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Red Dragonfly Released Performance Forecast Profit Of - 68 Million Yuan To - 80.5 Million Yuan

2023/2/13 19:24:00 1

Red Dragonfly

Red dragonfly is no longer "red"?

Recently, the leather shoe giant Red Dragonfly released its first loss forecast since its listing in 2015. In 2022, the Company expects the net profit attributable to the parent company to be - 25 million yuan to - 37.5 million yuan, and the net profit attributable to the parent company after deducting non profits to be - 68 million yuan to - 80.5 million yuan. At the same time, this is the fifth consecutive year that the company's performance has declined.

You should know that since its debut, Red Dragonfly has stood out in the shoe industry market where people are competing. Not only did it have more than 4300 stores at its peak with more than 200 million monthly receipts, but it also survived the successive downfall of Belle, Daphne, Saturday and other giants.

However, this leather shoe giant, after all, fell into doubt.

Red dragonfly takes off

In 1995, the 31 year old Qian Jinbo emptied his savings of 500000 yuan and founded the "Red Dragonfly" in Wenzhou, stepping into the shoe industry.

At that time, the domestic shoe industry was in full swing. In Wenzhou alone, there are more than 4000 shoe companies, including Kangnai, Aokang, Gilda and other leaders. New brands like Red Dragonfly are countless. Almost at the same time, Shan Zhimin founded Yierkang and Chen Guangmin founded Dadong in Wenzhou. Qian Jinbo's step is like being involved in a huge storm.

It's hard to pass the pass. What's more, Qian Jinbo is not a rash person in the shoe industry.

Earlier, after joining the supply and marketing force in Wenzhou and becoming one of them, Qian Jinbo and Wang Zhentao, the founder of Aokang, jointly opened a shop to sell Wenzhou shoes. After the event of "Burning Wenzhou Shoes", they founded Yongkang Aolin Shoes Factory together to produce their own shoes. Only later did they have different ideas, so they parted ways. Qian Jinbo founded Red Dragonfly himself.

In the past 10 years of dealing with shoes, Qian Jinbo has already had a unique understanding of the development of the shoe industry. At that time, there were many shoe enterprises in Wenzhou, but most of them were OEM production. However, to really make shoes, you had to build your own brand and factory, and produce and sell them yourself. In addition, not only the product quality, but also the product design, even the design of the outer packaging, have a subtle impact on the sales of shoes.

To this end, Qian Jinbo specially found a Milan designer who is proficient in Chinese culture and asked him to design a new LOGO style for the brand "Red Dragonfly". At the same time, he also abandoned the 50 cents shoe box commonly used by other businesses, and used the 2 yuan shoe box for packaging, and printed "seeking proximity from distance" on each shoe box to convey the enterprise philosophy.

By 1996, the sales volume of Red Dragonfly had exceeded 10 million, and in the following year, there were 300 offline stores of Red Dragonfly.

However, what really made Red Dragonfly rise against the wind was the "Green Grassland" monopoly plan launched by the brand in 1998, a low-cost expansion model.

The so-called "Green Grassland" actually means that through unified management, unified image, unified service, unified price, unified advertising and other ways, hundreds of marketing personnel distributed throughout the country directly manage the terminal market, provide consumers with high-quality products and services, and gradually establish the credibility, loyalty and satisfaction of the Red Dragonfly brand in the minds of consumers.

Within a few years of the implementation of the "Green Grassland" monopoly plan, Red Dragonfly has built a three-dimensional marketing network that reaches Shanghai in the east, Xinjiang in the west, Heilongjiang in the north, and Hainan in the south. With a wide coverage, it is rare in the industry, thus becoming one of the largest monopoly organizations in the country, and the output value of Red Dragonfly has also exceeded 100 million yuan in a few years.

Since then, Red Dragonfly has become a horse racing enclosure and accelerated its development. At its peak, it had more than 4300 stores in China. In 2015, Red Dragonfly was successfully listed, with a market value of nearly 9 billion yuan.

Channel change: great turbulence in China's shoe industry

I will appear after you sing. The launch of Red Dragonfly has eclipsed Daphne, Belle and other "predecessors".

At that time, while Qian Jinbo was running around to produce "Red Dragonfly", Daphne, far to the south, had been listed on the Hong Kong Stock Exchange with a halo on her head. Since then, Daphne has stepped into the road of rapid expansion, especially after solving the product crisis and turning losses into profits, the brand has made great strides and opened stores.

By 2012, the number of stores across the country had reached 6881, and Daphne also ushered in a peak moment. The company's revenue in that year exceeded 10 billion Hong Kong dollars, achieving a net value of 956 million Hong Kong dollars, and its market value had reached 18.9 billion Hong Kong dollars. When the performance is * * *, Daphne can sell 50 million pairs of women's shoes in one year, ranking first among the mainland women's shoes brands for five consecutive years, with a market share of nearly 20%. It can be said that for every five pairs of brand women's shoes in China, one pair comes from Daphne.

A few years later, Sheng Baijiao also led Belle to enter Hong Kong Stock Exchange, and with a market value of HK $69.7 billion, made Belle the king of Hong Kong Stock Exchange in mainland retail market value. Since then, Belle and Daphne have caught up with each other, and Belle has overtaken each other by the number of net increased stores that break a thousand every year. By 2014, the number of Belle stores had exceeded 20000, with a total revenue of 40 billion yuan.

