The company released a semi-annual report

24Q2 revenue was 0.925 billion, -2.03% YoY, net profit to mother 0.032 billion, -22.39% YoY; 24H1 revenue 2.078 billion, -1.59% YoY, net profit to mother 0.148 billion, +3.08% YoY; the decrease in 24H1 revenue was a slight decrease in online revenue and offline revenue compared to the same period.

By brand, 24H1VGRASS revenue was 0.397 billion, -12.55%; Yunjin 0.043 billion, +115.09% YoY; and TEENIE WEENIE earned 1.622 billion, -0.25% YoY, accounting for 78%.

Looking at the number of stores, as of 24H1, there were 1,260 companies, and 1,296 at the end of 23, a net decrease of 36. Among them, there were 130/54 VGRASS directly/franchisees (134/63 at the end of '23); 815/260 TEENIE WEENIE directly/franchise stores (860/238 at the end of '23); and 1 Yunjin direct-run store, unchanged from the end of '23.

By channel, 24H1's online revenue was 0.785 billion yuan (38%), or -0.37%; offline revenue was 1.277 billion yuan (61%), or -2.21%; of these, TW stores earned 0.91 billion yuan, a slight decrease over the previous year.

24H1's gross profit margin was 69.4%, an increase of 0.5 pct; of these, TW was 67.58%, a decrease of 0.5 pct; Vgrass 75.51%, an increase of 3.7 pct; 24H1 sales expenses were 1.049 billion, a decrease of 1.17%, representing a decrease in sales staff salaries and outsourced labor costs for sales staff, as more direct-run stores were converted to franchise stores in the second half of last year, and the number of employees decreased. Net profit margin to mother was 7.11%, +0.32pct year over year.

Promote the transformation of online marketing and strengthen the competitive advantage of online channels

Implement online marketing reforms based on each brand's own characteristics to effectively increase online share and core platform rankings. Teenie Weenie adheres to integrating online marketing with high-quality content as the core, and continues to improve online channel performance and competitiveness with content advantages. In March of this year, Teenie Weenie teamed up with Douyin e-commerce to plan the flagship “Twin Shell” jacket campaign, successfully breaking the circle using the “Rainforest Show” live broadcast for the first time. Teenie Weenie women's clothing jumped up the rankings during Tmall's “618” promotion period, and the menswear and children's clothing business also grew in the first half of the year.

Optimize the store structure, improve single store performance, and consolidate the advantages of offline marketing networks. Teenie Weenie's offline retail team resolutely implemented offline channel reforms, promoted the construction of an asset-light offline retail system, and improved individual store performance to achieve overall profit growth in the face of a decline in the number of stores.

The newly opened composite model store covering men's, women's, and children's clothing products enhances the product scenario-based display and incorporates Teenie Weenie's iconic classic college style elements. Some stores have been refurbished and upgraded. The new image of the store is simple and upscale and highlights the college style, enhancing the brand image and customer shopping experience.

The market continues to be sluggish, and the operation is steady and seeking change

In response to the continuing sluggish market, the company thoroughly understood new changes in market demand, strengthened core category planning, and built flagship products around core categories; continued to promote internal organizational transformation, process transformation, product innovation and channel transformation, focusing on the implementation of processes such as IPD (integrated product development), IPMS (integrated product marketing and sales), and ISC (integrated supply chain) to create and transform a matrix organization.

Maintain profit forecasts and maintain “buy” ratings

We expect the company's net profit to be 0.34 billion, 0.39 billion, and 0.45 billion yuan respectively in 24-26, EPS 0.98/1.12/1.3 yuan/share, respectively, and the corresponding PE is 7/6/5X, respectively.

Risk warning: Increased industry competition, financial risks, and the expansion of franchise channels falls short of expectations.