La Chapelle, who has been underperforming for two consecutive years, has finally punched again.
On April 11, 2018, La Chapelle announced that it would spend 52 million euros to acquire the entire issued share capital of Naf Naf SAS, a brand of French Vivarte SAS. After the transaction is completed, La Chapelle will expand its market share in Europe and Naf Naf SAS will also enter the Chinese market. The industry's view is not optimistic about whether this brand that performs poorly in the French market can be optimistic about entering the Chinese market.
Founded in 2011, La Chapelle was formerly known as Shanghai Xuhui Laxia Bell Clothing Co., Ltd. After 16 years of development, it has become a fashion group with 8907 stores and 10 private brands. The revenue in 2017 reached 8.99 billion yuan. . La Chapelle has several women's wear brands such as La Chapelle and Puella, men's wear brands such as JACK WALK and POTE, and 8em children's wear brands. However, behind the continued growth of revenue, La Chapelle's profits have continued to decline, and the company's innovation is weak under blind expansion. Can the acquisition of the French brand, La Chapelle, reverse the poor performance?
Why buy overseas brands?
Recently, La Chapelle acquired the clothing brand operator Naf Naf SAS from the French apparel group Vivarte SAS through a joint consortium of its grandchildren. The total transaction price was 52 million euros, of which La Chapelle accounted for 40% of the price of 20.8 million euros. Two Hong Kong buyers, Trendy Pioneer and Eastern Union, each own 30% of the shares, each with a consideration of 15.6 million euros.
In the context of the acquisition of this French brand, La Chapelle said in response to the contents of the China Business Journal that the acquisition of a 40% stake in Naf Naf by La Chapelle will help improve the overall visibility and international influence of La Chapelle. . By investing in international clothing brands, the brand portfolio can be enriched and the company's penetration and influence in the international fashion apparel market can be enhanced. At the same time, the transaction is beneficial to the company to share fashion design, terminal channels and other resources with the international brands. Complementarity and synergy.
According to the data, Naf·Naf was founded in 1974 and is one of the most popular brands in France. It mainly sells women's apparel products and accessories in Europe.
From the outside world, the reason why La Chapelle wants to conduct overseas mergers and acquisitions has a lot to do with the poor performance of the domestic market. In FY2017, La Chapelle's net profit fell 6.3% on the basis of the double-digit decline in FY2016, to 49.85 billion yuan. The gross profit margin fell 160 basis points to 62.5% due to the decline in average unit price and online proportion. Operating profit margin improved by 20 basis points to 8.2%. In FY2017, the company achieved operating income of 8.99 billion yuan, a year-on-year increase of 5.2%, and net profit of 537 million yuan, down 6.1% year-on-year.
La Chapelle’s secretarial office said that the decline in the company’s net profit in 2017 was mainly caused by factors such as the decline in department store channels and the loss of counters, and some brand losses that were still in the incubation period. In addition, in 2017, the company's accounting estimates for the proportion of bad debts received and received were changed, and the net profit for 2017 decreased by 28.6 million yuan.
In fact, in the past few years, La Chapelle has expanded rapidly, and the number of stores has expanded from 1,841 in 2011 to 9,448 in 2017, with an average annual growth rate of about 1,000. The number of employees has soared from a few thousand to nearly 40,000. It has gradually exposed many problems.
According to a former executive of La Chapelle who did not want to be named, Roland Berger found in the strategic diagnosis of La Chapelle that there was a problem with the management of La Chapelle. With the increase in stores, management is not in place and there are many problems in the supply chain. It is embodied in the market of second- and third-tier cities, and sometimes there is a phenomenon that goods are not delivered. As early as three or four years ago, La Chapelle had nearly 8,000 outlets, and so many terminal stores could not be refined, including training for personnel and timely feedback on product information.
How to take a fast fashion route?
La Chapelle, a fast-wearing fashion brand, has rapidly grown to 890 stores in just 10 years. The sales revenue has exceeded 10 billion yuan, which seems to have its success. In the view of Hu Gang, the co-founder and president of the company, and the former executive vice president of La Chapelle, La Chapelle does have a fast-fashion gene: “The rapid response capability of the La Chapelle supply chain is at the international level. Horizontal midstream."
Hu Gang told reporters that La Chapelle's products are selected from Japan, South Korea and other places. Combined with Chinese elements and their own design features, the ratio is similar to that of Uniqlo. Overall, the price is not high and the quality is good. Therefore, many La Chapelle customers are directed at the product, but lack awareness of the brand.