Both Daphne and Belle are seniors in shoe manufacturing from the point of view of brand establishment and time to market. However, when Red Dragonfly was in its heyday, these seniors went into decline one by one.

In 2015, Belle's performance growth almost stagnated, and its total revenue rose only slightly by 2%. In the three years from then on to 2017, the situation became worse and worse. The company's net value plummeted by 55%, and its market value evaporated by nearly 80%, from HK $150 billion during the period of * * * to less than HK $35 billion. Finally, it had no choice but to privatize and delist in 2017.

And Daphne, which was listed earlier, also saw its revenue shrink significantly after 2015, falling into the mire of performance loss. From 2015 to 2020, the company lost 497.6 million Hong Kong dollars, 819.5 million Hong Kong dollars, 688.8 million Hong Kong dollars, 786.6 million Hong Kong dollars, 1019.5 million Hong Kong dollars and 242 million Hong Kong dollars respectively. The market value of its 17 billion Hong Kong shares during the period of * * * also halved to 353 million Hong Kong dollars, and its stores closed from more than 6800 to hundreds of stores.

This is not groundless. Around 2015, the whole Chinese shoe industry ushered in great turbulence, and even the sports shoe brand Guirenniao was doomed.

In the 1990s, the single market environment enabled shoe and clothing brands such as Guirenniao, Belle and Daphne to open the market through the mainstream channel of brand franchise stores and gain * * *. However, with the rise of new channels such as shopping malls and the Internet, this traditional channel dominated by department stores and franchised stores has been impacted. Instead of increasing revenue, it has become a drag on performance growth, and the old shoe brands have gradually fallen into the shackles of operation.

Take Daphne as an example. Under the siege of new channels, the brand had to change its expansion path from 2015 to close a large number of stores. The once proud 6000 stores had a closure rate of more than 90% in a few years.

It's hard to escape the "Sword of Darmus" if you want to invigorate yourself

Against the background of the decline of giants and the upheaval of the whole shoe industry, Red Dragonfly's going public against the trend has become particularly eye-catching.

In fact, compared with the tragic situation of * * *'s being lonely because of its inability to grasp e-commerce, Red Dragonfly embraced e-commerce as early as 2010, established its own e-commerce department, and achieved online sales of 30 million yuan in * * *. By about 2019, the online sales of Red Dragonfly had exceeded 600 million yuan.

This kind of foresight decision indeed made Red Dragonfly escape from the industry crisis for a short time. But for the clothing industry, almost every brand has a "sword of Darmos" on its head, even Red Dragonfly is no exception. What the brand can do is to adjust and readjust, so as to make the disaster come later.

   The first is the general problem of inventory backlog in the clothing industry. As early as 2015, Red Dragonfly has successively taken measures to reduce inventory. Especially after the proportion of inventory in total assets reached the highest level in 2016, reaching 21.8%, the company began to increase the amount of inventory withdrawn, and the annual impairment loss is often 40 million yuan to 50 million yuan. On this basis, the ratio of inventory to total assets will gradually decline. By 2021, the company's inventory will only be 600 million yuan, accounting for 13.2% of total assets.

   Secondly, e-commerce is coming, and Red Dragonfly, like other shoe brands, is closing offline stores. Since 2015, the company has controlled costs by reducing its direct stores. By 2021, the number of direct stores will drop from 445 to 261, and the total number of stores will also drop from 4100 to 3134.

In addition, the number of employees and output of the company are also shrinking significantly. At present, the number of employees has declined from 5917 in 2015 to 4053 in 2021, a decrease of one third; Its annual output also declined from more than 700 pairs in 2015-2019 to more than 400 pairs in 2020.

   The decline in shipments is bound to bring about a decline in the company's revenue scale. After 2017, the operating revenue and net profit attributable to the parent company of Red Dragonfly declined from 3.245 billion yuan in 2017 to 2.511 billion yuan in 2021.

However, at the same time of revenue decline, the company's selling expenses and administrative expenses are growing in a reverse direction. In 2015, the company's selling expenses and administrative expenses accounted for 13.6% and 8.2% of the operating revenue respectively, and by 2021, these two accounts have reached 18.8% and 11.6% respectively.

By contrast, it is no surprise that the red dragonfly is difficult.

epilogue

In recent years, domestic traditional shoe brands have been undergoing changes to revitalize themselves. For example, Belle reshaped itself from retail, supply chain, R&D, management, culture and other aspects through digital transformation after delisting, and finally turned upside down; Daphne also made a transition to asset light by selling land, thus turning losses into profits.

Based on this, Red Dragonfly is also making efforts in the direction of private domain and brand upgrading, aiming to solve the problem of brand aging and sales.

In terms of brand upgrading, the company has been trying to update the store image since last year to highlight the style that conforms to the characteristics of "Dragonfly". At the same time, the company is also actively adjusting its products to form differentiated products, and hopes to build Red Dragonfly into a "wedding shoes * * Lenovo brand" through continuous product iteration.

Admittedly, in the face of brand aging, brand upgrading is an inevitable trend, but whether the Red Dragonfly brand strategy can succeed or not still needs a big question mark. However, there is no denying that old brands like Red Dragonfly really need new stories to avoid stepping into the footsteps of Daphne and Belle.


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