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Produced by Radar Finance Hongtu | Edited by Li Yihui | Deep Sea

Heilan Home, the "men's wardrobe", saw an increase in revenue but not in profit.

Recently, the company disclosed its financial report for the first half of 2024. During the period, it achieved operating income of 11.37 billion yuan, a year-on-year increase of 1.53%; and achieved net profit of 1.636 billion yuan, a year-on-year decrease of 2.54%.

"In the first half of 2024, the recovery of the domestic consumer market was lower than expected, and the overall clothing optional consumer category was under pressure." This is how HaiLan Home described it in the financial report.

Public information shows that Heilan Home Group was established in 1997, but as early as 1988, 28-year-old small town youth Zhou Jianping took out 300,000 yuan of personal savings from running a photo studio, rented more than 10 empty rooms in Xinqiao Town, Jiangyin, and led 18 workers to establish Jiangyin Xinqiao No. 3 Woolen Textile Factory, the predecessor of Heilan Group.

2020 is considered a "watershed" in the development of Heilan Home. This year, the company's performance fell from its peak. In November of the same year, the 32-year-old "second-generation" Zhou Lichen officially took over and took over the banner of Heilan Home's future development from his father Zhou Jianping. Since then,Under the leadership of Zhou Lichen, the "middle-aged" Heilan Home is attempting to transform into a diversified brand and promote the development of multi-brand businesses.

But now, three and a half years have passed, and Heilan Home's revenue has not returned to the level of 2019, and the growth rate of net profit has also been up and down like a roller coaster. According to iFinD data from Tonghuashun, from 2021 to 2023, Heilan Home's revenue was 20.2 billion yuan, 18.6 billion yuan, and 21.5 billion yuan, respectively, and its net profit in the same period was 2.5 billion yuan, 2.2 billion yuan, and 3 billion yuan, respectively. In the first half of this year, revenue increased again but profit did not.

In the secondary market, since the beginning of July, HaiLan Home's stock price has experienced a sharp decline, falling from more than 9 yuan to less than 5 yuan, and hit a new low in a year after the disclosure of the interim report. The current total market value is 28.5 billion yuan.

Net profit fell in the first half of the year

After the market closed on August 19, Heilan Home released its 2024 semi-annual report.

The financial report shows that in the first half of this year, the company's revenue was 11.37 billion yuan, a slight increase of 1.53% year-on-year; the net profit attributable to the parent was 1.636 billion yuan, a decrease of 2.54% year-on-year; the non-net profit was 1.509 billion yuan, a decrease of 9.26% year-on-year.

inIn the second quarter, HaiLan Home achieved revenue of 5.193 billion yuan, a year-on-year decrease of 5.9%; net profit attributable to shareholders of the parent was 750 million yuan, a year-on-year decrease of 14.42%; net profit attributable to shareholders of the parent after deducting non-recurring items was 630 million yuan, a year-on-year decrease of 27.5%.

Judging from the financial report, there is a difference between the non-net profit and the net profit attributable to the parent company in the second quarter, mainly because the company's wholly-owned subsidiary acquired 11% of the shares of Sboz with its own funds of 88 million yuan, and its shareholding ratio increased to 51%, and the investment income increased by 117 million yuan year-on-year.

Regarding the significant decline in performance in the second quarter, Soochow Securities Research Report believes thatDue to sluggish terminal consumption and climate impact this quarter, the company's revenue declined by single digits and its net profit declined by double digits due to increased expenses.

Similarly, Heilan Home attributed its performance fluctuations to the weak macro-environment. In the financial report, the company said that in the first half of 2024, the recovery of the domestic consumer market was less than expected, and the overall optional consumer category of clothing was under pressure.

Currently, Heilan Home owns brands such as men's wear, women's wear, children's wear, and home furnishings, as well as group purchasing and customization businesses. The brand matrix includes the main brand Heilan Home, as well as the lifestyle home furnishing brand Heilan Preferred, the high-end women's brand OVV, the simple and fashionable men's wear brand Black Whale, the high-end baby and child lifestyle brand Yingshi, the competitive sports brand HEAD, and the workplace apparel Heilan group purchasing and customization business.

