Focus On Lilang'S Revenue Report In 2021 Reveals Continuous Benefit Optimization Of Transformation And Consignment Mode

On March 18, China LiLang announced its full year performance in 2021, with total revenue of about 3.38 billion yuan, up 26.1% year-on-year; The gross profit was 1.415 billion yuan, with a year-on-year increase of 17.5%; Net profit fell 16.0% year on year to 468 million yuan.

According to the announcement, the decrease in net profit was mainly due to the decision to stop the development of professional sports shoes during the year, and the plan to clear the off-season inventory as soon as possible, so the provision of 122 million yuan for product inventory was made.

However, it is worth noting that in 2021, with the continuous promotion of key projects such as LiLang cultural and creative industrial park and LiLang logistics park, under the large investment expenditure, the group still maintains financial stability, and the business strategy of China LiLang in the past year deserves special attention.

　　 1. Online self run and self built factory fast response

First of all, in terms of online, LiLang will switch to its self operated mode in 2021. During the 6.18 e-commerce shopping festival, LiLang's self-employed online stores launched the production of new pants e-commerce special items. China LiLang started a new mode of selling new products through e-commerce by setting up its own factories, increasing seven production lines, and utilizing the group's ability of rapid small batch production.

China LiLang also opened stores in the wechat Mall for main series and light business series respectively. It actively used the business of wechat platform, provided customer relationship management services and opened stores in the wechat mall. It used the interactive characteristics of social platform to promote brand promotion and promote sales.

China LiLang increased retail sales by 20% to about $500 million through online channels during the year.

　　 2. Transform the mode of consignment sale and optimize the sustainable benefit

In addition to the continuous improvement of online retail, the strong performance in LiLang's financial report also included that the average turnover days of trade accounts receivable in 2021 decreased significantly from 101 days to 57 days, the inventory turnover days decreased from 168 days to 145 days, and the seasonally sold out rate increased from 65% to 73%.

Combined with the reasons, in the second half of the year, LiLang channel inventory clearance was effective, and the cash flow of distributors was improved compared with the mid-term, and after the light business to self-supporting and 40% main series resale mode, the turnover of accounts receivable was faster, and the average turnover days of trade accounts receivable and the turnover days calculated by the trade accounts receivable at the end of the year continued to decrease.

LiLang said that although the business environment is full of challenges, China LiLang actively adopts flexible marketing strategies, and makes good use of its rich sales management and inventory management capabilities to make appropriate deployment for extreme weather in the year, so as to minimize the impact; And through the reform of sales model, we have successfully implemented the strategies of channel optimization, product aging and Internet plus, and the sales performance is ideal.

What is particularly worth mentioning is the reform of LiLang's sales model. LiLang introduced the main series into the consignment mode in 2021. By the end of 2021, 966 stores have been transformed into consignment mode, which is equivalent to about 40% of the total number of stores.

After the transformation, under the consignment system, franchisees can access the online warehouse in real time, and have the function of quick replenishment, which makes the product deployment more flexible, and reduces the pressure of the franchise stores to stock a large number of goods in the stores, so that the inventory can be maintained at a healthy level for a long time, and the benefits of the stores can be improved.

3. Store structure fine adjustment

In terms of stores, China LiLang continued to optimize the profit structure of stores and closed some stores with less than ideal operating benefits. As of December 31, 2021, the number of all retail stores decreased by 28 to 2733.

However, after the light business series was changed to self operated in 2020, by the end of December 2021, a total of 2733 stores were operated by the group, of which 290 were self operated, with a net increase of 3.

In addition, the number of new stores opened during the year mainly concentrated in self-employed stores, shopping malls and outlets stores. The number of shopping malls increased to 852 (2020: 807), accounting for 31.2% of the total number of stores.

The group also said that in 2022, it will carefully plan its nationwide shop network. The total number of stores is expected to increase by 50 to 150 in 2022. It will continue to open stores in high-quality shopping malls in provincial capitals and prefecture level cities, as well as outlets in outlets, as the usual channel for inventory clearance. As of December 21, 2021, the group has 49 outlets (36 in 2020), which together with the e-commerce platform has become an effective channel for standing inventory clearance.

As a Quanzhou enterprise, at the time of the epidemic in March this year, the board of directors and all staff of LiLang group, with their hearts attached to their homes and compatriots, decided to donate 5 million cash and materials to Quanzhou anti epidemic front line.

Chairman Wang Dongxing concluded: the economic environment of the group in the first half of 2022 is prudent. The rapid changes of epidemic situation and economic environment increase the challenges faced by garment enterprises, promote the consolidation of the industry, and provide more favorable competitive environment for powerful enterprises. However, if the development of the epidemic situation and the uncertainty of the economic environment are gradually eliminated, it is believed that it is conducive to the sustained and healthy development of China's economy, restore consumer confidence and better release the retail consumption demand of consumers. In the long run, China LiLang will continue to focus on bringing fashionable and cost-effective men's clothing to customers. We firmly believe that unique product design, high originality and diversified varieties can enhance the brand competitiveness, widen the difference with competitors, and help the group further consolidate its leading position in the men's wear industry, To consolidate business sustainability and long-term growth.