Hit Meibang Fashion: New strategic adjustment on the road

Plans and processes are the foundation for success, execution and flexibility are the keys to success - Zhou Chengjian

In early May, Shanghai was shining brightly. The flagship store of ME&CITY located on Huaihai Road was remodeled for several months. The original shop structure was adjusted. It was recently landing a Huaihai shopping district with a brand new attitude.

“In 2009 and in the first half of this year, ME&CITY’s costs were too high. The company made amendments to this year's development strategy. Long-term investment should be postponed and cannot only ignore tomorrow without regard to today.” Meibang Apparel [19.40 1.84%] (002269) Chairman Zhou Chengjian was located at him. The office in Shanghai told the Securities Times reporter that the company plans to adjust its current and future development strategies.

In the past three years, the pace of Meibang apparel can be described as "not going the unusual way." In 2008, the financial crisis swept across the globe. Under the background of a sluggish domestic and foreign apparel industry, Mebon apparel successfully landed on the A-share market and received 1.4 billion yuan in development funds during the severe economic winter period. From 2009 to the first half of this year, the multi-brand strategy of M.B. apparel was formally launched. After the heavy launch of ME&CITY, due to expenses and other reasons, the performance was lower than market expectations. In the first quarter of this year, net profit fell by 90% year-on-year. What is the next step for Mebon, who does not walk the unusual road? The reporter then had an in-depth exchange with Zhou Chengjian.

From one baron to two barneys

“The experience of the past year has been very deep.” Zhou Chengjian told reporters that in the process of making a Smith Barney dress into two brands of Smithsdale (meaning the two brand categories including Smithsonian and ME&CITY), through the exploration of 2008 and 2009, Toss, it is expected that this year's overall performance can achieve the set goals.

In 2008, the day of MEIBO Apparel landing on small and medium-sized boards, the ME&CITY branding conference was held simultaneously in Shenzhen. “I would rather do the turtle in the right direction than the rabbit in the wrong direction.” Ten years after starting his business, Zhou Chengjian took the first step in a dual-brand strategy. According to reports, ME&CITY has been separated from Metros/bonwe's urban line and is now gradually building four product lines: urban fashion series, urban leisure series, business series, and children's wear series.

From a big brand of two product lines to a series of two major brands, it is not easy for this step.

"The performance in the first half of this year was not particularly satisfactory, mainly because of the large amount of investment in the early stage of ME&CITY, and the shortage of labor caused suppliers to delay shipments." Zhou Chengjian stressed that the company is now taking various measures to make up and adjust. The situation is expected to improve after the fall and it is expected that there will be a good transcript for the whole year.

In the apparel industry, the birth of a new brand usually takes 3-5 years to mature. Zhou Chengjian tried to put the deadline on the fold. “New brands generally require two to three seasons of product testing, and with years of experience, Smith Barney hopes to finalize the situation with a quarter of a product. I believe ME&CITY will have as much room for growth as Meters/bonwe, despite the future of the Meters/bonwe brand. There is still a lot of room for development. According to him, ME&CITY is gradually finding its way into the market. From this summer on, the product's richness will be greatly improved. “The change will be very obvious. It is expected that comparable stores will reach 30% year-on-year. The above sales increase."

In 2009, the rapid expansion of direct sales of Smithsdale’s apparel business increased the number of direct-operated stores by 27% to 523, an area increase of approximately 74% to 270,000 square meters, and revenue growth of 61% to 2.3 billion. Among them, ME&CITY almost all took the form of the direct mode of development in 2009, which has attracted the attention of many people in the industry. Zhou Chengjian’s explanation is: “The strategy of direct marketing and joint development of Meibang Fashion has not changed, but ME&CITY’s absence of franchise stores in 2009 is also normal. Only when the company shapes the brand of the direct system to allow franchisees to see the value, There is only interest to drive in."

He stressed that the ME & CITY children's wear series targeting ages of 3 to 12 years of age emphasizes that the product has gradually been recognized by the franchise market. At present, there are more than 150 contracted franchisees, and it is expected to reach more than 300 this year. "The authorization of franchisees for children's clothing series will further drive the entire ME&CITY brand, extending from the original direct operation to the joint development of franchising and direct marketing. Now many franchisees require the company to authorize the adult outfit series."