Although there are many brands, it is the Heilan Home series that supports the company's revenue, accounting for about 82% of the revenue in the first half of this year.

The financial report shows that during the reporting period, the Heilan Home series achieved a main business income of 8.917 billion yuan, a year-on-year increase of 3.15%; Heilan group purchase customization business achieved a main business income of 1.086 billion yuan, a year-on-year decrease of 0.65%; other brands achieved a main business income of 906 million yuan, a year-on-year decrease of 14.85%.

Product sales are difficult to grow significantly, and the inventory situation of Heilan Home, which improved slightly last year, increased again in the first half of the year. According to last year's annual report, the company's inventory at the end of 2023 was 9.337 billion yuan, including inventory in the company's headquarters warehouse and goods that have not yet been sold in stores, a year-on-year decrease of 1.25% from the beginning of the year; the inventory turnover days were 282 days, 16 days less than last year.

According to the semi-annual report, the company's inventory was 9.553 billion yuan at the end of the first half of the year, an increase of 1.727 billion yuan compared with the same period last year; but the inventory turnover days data was not disclosed in the latest report.

At present, Heilan Home mainly relies on offline channels. In the first half of the year, the company's offline revenue accounted for about 80%. As of the end of the period, the company had 1,773 directly-operated stores and 5,184 franchised stores, respectively, an increase of 90 and a decrease of 10 from the beginning of the year, and an increase of 85 and a decrease of 1,340 from the end of the first half of last year.

at the same timeThe company also continues to make efforts online, not only continuing to deepen its presence on platforms such as Taobao (Tmall), JD.com, Vipshop, Douyin, Douyin, Xiaohongshu, Kuaishou, and WeChat, but also deepening cooperation with experts in short videos and live broadcasts, and working with celebrities to promote products.

The financial report shows that in the first half of the year, the company's online revenue was 2.21 billion yuan, a year-on-year increase of 47%.

"Second generation" Zhou Lichen takes over

Tianyancha App shows that HaiLan Home was founded in 1997 and is located in Wuxi City, Jiangsu Province.

This year's semi-annual report shows that the largest shareholder of Heilan Home is Heilan Group Co., Ltd., holding 36.77% of the shares; the second largest shareholder is Rongji International (Hong Kong) Co., Ltd., holding 23.06% of the shares. The above-mentioned Heilan Group Co., Ltd. and Rongji International (Hong Kong) Co., Ltd. are persons acting in concert, and the ultimate controller of the company is Zhou Jianping.

Public information shows that Zhou Jianping, the founder of Heilan Home, started his career in the 1980s.Back in 1988, ten years had passed since the reform and opening up. Zhou Jianping, then 28 years old, took out the 300,000 yuan he had saved from running a photo studio, rented more than 10 empty houses in the town, and led 18 workers to establish the Jiangyin Xinqiao Third Woolen Textile Factory.

Three years later, the woolen spinning mill was doing well. Zhou Jianping decided to phase out woolen products and focus on fine spinning, which was still a blue ocean. He built the Jiangyin No. 3 Fine Wool Spinning Mill, which later became the Sanmao Group.

By the end of the 20th century, Sanmao Group had completed its transformation from fabric production to clothing manufacturing. In 2001, Sanmao Group was officially renamed Heilan Group.

Soon after, Zhou Jianping went to Japan for market research. He was deeply impressed by the trendy store layout, rich product selection and mass-market self-service shopping methods of Japanese clothing brands. After returning to China, the first "Heilan Home" store opened in Nanjing Zhongshan North Road in 2002. The benchmark was the self-service clothing shopping model of Japan's Uniqlo. This marketing initiative made Heilan Home stand out in the market.

In 2014, Heilan Home successfully entered the capital market by acquiring Kainuo Technology. Since then, the company has continued to expand in scale with the help of the chain model.

According to iFinD data from Tonghuashun, HaiLan Home's revenue increased from 12.338 billion yuan in 2014 to 21.97 billion yuan in 2019, and its net profit attributable to shareholders of the parent company increased from 2.375 billion yuan to 3.21 billion yuan during the same period.

