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Interface News Reporter | Zhu Yongling

Interface News Editor | Lou Qiqin

The prices of large women's clothing sold to rich ladies and aunts have also stopped increasing.

Winner Fashion, a local mid-to-high-end women's clothing group, released its financial report on August 15. In the first half of 2024, the company's revenue fell 1.03% year-on-year to 3.306 billion yuan, and its net profit attributable to shareholders fell 37.41% year-on-year to 279 million yuan.

Winner FashionKoradior, NAERSI and NEXY.CO are three main brands with annual revenue exceeding 1 billion yuan, as well as five other mid-to-high-end women's clothing brands.

Although the revenue decline was small, it was still unusual for Winner Fashion. Prior to this, in the same period of previous years since its listing in 2014, Winner Fashion's revenue only recorded a mid-single-digit decline in the first half of 2022, and achieved double-digit growth in other reporting periods.

A more intuitive comparison is that Winner Fashion’s past growth rate usually outperforms the market.Winner Fashion's revenue increased by 22.05%, much higher than that of the previous year.ClothesThe total retail sales of consumer goods in the categories of footwear, hats, and textiles increased by 12.9%.ClothesThe total retail sales of consumer goods in the categories of footwear, hats, and needlework textiles increased by 1.3% year-on-year, and Winner Fashion fell behind.

Combined with the single-quarter operating performance previously disclosed by Winner Fashion, as well as the sales performance of various brands and channels, the decline in performance in the first half of 2024 was mainly dragged down by the second quarter, the main brand Koradior, and offline channels, especially department stores.

The performance of the three major brands in the second quarter was worse than that in the first quarter.Koradior's sales decline widened from low single digits in the first quarter to 10% in the second quarter. NAERSI and NEXY.CO recorded mid-single-digit and high-single-digit growth in the first quarter, but the growth rate fell back to low single digits in the second quarter. Brands other than the three major brands also turned from low single-digit growth in the first quarter to low single-digit decline in the second quarter.

In the first half of 2024, Koradior's revenue, which contributed more than 30% of the total revenue, fell by 6.19% to 1.057 billion yuan.NAERSI and NEXY.CO increased by 4.27% and 5.14% to 735 million yuan and 504 million yuan respectively. These three brands together accounted for 69% of the total revenue. Among other brands, only La Koradior and FUUNNY FEELLN recorded double-digit growth in revenue, while the rest of the brands recorded mid-to-high single-digit declines.

In terms of channels, in the first half of 2024, the revenue of Winner Fashion's direct stores and dealer stores fell by 3.67% and 11.72% respectively, accounting for about 80% and 4% of the total revenue respectively. According to data disclosed by Winner Fashion at the performance conference, among offline channels, only shopping malls grew by 2.92%, while other formats recorded a decline. Among them, department stores, which accounted for more than 60% of the revenue, fell by 4.29%. The company's management said that the biggest problem with department stores is that "there are no new customers, basically all old customers."

Although Winner Fashion has eight brands, almost all of them are women's clothing styles, positioned in the light luxury price range of 1,000 yuan - the company's gross profit margin further increased to 76.30% in the first half of 2024. The core customer group is women aged 30 to 45 with certain economic strength. According to the management of Winner Fashion, more specifically, they are private business owners, civil servants, teachers, freelancers and high-net-worth individuals.

The growth setback of Winner Fashion once again verifies the signal already conveyed by the financial reports of luxury brands - these middle-class consumers, who are often considered to be relatively less affected by the economic environment, are also becoming more rational.

In addition to the decline in revenue, there are also several detailed data to serve as evidence.

In the first half of 2024, e-commerce was the only channel for Winner Fashion to achieve growth, with Vipshop accounting for the largest share, with revenue increasing by 14.80% year-on-year to 240 million yuan, far exceeding the 6.46% increase in the same period last year. According to a roadshow by Winner Fashion in 2023, Vipshop has the highest discount rate among e-commerce channels, selling inventory within 3 years at 30%-50% off; while Tmall outlet stores mainly sell inventory within 2 years at 50%-70% off, and Douyin sells both inventory within 2 years and inventory within 3 years.

In addition, according to the management of Winner Fashion at the performance briefing, in the first half of 2024, after making certain adjustments to the store channels, the single-store efficiency of its directly-operated stores did not increase significantly, only slightly increasing from 1.76 million yuan to 1.77 million yuan.

Specifically for each transaction, Winner Fashion will increase the consecutive order rate (i.e.The number of products from two or more categories purchased in a single transaction (/total number of purchases) increased by 4 percentage points, and the repurchase frequency of VIC customers increased significantly; however, the average order value still fell by 2 percentage points.

Overall, Winner Fashion's performance in the first half of 2024 was not within management's expectations.

The revenue growth rate of over 20% in 2023 once gave Winner Fashion confidence. The company had set the retail sales (flow) target for 2024 at 10.5 billion yuan, a year-on-year increase of 19%. However, at the latest performance conference, Winner Fashion management lowered its expectations to around 9 billion yuan, which is basically the same as the 8.8 billion yuan flow in 2023.

Winner Fashion previously revealed that it was considering introducing a new international brand of men's and women's clothing from outside, which was expected to be launched in the first quarter of 2025. This plan has now been put on hold. Winner Fashion management explained that considering the current economic environment, the company has raised the conditions for cooperation and related negotiations are basically at a standstill.

The most tangible impact of the optimistic expectations on the current operation is the increase in inventory due to the large amount of stock. By the end of the first half of 2024, Winner Fashion's inventory of goods increased to 1.111 billion yuan, an increase of 360 million yuan year-on-year; the inventory turnover days increased from 211 days in the same period last year to 279 days. However, Winner Fashion's management said that 94% of these inventory items were in stock for two years and were mainly basic styles that were not affected by trends.

At present, Winner Fashion is still operating along the previously established strategy of "multi-brand, omni-channel, platform-based, upstream and downstream", that is, to carry out more refined operations at the brand, channel, product and supply chain levels, to make the best use of existing resources and improve efficiency.

For example, in terms of channels, Winner Fashion began to reduce the number of stores in 2022, and instead pursued opening large and good stores. At the end of the first half of 2024, compared with the beginning of the period, the number of offline stores of Winner Fashion decreased by 52 to 1,912. Among the directly-operated stores, department stores saw the largest decrease. In addition, the area of ​​a single directly-operated store also increased by 4 square meters to 168 square meters.

At the supply chain level, Winner Fashion is carrying out intensive reforms, increasing the proportion of large orders and reducing the number of suppliers. In the first half of 2024, the number of its fabric suppliers fell by more than 30% year-on-year.

Winner Fashion has not cut its investment in brand marketing. In the first half of 2024, the company's advertising and promotion expenses increased by 44.1% year-on-year to 121 million yuan, and its proportion of total revenue increased by 1.2 percentage points year-on-year to 3.7%.