Looking back at the first half of the year, there were obvious signs of weak consumer demand, and the overall growth of the clothing industry was lackluster, with only a 1.3% year-on-year increase in textile and clothing retail sales.

The pressure faced by clothing companies is also evident. According to Wanlian Consumer, as of early August, the proportion of listed companies in the textile and apparel sector expecting losses has increased significantly, rising from 7% in the same period last year to 22% for the first time.

Of course, looking at it from a different perspective, this also reflects the upgrading of the reshuffling of the clothing industry, with tail-end companies being accelerated cleared out, and leading clothing companies actively seeking change and transformation, there may be opportunities for counter-cyclical strengthening.

In comparison, companies that are more certain should have two characteristics: 1) stable performance and sustainable development; 2) sufficient space for transformation and upgrading, improvement of core competitiveness. For cash-rich leading clothing companies, this point is relatively more important.

In this direction, GXG behind the parent company Mueyuan Group, which pioneered the "commuter menswear" market last year, is worth paying attention to.

Steady development against the trend, outperforming the overall market in the basic business.

First, let's look at the performance. According to Mueyuan Group's financial report, it achieved a total revenue of 1.088 billion yuan in the first half of the year, a slight increase of 0.3% year-on-year. The gross margin continued to improve, reaching 53.6%, and remained profitable. Considering the overall pressure on clothing companies and the fact that Mueyuan Group is in a phase of deep transformation and adjustment, along with high spending and investment, its performance still demonstrates a certain level of stability.

At the same time, further analysis of its performance composition reveals more supporting factors.

First, GXG brand revenue growth significantly outperformed the industry's large cap, while the overall revenue growth of the group was affected by the termination of the children's clothing business. In the first half of the year, GXG achieved revenue of 0.979 billion yuan, a year-on-year growth of 6.2%. In the long run, as Moshang Group's business becomes more focused, it will help concentrate resources to support core brands and accelerate the transformation and upgrade of GXG.

Source: Company Announcement

Second, Mode Commuter brand performance has continued to grow, although it has a smaller scale, it steadily releases its potential. In the first half of the year, Mode Commuter revenue grew by 10.8% year-on-year, and the gross margin increased by 2.2 percentage points, reaching 56%, making it the brand with the highest gross margin under Moshang Group.

Third, the operational efficiency of Moshang Group's individual stores has improved, and the overall performance of online channels has been stable. The growth rate of offline self-operated stores, distribution stores, and online channels has outperformed the large cap. As of the first half of the year, Moshang Group had a total of 958 new stores, a net decrease of 64 stores compared to the end of last year, but overall revenue growth. Among them, self-operated store and distribution store revenue grew by 2.9% and 11.2% respectively, and online channel revenue grew by 1.7% year-on-year.

Whether it is the main brand GXG or the offline self-operated channels, they are the foundation of Moshang Group's business and play a crucial role, making the overall performance of the group increasingly solid.

In addition, Moshang Group maintains a stable cash flow, with cash and cash equivalents of 0.197 billion yuan, a stable increase compared to the end of last year.

Men's wear + quality + scene, overlapping brings development certainty.

In terms of the track, GXG brand is an excellent option, with great development space and strong certainty in the commuter men's wear.

From top to bottom, the men's wear market is steadily bullish, demonstrating long-term growth potential. Moreover, the demand for men's wear consumption is relatively rigid, with a good market structure, and the bullish background of industry reshuffling and upgrading promotes the increase of market share for leading brands.

An obvious phenomenon is that more and more well-known clothing brands have targeted the men's wear market, such as ellassay fashion and lululemon opening men's wear stores in the past year. An increasing number of male users have started to pay attention to trendy and other popular categories of content, and a large number of male users have flooded into Xiaohongshu, creating new demands and opportunities.

Behind this, there is a profound change in the concept of clothing consumption for Chinese men. They pay more attention to fashion and personalization in terms of clothing style, and they are eager to express their life attitudes through clothing. As a result, the trend of quality and scene-oriented men's wear consumption becomes increasingly apparent, and high cost-performance ratio and addressing pain points in specific scenarios have become high-quality tracks for capturing incremental opportunities.

Let's take a look at the GXG brand, which has always attached importance to product quality and has a competitive advantage in the cost-performance ratio route. Since the first half of last year, it has positioned itself as "more suitable for young casual men's wear for commuting", deeply cultivating the commuting scene and achieving early positioning.

By further focusing on the commuting scene, major brands have different focuses. The early positioning of GXG strengthens differentiation and first-mover advantages, which helps expand the market. At the same time, commuter men's wear essentially corresponds to a market with high demand and strong awareness, with significant potential value.

Today, as young people increasingly pursue a balance between work and life, there are new demands for commuter clothing, preferring practical and stylish styles. Business or casual wear alone is not enough to meet this new demand, and commuting is the "middle ground" that connects the two, more accurately matching consumers' clothing needs.