However, looking back, 2019 also became the peak of the company's revenue scale, which has not been surpassed so far.Under the influence of the epidemic in 2020, the company "moved forward with heavy burdens" and the company's revenue and net profit fell by double digits throughout the year. It was also in this year that Zhou Jianping handed the "scepter" to his son Zhou Lichen.

It is reported that in 2021 after Zhou Lichen took over, Heilan Home made comprehensive adjustments to its brand and product strategies, and proposed a "multi-brand, full-category, and group" strategy. In addition to continuing to consolidate the brand image of "men's wardrobe", it also actively promoted the development of multi-brand businesses to cover a wider consumer group.

At the same time, in terms of marketing, Heilan Home also frequently changes its popular spokespersons, including first-line male stars, popular young actors, and powerful actors. Jay Chou, Zhang Songwen, Zeng Shunxi, and Sun Li have all joined its endorsement lineup.

To this end, the company has invested a lot of money in sales.The financial report shows that with single-digit revenue growth in the first half of the year, the company's sales expenses reached 2.388 billion yuan, a year-on-year increase of 14.17%, of which advertising expenses were 376 million yuan. In contrast, R&D investment in the same period was only 112 million yuan, a year-on-year increase of 7.51%.

From the actual situation, the company's development is not optimistic. After a brief recovery in 2021, its performance declined again in 2022. Last year, its revenue rebounded to 21.5 billion yuan, but in the first half of this year, its revenue slowed down and its net profit declined.

BesidesAfter a series of attempts and marketing, Heilan Home still cannot get rid of the label of "men's wardrobe"In the first half of this year, the revenue from other businesses including other brands accounted for less than 10%, and there was a double-digit decline, which indirectly shows that the performance of the company's multi-brand business other than the main brand is not optimistic.

Adding new tracks to seek growth

Heilan Home is still trying new possibilities.

The semi-annual report shows that during the reporting period, the company's wholly-owned subsidiary Shanghai Heilan Home Investment Co., Ltd. (hereinafter referred to as "Shanghai Heilan") used its own funds of RMB 88 million to acquire 11% of the equity of Spazz Brand Management (Shanghai) Co., Ltd. (hereinafter referred to as "Spazz") held by Shanghai Haixin Sports Development Group Co., Ltd.

Prior to this, in 2023, Heilan Home had increased its capital in SBOZ by RMB 160 million through Shanghai Heilan, holding a 40% stake in it. After the completion of this acquisition, Shanghai Heilan holds a 51% stake in SBOZ, becoming the controlling shareholder of SBOZ, and will include it in the consolidated financial statements of the listed company.

According to information, Sportsball’s main business is the authorized agency for the expansion and retail business of footwear and apparel of first-tier international sports brands such as Adidas, Nike, Puma, and Asics in mainland China.

The holding of Sportswear is considered by the industry to be Heilan Home's continued search for new performance growth. In its semi-annual report, the company said that as the tourism industry's prosperity has recovered, the outdoor sports industry has also entered a period of rapid development, and emerging sports and niche sports have gradually entered the public's field of vision, the prosperity of the sportswear industry is expected to continue to improve.

In the future, whether SBOZ can bring new performance growth to HLA remains to be seen.

In addition to developing new markets, Heilan Home is also increasing its overseas market presence. The semi-annual report states that the company is actively promoting the brand's overseas expansion. While deepening its presence in mature markets such as Malaysia, Thailand, Vietnam, and Singapore, it also entered overseas markets such as the Maldives and Kenya in the first half of the year.

As of the end of the period, the company had 68 overseas stores and achieved main business income of 161 million yuan in overseas regions, an increase of 25.44% over the same period last year. In the second half of the year, the company plans to expand into other new markets such as Central Asia and the Middle East.

However, Heilan Home's various attempts seem to have failed to impress investors, and the company's stock price has fallen significantly recently. Market data shows that on July 1, the company's closing price was 9.39 yuan, but by August 23, the company's stock price had fallen to 5.94 yuan, a drop of more than 30%.

As the stock price continued to fall, some investors asked on the investor interaction platform whether the company's management had plans to increase its holdings, but as of now the company has not repurchased or the management has not increased its holdings.