Balance the current year's interests and future benefits

Last year's goal of 40% increase in total revenue, net profit in the first half of this year is expected to decline by 70% to 100% year-on-year. This data has led many market participants to believe that Smith Barney has fallen into a period of rapid development. “In ME&CITY, the company did pay a lot of tuition. When it started, it overestimated itself and set an unrealistic goal,” Zhou Chengjian said frankly. Under the burden of cost pressure, the company’s profit growth was slow in 2009. Declined, weighing the interests of the current year and future annual benefits, the company decided to adjust its development strategy.

Zhou Chengjian pointed out: "ME&CITY must achieve large-scale development, and it must spend a lot of money. From the situation in 2009 and the first half of this year, the cost is too high. The company has decided to slow down its long-term investment and focus on management improvement and efficiency improvement. This year's benefits will be improved and appropriate investment will be made next year.” During the interview, Zhou Chengjian repeatedly emphasized that as a listed company, Meibang Apparel must guarantee the interests of the current year, but also balance long-term interests and short-term interests. “We cannot blindly pursue the future. Regardless of today."

Meibang Apparel recently issued an equity incentive plan. The first phase of 7 million shares was granted to the incentive targets including 7 senior executives and 193 other employees. The exercise condition was that during the four years from 2010 to 2013, the annual return on equity was not low. At 12%, the compound growth rate of net profit is not less than 25%. Zhou Chengjian particularly emphasized the responsible attitude of the management team and employees. “This year the company launched equity incentives, and if the net profit growth is lower than 25%, equity incentives will fail, and to realize this goal, we must make strategic adjustments.”

“The company’s listing has allowed me to return to rationality,” said Zhou Chengjian, who is an impulsive personality. Before the IPO, he was not keen on reporting results and considered development goals more. Now he must slow down the pace of development and pay more attention to risk control. Looking ahead to the company’s development prospects, Zhou Chengjian expressed with confidence that “the tossing of the past year has expanded the company’s development platform and is expected to be in good shape in the next 3 to 5 years.”

More and more fine and more refined

The market generally believes that Meibang Apparel is well-versed in raising the visibility of its spokesperson. In the 1990s, Zhou Chengjian invited Hong Kong star Aaron Kwok, a Hong Kong star at a time when he was heavily invested, which was rare at the time. Some evaluations pointed out that Aaron Kwok's endorsement played an important role in the early growth of Meters/bonwe, prompting it to rapidly grow into a first-line brand. After that, the cooperation between Meters/bonwe and Jay Chou also played a win-win effect. With the debut of ME&CITY, Smith Barney has teamed up with international stars such as Wentworth Miller and Orlando Bloom.

“Celebrities and image ambassadors can expand brand influence,” said Zhou Chengjian. In the 1990s, few people were willing to spend large sums of money to appeal to image spokesmen. Mebon clothing just took advantage of the opportunity, but in the current market competition environment, it was promoted by the image spokesperson. Brand influence and popularity are far from enough, and branding will be more reflected in providing service value beyond the product itself, and will refine consumer demand.

According to Zhou Chengjian, the company will use Meters/bonwe and ME&CITY to operate through two business units, sharing management platforms, supply chain platforms, and risk control systems. However, it has an independent store system and different brand strategies and business strategies. "Retail can be made more and more detailed and refined. The reason why two major brands and four major series are needed is because brands not only represent products, but also highlight different types of lifestyles."

He explained the difference in sales data and further elaborated the necessity of market segmentation. “In the small long holiday period, the three-day cumulative sales of the Meters/bonwe and ME&CITY stores in the Shanghai market are almost the same, but the one-day sales gap is very significant. The sales of the popular branded Meters/bonwe stores rose on the first day of the holiday. On the third day, sales fell sharply, accounting for only half of the first day, compared with ME&CITY, which mainly targeted urban white-collar workers between the ages of 22 and 35, and their consumption habits are mature and rational. More balanced sales."

Specifically for internal control management, Meibang Apparel specially planned information system upgrade projects in the use of IPO raised funds, and introduced management systems such as SAP AFS shoes and apparel industry solutions to optimize supply chain management and product planning, design, and development processes. . Zhou Chengjian introduced that "at present, the new ERP system has just been upgraded to help companies move from production-oriented demand to market-oriented demand and achieve sustainable rapid development."