The company released its report for the third quarter of 2024

24Q3 revenue was 1.396 billion, a decrease of 13.9%; to mother -0.063 billion; 24Q1-3 revenue of 4.5 billion increased -13%; to mother 0.11 billion, the same increase of -49%

24Q3 gross profit margin of 54.9%, same decrease of 1.4%; net profit margin 2.4%, same decrease of 1.6%.

By channel, Q1-3, online revenue decreased by 9.5%, gross profit margin of 42.0%, same decrease of 3.1 pct; offline revenue of 3.3 billion decreased by 14.7%, gross profit margin of 60.2% decreased by 0.4 pcts, of which direct management decreased 1.9 billion by 19%, gross profit margin 70.8% decreased by 0.3 pcts; joined 1.4 billion decreased by 8.2%, gross profit margin of 45.7% increased by 1.4 pcts.

By brand, Q1-3, PEACEBIRD women's clothing 1.76 billion, same decrease of 11.6%; PEACEBIRD menswear 1.79 billion, same decrease 7.4%; LEDin girls' clothing 0.37 billion, same decrease of 31.5%; Mini Peace children's clothing 0.54 billion, same decrease of 16.8%.

In terms of stores, as of the end of 24Q3, there were 3,476 stores, a net decrease of 255. Among them, 1,095 were self-operated, a net decrease of 80 companies; 2,381 companies joined, a net decrease of 175 companies.

Build a brand matrix to cover young consumers

The company loves and focuses on youth fashion, distinguishes target customers from multiple dimensions such as age, personality characteristics, price range, and application scenarios, and creates a fashion brand matrix. The multi-brand portfolio effectively covers young Chinese fashion consumers. At the same time, the company focuses on building high customer reputation, enhancing customer stickiness to the brand, and continuously meeting the fashion needs of young consumers.

Data-driven transformation of the entire product supply chain

The company focuses on the customer as the center, is data-driven, and comprehensively opens up the entire product supply chain in the core links of design, production, logistics, and marketing. On the design side, data from multiple operating platforms is intelligently analyzed to capture trends and consumer needs to improve the accuracy of product design; on the production side, artificial intelligence is introduced to estimate product demand, continue to refine the flexible production and supply system, and quickly produce fashionable products; on the marketing side, the rapid and efficient circulation of products in stores is promoted through data support, and online big data supports high-quality and accurate marketing.

Fully embrace new retail and create the ultimate shopping experience

The company focuses on contemporary young consumer groups, increases channel resource investment in places with a high concentration of young consumers, improves the convenience of shopping for consumers, and creates the ultimate shopping experience. The company develops offline channels such as shopping centers and department stores to comprehensively enhance the sense of experience, create a more open customer interaction atmosphere, and build stores into customer communities one by one.

Promote the share of traditional e-commerce businesses online, and actively promote new social retail channels such as mini-programs and live streaming of influencers to provide customers with richer and more diverse shopping choices; create novel and interesting interactive content on new traffic platforms favored by contemporary young people, such as Douyin, Xiaohongshu, and Station B, and accurately market people in different circles.

The profit forecast was adjusted and the rating was downgraded to “increase holdings”

Due to changes in the consumer environment this year, terminal purchasing power is under pressure, and there is some uncertainty about passenger flow and discounts, so we adjusted our profit forecast; we expect revenue of 72, 75, and 7.9 billion yuan (original value 8.3 billion, 9.2 billion, and 10.3 billion yuan) for 24-26; 2.8/4.2 and 0.47 billion yuan (original value of 0.56/0.66/0.75 billion yuan); PE 23X, 15X, and 14X, respectively. The rating was downgraded from “buy” to “increase holdings”.

Risk warning: brand operation risk and countermeasure risk; macroeconomic fluctuation risk; franchisee model risk; inventory management, price drop risk, etc.