It can be said that the demand for commuter men's wear is destined to be huge. According to big data predictions from various sources, 73% of Generation Z will become new professionals in the workplace in the next 10 years. According to data from the National Bureau of Statistics, males account for 53.4% of Generation Z in China, higher than females.

On the cognitive level, firstly, the main target group of commuting menswear is young people, and some business menswear brands still have not shaken off the labels of "outdated" and "old-fashioned", only the brand awareness of "youthful" can truly impress a wide range of young people; secondly, the cognitive advantage of commuting menswear may be stronger, as male consumers tend to focus on consumption decision efficiency, and commuting menswear has certain functionality, with characteristics that may be similar to sportswear, once loyalty is established with a certain brand, the consumption will continue.

In this sense, commuting menswear can be described as a rare and high-quality track.

Taking high-quality and cost-effective as the mainline, and re-building three underlying capabilities.

It can also be seen that GXG continues to improve the "supporting" underlying capabilities of commuting menswear strategic positioning, and fully reshape products, channels, and brands, taking high cost-performance ratio as the mainline.

On the product side, GXG maintains active innovation, while expanding the dimension of categories to form a high-quality and diversified product matrix.

After establishing the brand positioning of commuting menswear, GXG innovatively launched the Zero Pressure series, developing a variety of easy-to-care, elastic, lightweight, stain-resistant, and wrinkle-resistant fabrics, empowering and improving product quality, and thus creating a product series of "high quality + high aesthetic + excellent price", and continuously expanding it.

For example, in the first half of this year, GXG launched the Zero Pressure Polo, reshaping the posture of the Polo category. The Zero Pressure Polo product not only uses imported ELITE xinjiang yilite industry yarns and upgraded wool weaving technology to create a refreshing feel, but also takes inspiration from the "seven days a week" to create a combination of weekly outfits, meeting different dressing needs.

In addition, based on the needs of professionals in the workplace, GXG has innovatively launched a variety of products such as the Jing Feng Lan T-shirt, sun protection jackets, and shirt jackets, promoting the diversified development of the 'Zero Pressure Series + Auxiliary Categories.'

It is also worth noting that GXG has collaborated with many well-known designers, including Chen Peng, Okazawa Takahiro, Jason Freeny, etc. Last autumn and winter, it invited former Armani chief designer Giuseppe to design the Master Series products. GXG has a deep fashion heritage and to some extent, it has more advantages in solidifying the product end with its 'trump cards'.

On the channel side, GXG deepens the integration of online and offline sales channels, especially by optimizing store structures and revitalizing store images, using stores as a window to promote brand awareness of 'commuter menswear'.

As can be seen, GXG is promoting store upgrades by implementing a 'one retreat, one advance' strategy. The financial report shows that in the first half of the year, GXG's store count decreased by a net of 19, closing inefficient stores. At the same time, GXG's city-store expansion plan is steadily progressing. It is reported that this year, it will focus on increasing its presence in Xi'an, Hefei, Nanjing, Chongqing, and Changzhou, among other new first-tier and second-tier cities, to enhance brand influence.

In the first half of the year, GXG also unveiled a brand new flagship store in Yiwu Xin.

Unlike previous stores, the new generation flagship store of GXG draws design inspiration from offices, presenting a minimalist commuting space and achieving a significantly expanded area of 450 square meters. In the past, the store area was mainly around 200 square meters, further creating an immersive, high-quality shopping experience.

On the branding side, GXG conducts innovative marketing activities to express its brand in a new way and strengthen emotional resonance with consumers.

For example, in the first half of the year, GXG and Yado Hotel reached a cross-border cooperation and launched the "Zero Pressure Borrowing Station," creating the "Early G Late A" workplace spirit; in Ningbo, the "GXG×Gong Jun Summer Meeting" was held, focusing on the IP marketing of "Super VIP City Tour," allowing more consumers to intuitively feel its new brand positioning and proposition.

Therefore, GXG provides a comprehensive quality experience in terms of products, channels, and brands.

This not only reflects a systematic matching, but also puts it in a more forward position on the quality-price route, laying a solid foundation for GXG's exploration of the commuting men's wear track.

For brands, the foundation of high quality-price ratio lies in products, and higher requirements lie in brand image, expression, etc., while the key is to make consumers truly feel that they are enjoying high-quality products and services. GXG actively meets higher requirements and is expected to gradually convert them into market competitiveness.

Epilogue

In general, the current Muzhiang Group is still on the right path of upward trend. The ability to outperform the market benchmark in terms of basic business demonstrates the value and effectiveness of its transformation of commuting men's wear.

Similarly, the transformation and upgrading of Muzhiang Group is still gradually unfolding, and the related potential is yet to be released. The steady growth of its performance may have just begun, and it may even gain momentum for high growth from the transformation, opening up new prospects. As it continues to deliver performance in the future, the value brought by this new positioning is expected to be gradually explored and recognized by the market.

At present, perhaps we can have a little more patience and wait for the roses to bloom slowly with time.