"The rise of La Chapelle is to seize the strategic opportunity, that is, the rise of China's shopping malls. After a large number of commercial formats such as La Chapelle and Wanda signed a series of strategic cooperation agreements. With the rise of shopping centers, Laxia Bell seized the strategic opportunity of the rise of the channel. Due to the low rent, the shopping center brought a certain sales scale to La Chapelle.†Hu Gang told reporters.
In addition, the La Chapelle chain has adopted a direct mode, which allows the headquarters to effectively control the terminal during early expansion. However, when such a direct-sale store sinks into a third- and fourth-tier city, it will encounter various problems, such as management lag and supply chain problems.
With the acceleration of expansion, La Chapelle opened 1,014 stores in 2016. “The store has increased, sales have increased, but profits have been declining, and the unit efficiency of each store has also declined. This reflects the supply of La Chapelle. There is a problem in the chain. For example, in terms of supplier partners, the front-end linkage supplier should be used. However, La Chapelle has no contribution, selection, and proofing system, and can only rely on suppliers.†A Latina who did not want to be named Former Bell executives said.
He gave the reporter an example: "It was originally a VP-level leader docking supplier, and later changed to a senior manager and director level to dock. This caused a lot of supply chain coordination problems, rapid response ability. La Chapelle is dealing with partners. The relationship is still in the traditional era, and there is no balance between good interests and risks. For example, if La Chapelle does not purchase fabrics, then the garment suppliers will bear most of the risks, and their warehouses will endure up to two to three. The monthly loan cycle is obviously unfair to the garment suppliers."
The former executive pointed out to reporters that the approximately 9,000 direct stores in La Chapelle, the product design did not maintain interaction with the end consumers is a big problem. He mentioned, "Although La Chapelle has been improving, but can not grasp the consumer's mentality, can not lead the trend, product ideas are still buying ideas, rather than the idea of ​​the end consumer, this traditional development path obviously restricts the later stage development of."
Can the acquisition be coordinated?
In June 2017, La Chapelle was finally listed, but its road to listing was full of twists and turns. As early as 2012, La Chapelle began the IPO road, sprinting IPOs in the A-shares, but suffered IPO "gates" and eventually collapsed. Since then, the company has turned its attention to the Hong Kong stock market and listed it in Hong Kong in October 2014. However, La Chapelle still remembers A shares, and only half a year later, he started the journey of returning to A shares. On April 21, 2015, the company's board of directors passed the proposal to issue A shares. On October 26 of the same year, the company submitted the application materials. The CSRC accepted the application and lost the following. In 2017, La Chapelle launched the third impact on the A-share market IPO, which was a success.
From the obsessive listing process of La Chapelle, La Chapelle's expansion has capital-driven features. "Xia Jiaxing, the founder of La Chapelle, is only a single major shareholder. There is no absolute holding, so the capital has the final say, capital is profitable, and there is generally no medium- and long-term planning. From H-shares to A-share listings, at the operational level, capital-driven is constantly Opening the store, but the efficiency is lower. Although the extension expansion is better, there is a problem with internal efficiency.†Cheng Weixiong, an independent analyst in the footwear industry and general manager of Shanghai Liangqi Brand Management Co., Ltd., told reporters.
In Cheng Weixiong's view, many Chinese companies are listed on the disease, and listing does not solve the fundamental problems of the company. Although La Chapelle has been listed, it is reasonable to say that it should be stabilized to do some internal management and resource management.
The reporter saw on La Chapelle's official website that La Chapelle currently has several brands such as La Chapelle, La Chapelle SPORT, POTE and La Chapelle Kids. “Actually, there is not much difference between so many brands. The La Chapelle store looks like a large area, showing strength, but this collection is indeed less dominant, because people who are shopping are now coming. The less." Cheng Weixiong told reporters.
According to industry insiders, efficiency improvement is a long-term process that requires a foundation and financial support. It is necessary to shut down and transfer the inefficient stores, and the bad categories are to be subtracted, and the bad brands should be adjusted.
However, La Chapelle chose the route of foreign mergers and acquisitions. Cheng Weixiong felt that the current situation of La Chapelle should be based on the brand foundation. Otherwise, the performance looks very high, there are many shops, and the actual gross profit is not high. The acquired French brand is also a brand that is positioned to be popular, does not combine statements, and does not have the support of the design R&D team. The domestic foundation is not solid, and it is of little significance to go abroad.
"The driving force of capital has revolutionized La Chapelle. It can have such a scale. Standardized development and upgrading cannot be driven by capital. In fact, there is a big gap between scale development and internal management system, including overseas mergers and acquisitions. enterprise management capabilities were tested, including personnel can support overseas mergers and acquisitions, to enhance the ability of Xing Garching personal issues. "the La Chapelle former executives stressed.
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