,At the same time, it recorded the highest level for the same period since 2019; there was a significant increase in dealerships, up 8.5 percentage points from the same period last year to 53.9%. The profit margins of both major channels were significantly higher than those of online channels; partner stores were relatively weak. This was due to fluctuations in the subsidy provided by Musang Group to partners and adjusted product supply.

Source: Company Financial Report

Judging from the above, Musang Group has successfully created a new image that is healthier and more dynamic, and has more endogenous development momentum than in previous years.

Looking at future growth from two clues

More specifically, the author seems to have two clues that form the Musang Group's new growth logic. Looking ahead, the above confirms that the Muchamp Group's reform layout over the years has entered a harvest period, taking the lead in upgrading the “bottom layer framework”; looking back, the Musang Group has taken the “commuter menswear” position ahead of schedule, and is speeding up in this direction, opening up new additions.

1. Forward-looking layout to reap dividends and motivation

Looking through many announcements and market data, we see that many menswear brands are still exploring the path of youth, fashion, and casual transformation, and have yet to reach the “deep water zone”. This includes many brands that have proposed returning to their main business, rectifying the store network, and speeding up the development of new retail since this year. The Musang Group, on the other hand, laid out an early stage to form a relevant underlying framework.

Taking channel reform as an example, Musang Group is known as “the first stock in new retail menswear”. Naturally, it has strong e-commerce genes, but in its early years, it paid attention to offline market layout and opened up new retail models.

In the second half of 2018, Musang Group promoted GXG's image upgrade strategy and built a comprehensive offline lifestyle center to provide consumers with an integrated and experiential shopping environment; in the second half of 2019,Musang Group began closing underperforming or loss-making offline stores one after another. At the same time, it also joined Tmall to open its first new retail experience store, and continuedFocus on developing high-potential offline stores,liftingBrand image, customer experience and online traffic.

By 2021, the Musang Group's online and offline integration model is maturing. As channel regulation and control increased, it once again actively adjusted the layout, began to reduce the discount rate provided to online channels, etc., which promoted continuous improvement on the profit side, which also brought about various positive changes in the first half of the year.

Thanks to the renewal of channels and brands, combined with product innovation, GXG was also once seen as being closer to young people and “the brand that knows young people the most.”

This may also be the reason. GXG has always shown strong plasticity like young people, and has the courage to start again. While others are still adjusting the underlying framework, they are aggressively advancing a new round of strategic upgrading.

2. Strong openingHigh-Level Transformation of Brand Perception

In May of this year, GXG officially established a new brand strategy:Focus on the commuting scene and position it as “casual menswear for young people more suitable for commuting”. This also means that it has begun to strengthen brand awareness and promote high-level brand transformation(One of the core strengths of world-renowned brands is that consumers recognize their advantages and let consumers choose to buy).

Judging from specific practice, there are several major logics that support its high-level transformation.

First,Commute sceneIt is a “blank area” where there is an imbalance between supply and demand.

Today, young people, represented by Gen Z, are entering the workplace and even as corporate managers. They pay more attention to work-life balance and put forward new requirements for clothing. Men's clothing consumption is also no longer satisfied with basic styles. This has gradually blurred the boundary between business and casual clothing, and the demand for scene-based clothing has come to the forefront.

However, there are almost no mature contenders on the commuter race track. As mentioned above, many menswear brands have yet to reach the “deep water zone.”This led toIt has had average results in seizing the minds of young people.

The fact that GXG is closer to young people also determines that it has a better chance to seize market opportunities and strengthen brand awareness.

Second,GXG continues to increase its strength to speed up brand awareness renewal.

In order to speed up the renewal of brand awareness, GXG has exploded brand communication and is constantly increasing.

For example, GXG proposed a new slogan, “Just right to wear GXG to work”, create a stronger brand symbol, reach strategic cooperation with mass media to launch media platforms, and cultivate scenarios on social platforms to form a more definitive connection with target groups. Recently, GXG also officially announced Gong Jun as a global brand ambassador.GXG's brand connotationsversusThe image and quality presented by Gong Joon are a perfect match, andGong JunThe commercial value of is obvious to all, and it is hoped that this will be usedAchieve a double burst of traffic and volume, working together to promote a new brand perception.

It is also worth noting that GXG revealed earlier that the collaboration with Fanzhong Media (002027.SZ) is still making a big move.It will explode the entire Chinese office building and community dominated by young people during the new product launch phase in the fall and winterto help GXG achieve full coverage and coverage of consumers from apartment buildings, office buildings, shopping malls, and cinemas.

Judging from the scale of investment, GXG is expected to reach 100 million dollars. This is one of the biggest handwriting since GXG was founded, which is enough to show how serious it is.

Third,Also, the most important point is that the product meets the needs.

On the one hand, it was emphasized above that GXG is closer to young people, knows more about the personalities and fashion attitudes of young people, etc., so it is relatively easy to create trend-setting products. For example, the “GXG Youth Down Manufacturing Bureau” that it founded has its own IP is well received by the market. Currently, this IP has entered the 3.0 era, breaking through the boundaries and temperature limits of the down scene, and providing consumers with a lightweight and stylish choice.

On the other hand, GXG has obvious quality advantages, high quality-price ratio, and is in line with the new demand trends in the consumer market. Especially since entering this year, consumers have paid more attention to product quality. For example, CBI released the consumer industry outlook report for the second half of 2023 and mentioned it,Consumers seek to pay the same price, but get a better product.

Looking at this point a little further, GXG insists on using high-quality fabrics to ensure product quality, including using black technology fabrics to empower product experience. After establishing a “commuter” brand position this year, it also upgraded the zero-pressure series. At the same time, GXG invited the former chief designer of Armani to operate this year's Master Series products. This collaboration will revolve around five categories, including sweaters, coats, cotton coats, suits, and jackets.

This means that consumers have the opportunity to buy high-quality, highly aesthetic products at relatively affordable prices, which is also more in line with the spending power of GXG's target group of young people in the workplace.

epilogue

Overall, the menswear industry has ushered in a booming stage of development, providing good opportunities for companies that are ready to grow. A “double click by Davis” after a long absence may also be interpreted.

Currently, the Musang Group is striving to develop in a more definitive direction and has become an entity that cannot be ignored. Whether judging from short-term performance or long-term strategic layout, Musang Group's fundamentals continue to improve. In particular, it is ahead of the industry at the level of strong brand awareness, and has opened up a new situation.

Perhaps the transformation process of the Musang Group has not been easy, but what can be seen is that it has embarked on an uphill path, gradually showing long-term value.