23Q3 revenue was $693 million, same increase of 20.6%, net profit of $27 million, same decrease of 14.4%. The company's 23Q1-3 revenue was $2,066 million, up 18.3%. 23Q1/Q2/Q3 revenue and year-on-year growth rates were $666 million (yoy +6.0%), $707 million (yoy +30.2%), 693 million (yoy +20.6%); 23Q1-3 net profit of $136 million, same increase of 67.1%, 23Q1/Q2/Q3 For 47 million (yoy +0.4%), 62 million (yoy +1785.9%), and 27 million (yoy -14.4%); Q3 revenue growth is a strategy of active expansion in recent years that has achieved good results. As of 23Q3, the number of stores owned by the company was 658, an increase of 45 over the beginning of the year, which effectively contributed to revenue growth; at the same time, the company adopted a multi-brand, multi-platform development strategy online to promote good growth in online sales.
The 23Q1-3 net profit growth system adopted a strategy of active expansion and increased investment for long-term development. As the business environment returned to normal, the company's newly opened store sales increased, and the cost ratio continued to be optimized. The company's gross margin increased to 66.9%, an increase of 3 pct, and domestic business profits recovered well.
23Q1-3 has a gross profit margin of 66.9%, same increase of 2.8pct, net profit margin of 8.6%, same increase of 2.2pct23q1-3 sales expense ratio of 45.4%, same decrease of 0.4pct; management (including R&D) cost ratio of 10.8%, same decrease of 1pct; financial expense ratio of 1.1%, same increase of 0.5pct. In addition, net cash flow from 23Q1-3 operating activities also increased by 63.67%, mainly due to the 18.33% year-on-year increase in corporate revenue in 23Q1-3. The revenue growth rate was higher than the cost increase, which led to a marked increase in cash received from the sale of goods and the provision of labor services, and the increase was higher than the increase in cash received from purchasing goods and receiving labor payments.
Status of stores opened by brand: As of 23Q3, ELLASSAY had 201 direct-run stores and 104 franchise stores; 74 Laurèl direct-run stores and 13 franchise stores; EdHardy and EdhardyX had 63 direct-run stores and 40 franchise stores; iRoParis had 109 direct-run stores, 2 franchised stores; and 52 self-portrait direct-run stores.
Profit situation by brand: 23Q1-3, ELLASSAY revenue of 718 million yuan, same increase of 10.3%, gross profit margin of 71.2%, same increase of 3.4 pct;
Laurèl had revenue of $233 million, same increase of 35.3%, gross profit margin of 75.5%, same increase of 4.3 pct; EdHardy and EdHardyX revenue of 226 million, same increase of 0.6%, gross profit margin of 58.6%, same increase of 6.8 pct; iroParis revenue of 561 million, same increase of 18.1%, gross profit margin of 56.2%, same decrease of 0.5 pct; self-portrait revenue of 300 million, same increase of 51%, gross margin of 82.9%, same decrease of 0.5 pct.
By channel, offline revenue was 1.77 billion, accounting for 86.9%, gross profit margin of 69.3%, same increase of 3.3 pct; online revenue was 268 million, accounting for 13.1%, gross profit margin of 58.7%, same increase of 0.7 pct.
Channel resources that effectively help multiple brands collaborate and expand their operating efficiency. After years of hard work, the company has formed a sales network combining direct management and distribution, covering core business districts in major cities across the country and effectively covering surrounding regional markets. It has opened hundreds of new stores in top business districts such as SKP, Vientiane City, Taikoo Li, IFC, and Deji, and has continuously built landmark stores, becoming a brand power that cannot be ignored in leading business districts. In terms of channel expansion for the main brand, the company continues to implement channel optimization strategies, focusing on the layout of emerging integrated businesses in major cities, focusing on the strategies of “opening a big store at low cost” and “making a new store hit” and achieved impressive results. For newly introduced international brands, the company mainly uses a direct business model, relying on rich channel resources and sales networks. Each brand selects appropriate channels to enter according to its positioning, and rapidly promotes the implementation of its business in China.
The multi-brand group model enhances the company's ability to bargain over channels, and cooperation with channels is also becoming more strategic, helping to obtain high-quality store locations in highly competitive core business districts. As the company's high-end brands continue to develop, the various brands will work collaboratively, and the company's operating efficiency will continue to improve.
Efficient digital systems that enable multi-brand operations
The company is gradually building an omni-channel real-time interactive digital system that can be used by various brands to open up the three levels of consumer access terminals, products, retail, member management systems, and business processing back-office and deposit data assets; and realize real-time interaction and data feedback for functions such as customer relationship management, product management, order management, and inventory management. Through digital transformation, the company has made a breakthrough in creating a digital product and member operation platform where various brands can fully collaborate online, offline, direct management, and franchise at the same time. In terms of product management, online, offline, direct management, and franchise channels have been opened, improving the efficiency of goods circulation. Member management gradually opens up the membership rights that consumers share in public domain, private e-commerce and offline stores, realizes real-time data collection and integration across channels, generates member portraits and corresponding marketing interaction strategies through data reflow analysis, and combines multi-store applet malls with enterprise WeChat to achieve global content management and access through automated engines to improve overall conversion efficiency.
Adjust profit forecasts to maintain “buy” ratings
The company's business model is mainly a retail model specializing in private brands and brand acquisition, with design and development, procurement, production, sales and marketing as the core, and emphasizes effective control of material procurement, product planning, production and sales. Reduce supply chain costs through economies of scale; ensure the high quality of products through a strict quality management system; achieve vertical integration of the product supply chain through efficient information and logistics networks to meet product needs through rapid product development and sales; provide high-quality sales services through the construction of a complete direct management and distribution network, achieve effective replication of multiple brands with industry-leading terminal operation capabilities to create a high-quality online and offline shopping experience for consumers; create a marketing system adapted to the high-end multi-brand matrix, flexibly covering all online and offline platforms and channels, on the brand promotion side There is a clear synergy effect. Taking into account the company's performance (23Q3, the company's net profit was $27 million, a decrease of 14.4%), we adjusted our profit forecast. The company's net profit for 23-25 is estimated at 2,20/3.41/383 million yuan, respectively (previous value is 3.03/3.61/519 million yuan), EPS is 0.60/0.92/1.04 yuan/share, corresponding PE is 17/11/10x, respectively.
Risk warning: the risk of a decline in performance due to adverse changes in the external market environment; the risk of not being able to accurately grasp fashion trends; the risk of products being counterfeited and illegal online shopping; the risk caused by the decline in traffic dividends from traditional e-commerce channels and poor expansion of new e-commerce channels, etc.