Industry + Investment, Can Seven Wolves Realize The Dream Of Fashion Group?

In March 2nd, Fujian seven wolves industrial Limited by Share Ltd (hereinafter referred to as "seven wolves") responded to questions on investor interactive platform, saying that in recent years, it will continue to promote the reform of business mode and build a fashion consumption investment platform.

The business model reform of the seven wolves began as early as 2014. At the same time of diversification and youth upgrading, the goal of transforming into a fashion group was determined, and overseas luxury brands were acquired.

The industry believes that fashion is leading rather than following. Development requires not only mergers and acquisitions, but also the acquisition of brands to help their own brands grow.

Trying to diversify

In March 2nd, in view of the development goals in recent years, the seven wolves said on the investor interaction platform that they will continue to promote the "seven wolves" business model reform, constantly adjust and optimize the specific business strategy under the new retail situation, establish a "consumer demand oriented" supply mechanism, maintain brand reputation in depth, and promote sales through channels, products and supply chain reshaping. On the other hand, the seven wolves will strive to integrate the excellent resources of fashion consumption industry and build a fashion consumption and investment platform.

In fact, the transformation of seven wolves has a long history. In February 1985, the founder Zhou Shaoxiong and Zhou Shaoming brothers invested and founded the Jinjiang Jin Jing labor overseas Chinese hometown garment craft factory, became the predecessor of the seven wolves. After years of development, the seven wolves have become famous brands in China.

However, the turning point appeared in 2013. Foreign brands have gradually increased the layout of the domestic market, and the electricity supplier platform has begun to rise. Like most domestic garment enterprises, the seven wolves inevitably fall into the predicament of declining performance. Earnings data showed that in 2013, the revenues and net profits of the seven wolves fell by 20.23% and 32.44% respectively.

Seven wolves chose diversified transformation. In 2014, seven wolves set up seven wolf group financial company, which is considered as one of the important signals of the company's transformation. In 2015, the seven wolves began to change from "pure industry" to "industry + investment". In the middle of July, the seven wolves announced the change in the use of some raised funds, and some of the funds raised previously for the "marketing network optimization project" were changed to 1 billion yuan for the establishment of wholly-owned investment subsidiaries. In December 2016, the Qianhai reinsurance Limited by Share Ltd, launched by the seven wolves, has obtained a business license.

On the product, in 2014, the seven wolves resumed the original trademark authorized by foreign countries, and began to make men's underwear, shorts, socks and knitted products. Thereafter, underwear and other products became the main force of the seven wolves' revenue. However, the performance of the seven wolves did not improve, until the net profit increased in 2017.

Song Qinghui, an economist, said that the seven wolves chose diversification and had a direct relationship with their successive decline in performance. They tried to exploit new profit growth points through diversification.

Younger upgrade

Like many old clothing enterprises, brand becoming younger becomes the key problem in the current consumption environment.

According to the 2019 China daily data, the sales cost of the seven wolves increased by 33.36% over the same period last year. The main reason for the change was the increase in advertising fees, platform service fees and terminal management fees during the reporting period compared with the same period last year. At the same time, net cash flow from operating activities decreased by 52.23% compared with the same period last year, mainly due to the increase of advertising fees and business operation service fees during the reporting period.

In this regard, the seven wolves said in the earnings report that the social marketing platform was added to the reporting period, and the social interaction and communication properties were used to fast fission, so as to achieve rapid increase in the distribution effect.

The increased sales cost is reflected in the increasing marketing activities of the seven wolves. In 2019, seven wolves set up the theme museum of wolf culture at the 2019 art Xiamen exhibition. Through technical means, the Museum of men's clothing of the seven wolves was moved onto the line. In 2019, the seven wolves tried to launch social marketing activities at important time points. In the same year, "double 11", the seven wolves launched the challenge challenge of "dares to lift alone", and got 110 million exposure.

Prior to this, the seven wolves launched a caring campaign for veterans, launched a "wolf youth, dare to be China" micro-blog topic; in clothing, launched the "dare to be China's hard core wolf" and "natural blood" series.

At the same time, the seven wolves also started the digital upgrading of offline stores. According to the 2019 China Daily, seven wolves tried to build a digital store system, with face recognition, shop supervision, store heat map, interactive screen and other application facilities to explore the new retail mode of "people, goods, and field" digitization and recognition and analysis.

Cheng Weixiong, general manager of textile and clothing management expert and Shanghai Liang Qi Brand Management Co., Ltd., believes that the brand, product and user experience and needs of the seven wolves are still brand oriented. In fact, the timeliness of user contact can continue to be strengthened in today's user demand orientation.

　　 Mergers and acquisitions thigh

Building a fashion group is the goal that the seven wolves have been insisting since the transformation. In 2014, the seven wolves set up a plan for the development of multi brand industries, and established a two wheel drive development strategy for industrial operation and investment to create a fashion industry group.

In 2016, the seven wolves bought the French brand 16N. In 2017, they bought the brand and sales channel of the international light luxury brand Karl Lagerfeld Greater China for 320 million yuan, accounting for 80.1% of the shares. At that time, seven wolves announced that such a successful operation of the brand will open the window for the seven wolves in the field of light luxury clothing.

But KarlLagerfeld's performance after takeover is not good. When the seven wolves bought the Karl Lagerfeld business, the business in Greater China began operation in 2013 and is still in the breeding stage of the brand, so it has not yet made profits. The 2019 China Daily reported that in the first half of 2019, Karl Lagerfeld revenue was 27 million 974 thousand and 600 yuan, operating profit loss was 16 million 189 thousand and 900 yuan, net profit loss was 15 million 574 thousand and 700 yuan, and cash flow from operating activities was 13 million 594 thousand and 400 yuan, still at a loss.

Cheng Weixiong said that fashion needs genes, and Fujian traditional men's wear brands, represented by seven wolves, originate from factories. They inherit production, cost, public interest and profits. They say that it is a business that lives on their feet. The lack of the mission and connotation of the so-called fashion brand is still the business thinking of inertia brand business mode. In addition, the investment in brand creativity, product development and market operation will be further increased, so that we can manage well the fashion brand which is much higher than its own.

"To be a fashion group, we need to start from the growth of our own brand. Our brand has not improved. We can not achieve a system through acquisition. The brand system needs to be compatible and complement each other." Cheng Weixiong further pointed out.

For the next step of planning for the fashion group, the Beijing Business Daily reporter interviewed the responsible persons of the seven wolves. However, as of press release, no reply was received.