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With the effective control of the epidemic in China, the recent retail business of Semir apparel has recovered rapidly, at present, the proportion of children’s clothing and adult clothing stores represented by Balabala and Semir has been close to 90%, and the average retail sales in recent days have returned to about 70% of the normal level, fluctuating between 60%-80% of the normal level in a single day, and the retail level will further recover in the future.

Semir apparel is divided according to the business structure, and the main business lines are casual wear and children’s wear. The casual wear market has entered a period of decline since 2005, and this market has basically entered complete saturation under the attack of ZARA, UNIQLO, H&M and other brands; Looking back at the children’s wear brand Balabala under Semir Apparel, the market is good, and Semir has an absolute say in the children’s clothing terminal market.

However, a few days ago, the 2019 performance report released by Semir apparel showed that the company achieved operating income of 19.359 billion yuan in 2019, a year-on-year increase of 23.15%; The net profit was 1.546 billion yuan, down 8.72% year-on-year.

Summar’s analysis and research reports show that the growth of Semir’s revenue is mainly due to the consolidation of performance brought about by the acquisition of French high-end children’s wear brand Kidiliz during the period and the growth of about 10% in the original main business; However, the decline in net profit was also due to the Kidiliz brand, which reduced the number of stores, high expenses, and a loss that exceeded expectations, with an expected loss of 300 million yuan.

Semir made a move on high-end baby and children’s clothing and borrowed from Balabala

Semir’s children’s clothing business has become an absolute advantageous industry, and since 2017, the children’s wear business led by Balabala has accounted for more than 50% of the group’s total revenue. However, it should also be noted that after Semir apparel acquired the French high-end baby and children’s wear brand Kidiliz, it did not bring significant growth to the group’s revenue and net profit, but dragged down the group’s net profit.

Kidiliz owns 15 brands such as ik ks, cati mi, Kenzo kids, and absorba, and the acquisition of Kidiliz by Semir apparel is intended to make up for its gap in the high-end baby and children’s wear market and further open up the international market.

Let’s start with the DNA of these brands. From December 1, 2016, Zannier, France’s largest children’s wear group, officially changed its name to Kidiliz, and will also focus on the development of the international market in the future. Because its international users have far exceeded the number of local users, Kidiliz’s next step will be to focus on exports, which accounted for 52% of the group’s revenue in 2015. On the whole, Kidiliz has international operation advantages and has a relatively large overseas market.

Secondly, Semir apparel “resource allocation” to Kidiliz’s brands. In July 2019, Absorba’s first store in China opened in Wenzhou. Absorba is a high-end baby and toddler clothing with French style, as a leading brand in France, it also takes time and resources to adapt to the current situation in China after coming to China.

Therefore, Semir apparel said in the recent record of investor relations activities: Regarding the overseas brand Absorba, Semir apparel said that it will promote the development of high-end brands focusing on infants and young children. Absorba lacks exposure, and Semir apparel will import traffic through cross-border with Balabala. Semir apparel is thinking about connecting Absorba to online e-commerce platforms, and is recently connecting products to balabala stores to supplement the lack of balabala in the infant product line.

Semir clearly proposed that to develop Absorba, it needs to seek the help of Balabala, import traffic, and access online e-commerce platforms.

At present, Balabala has become the brand with the highest market share in the industry, and the children’s clothing brand Balabala is becoming stronger and stronger. According to Euromonitor data, the brand with the largest market share in China’s children’s wear market in 2019 is Balabala, with a market share of 6.9%, far exceeding the second place ANTA children’s wear with 1.6%.

Semir clothing has the natural advantages of Balabala, as far as the current point of view, Balabala has supported many children’s clothing brands in the group, the most obvious effect is mini balabala, has become a leader in the field of infants and young children, but in fact, the results of other brands at this stage are not obvious. In the future, it is still unknown whether Balabala can support the success of foreign high-end brand Absorba, but it is very important for foreign brands to adapt to their own economic ecological environment while retaining their own brand genes.

How Semir apparel is developing Absorba while responding to the pandemic

In addition, a topic that cannot be avoided now is the “new crown epidemic”, Semir apparel now chooses to promote Absorba, focusing on the development of mid-to-high-end brands for infants and young children, and one of the problems that needs to be faced is the group’s clothing inventory. Inventory accumulation directly leads to a decrease in cash flow, and without sufficient cash flow, it is more difficult to promote the development of a brand.

Cheng Weixiong, a textile and garment brand management expert and general manager of Shanghai Liangqi Brand Management Co., Ltd., once said that Semir clothing has transformed into a full franchise model, and the inventory of winter clothing will not be too much pressure compared to other fully operated brand companies, at most, the winter New Year category due to the epidemic caused some franchisees to not pick up the goods, but the e-commerce business of Semir clothing has this digestion ability.

However, Cheng Weixiong also mentioned that in terms of the industry, the epidemic will cause different degrees of inventory pressure due to 19 winter goods, 20 spring and 20 summer, and with the global spread of the epidemic, it cannot be ruled out that it will also cause pressure on the 20 autumn and winter. This year, due to the pressure of the epidemic, the industry-wide business challenges have intensified, or it has become a “thunder” with a high probability.

On the whole, Semir apparel is a more cautious way to develop Absorba, and under the premise of responding to the epidemic, it is possible to develop new brands with the help of its original advantages.