Same store sales decline slowed Daphne still faces a difficult transition

On October 30th, Daphne announced the third quarter operating data. According to the announcement, due to the decrease in sales volume during the reporting period, Daphne’s core brand business same-store sales decreased by the number of units in the middle of the year. However, compared with the 9.1% decline in same-store sales in the first half of the year, Daphne’s same-store sales decline is slowing down, and Daphne may be good news for the transition period.

In fact, since 2015, Daphne’s performance has continued to decline. Data show that Daphne’s losses in 2015, 2016 and 2017 were HK$380 million, HK$838 million and HK$742 million respectively. With the bleak performance, Daphne fell into a low tide and closed the store.

According to the announcement, as of September 30, 2018, Daphne Group had a total of 2,930 points of sale in its core brand business and 243 points in the third quarter. However, three years ago, Daphne opened the mode of crazy closing. In 2015 and 2016, there were 805 net stores and 1,030 nets respectively; in 2017, the number of Daphne sales points decreased by 1009, including 317 Daphne directly operated stores. This means that Daphne closed nearly three stores a day on average.

According to the “Electronic Business Daily”, in the early days when the women’s shoes were scarce in the mainland market, the material was not yet abundant. Daphne positioned the middle and low-end, and quickly seized the hearts of consumers with “fair price fashion”, taking street shops and joining. The form of rapid expansion. According to statistics, from 2002 to 2013, Daphne stores grew from about 500 to nearly 6,000. According to reports, at the peak of its performance, Daphne’s market share in the women’s shoes market is as high as 20%, and one out of every five pairs of women’s shoes sold in China comes from Daphne. However, it is the high-speed expansion that left Daphne with no small hidden dangers.

In 2012, with the upgrading of consumption patterns, the impact of the Internet, and the rising of emerging brands, most domestic apparel companies are facing a “middle-age crisis”, and the demand for women’s shoes is gradually decreasing. The lower market demand has led Daphne’s inventory to keep rising. . Daphne began to implement the store closing strategy, and the revenues began to decline, and the gross profit margin and average selling price continued to decline. In the first half of this year, gross profit fell by nearly 50%. Daphne said in the announcement that the main reason was that the inventory pressure was too high, and the Group increased its efforts to clean up the inventory in the past season, resulting in an increase in the proportion of over-season products in the sales mix. As of June 30, Daphne had a remaining inventory of HK$960 million.

In fact, in the face of performance decline, Daphne is constantly adjusting its strategy, including designing new storefronts, upgrading brand image, and launching celebrity endorsements. Last August, Daphne teamed up with New York store brand Opening Ceremony to launch a cooperative model, hoping to increase “fashion”. “Feeling”, attracting more young consumers, but Opening Ceremony’s popularity in the Chinese market is quite low, and this transformation and upgrade still has little effect.

In addition, Daphne also turned his attention to the line, increased the strength of E-Commerce, and started promotion in online channels such as Tmall and Jingdong. Despite the large discounts, the sales results are not satisfactory due to the old style and low cost performance. Previously, Daphne began to try E-Commerce business in 2006, but in 2010 decided to invest with Baidu in the E-Commerce platform “Yaodian 100”. At the end of 2011, Daphne E-Commerce department closed the Jingdong, Letao and good under the high-level instructions. Lebu and other advantageous distribution channels, and fully support the Yaodian 100. As a result, “Yooke 100” failed, and Daphne also missed the E-Commerce dividend period.

In recent years, the domestic footwear industry has been continuously affected. Ma Gang, an expert in the apparel industry, believes that Daphne is now facing more problems in the overall sluggishness of the women’s footwear industry and external challenges. How to gain advantage in new retail is a major problem facing enterprises. In other words, Daphne needs to adjust its strategy from consumer demand, optimize sales channels, and build a brand to gain a wider competitive market.