Half A Year, Two Subsidiaries Went Bankrupt.

On the evening of May 18th, La Natsu Bell announced that the French Naf Naf SAS, a wholly owned subsidiary of the company, was unable to liquidate its suppliers and local government arrears, and the local court had ruled that it started the judicial reorganization. In fact, La Natsu Bell, known as the "Chinese version of Zara," has numerous high gloss moments.

It is not only known as "national dress representative", but also became the first "A+H" stock listed clothing company in three years. But in recent years, La Natsu Bell, whose head is "halo", has fallen into a predicament of loss. It will face the risk of being ST. Can La Natsu Bell still see the next spring?

Initiation and recombination

La Natsu Bell's Naf Naf SAS, who had spent her income, is now strangers. La Natsu Bell said in the announcement that as the Naf Naf SAS started the judicial reorganization, and the local court had designated the judicial administrator to assist Naf Naf SAS in all or part of the operation, the company lost control of Naf Naf SAS, which would no longer be incorporated into the consolidated statement of the company.

The announcement shows that due to the large losses in Naf Naf SAS in 2019 and the significant negative impact of the continuing business capability, the net loss attributable to La Natsu Bell's 2019 consolidated annual report increased by 443 million yuan. In the first quarter of 2020, the operation of Naf Naf SAS deteriorated further as the epidemic continued to spread in France.

Although Naf Naf SAS has adopted measures such as "applying for a temporary payment of government arrears" and "selling part of the core shops leasing rights", it has not effectively relieved the pressure of funds, and it has been unable to handle the capital settlement of business activities. In view of the inability of Naf Naf SAS to repay the debt due to 24 million 106 thousand euros, the local court ruled that it started the judicial reorganization according to the relevant French laws.

This is La Natsu Bell's second bankruptcy in six months. In January 21st, Jack, a subsidiary of La Bair bell, failed to pay his debts and was applied for bankruptcy liquidation by the court. About abandoning the subsidiary company Jack Walker and La Natsu Bell's explanation, "the brand is still in the initial stage of cultivation and development, and its brand competitiveness is not strong. In the future, it still needs a lot of capital investment, and the profit outlook is not optimistic.

For the successive bankruptcies of the subsidiary, La Natsu Bell, responsible person in an interview with the Beijing Commercial Daily, said: "at present, it is in a critical period of transformation and development. The company takes the initiative to implement strategic contraction and focuses on the development of the core women's clothing business. For non core businesses with uncertain growth prospects and expected future substantial losses or greater capital investment, resources will be substantially reduced or stopped according to the current operating situation. Jack and Walker applied for bankruptcy and liquidation in line with the company's need to concentrate resources and develop core businesses. "

Cheng Weixiong, general manager of textile and clothing management expert and Shanghai Liang Qi Brand Management Co., Ltd., looks like La Natsu Bell has problems such as loss and capital difficulties. In addition to the impact of the epidemic, the subsidiary is unable to pay rent and wages. To a certain extent, it has accelerated the bankruptcy rate of Naf Naf SAS.

However, economist Song Qinghui believes that the loss of control over Naf Naf SAS is not a bad thing for La Natsu Bell. The loss of control report forms does not merge, which reduces La Natsu Bell's losses to a certain extent. Secondly, the stripping of the less competitive sub brands will help La Natsu Bell focus on the transformation and development of the main industry.

Blindfold

The bankruptcy of two subsidiaries in the past six months is more a result of La Natsu Bell's aggressive expansion over the years.

In 1998, when the fashion agency became popular, La Natsu Bell's founder, Xing Jiaxing, sprouted the idea of creating his own clothing brand. After raising 500 thousand yuan of funds, he set up La Natsu Bell with 2 designers and several salesmen. In 2003, the clothing industry was in a slump. Xing Xing Xing, however, opposed its way of doing things, and led La Natsu Bell to make full use of his horse power to open a "big gamble". Subsequently, the clothing market ushered in the consumption craze. La Natsu Bell became famous in the first World War and gained a firm foothold in the garment industry.

Listed on the Hongkong stock exchange in 2014, three years later, it was listed on A shares and became the first "A+H" stock listed clothing company in China. With the development of capital market, the expansion of La Natsu Bell brand and stores has become increasingly fierce.

La Natsu Bell prospectus shows that in 2012, La Natsu Bell owned 3340 retail stores, and the number of stores increased to 6887 in 2014, reaching the peak of expansion in the first half of 2018, and the number of stores was as high as 9540. Its brand also expanded from the original three main women's clothing brands to five women's clothing La Chapelle, Puella, 7 Modifier, La Babit E and Candie's in 2018, three Mens JACK WALK, Pote, MARC WALK and children's wear brand. At the peak of brand expansion, La Natsu Bell added 4 brands a year.

For such a rapid expansion mode, Xing Jiaxing once said in public, "developing companies can not stop, and the domestic consumer market is growing by more than 20% every year. If we do not open new stores, it means retrogression."

Obviously, stopping is not easy for La Natsu Bell. La Natsu Bell, who was in a loss in 2018, still pushed ahead with the acquisition expansion. At the end of June 2018, La Natsu Bell bought NafNafSAS 40% stake from VIVARTE SAS with 20 million 800 thousand euros. Then, in June 2019, La Natsu Bell bought the LaCha Apparel II S rl60% rl60% stake at 35 million 340 thousand euros to indirectly acquire Naf Naf SAS 60% stake, and bought it under the acquisition, and NafNafSAS became La Natsu Bell's Affiliated Companies.

Cheng Weixiong said that the development mode of La Natsu Bell do brand and multi stores is indeed able to promote the development of enterprises and promote the rapid growth of brands in the triumph of song and dance. However, with the huge expansion, this kind of heavy asset mode has not brought much dividends, and the company soon got into a predicament because of the financial problems. Cost increases, cash flow is tight, resources are not matched, and store effectiveness is poor. When problems arise, they are not taken seriously. Instead, they lead to qualitative changes in the process of continuous quantitative change, resulting in bankruptcy of performance failures.

Delisting risk

It is worth mentioning that La Natsu Bell issued in May 15th the "stock may be implemented risk warning warning notice." According to the announcement, the estimated net loss of net profit attributable to 2019 yuan is 2 billion 139 million yuan (Unaudited) by the company's financial department.

This is another loss after La Natsu Bell's listing. In 2018, La Natsu Bell's revenue was the first to break tens of billions of yuan mark, although revenue grew two digit year-on-year, but the net profit attributable to the company dropped three digits, losing 159 million 500 thousand yuan.

"If the company's net profit attributable to shareholders of listed companies is negative after 2019, the company's A share will be dealt with by the" delisting risk warning ". La Natsu Bell responsible person told the Beijing Business Daily reporter.

As a matter of fact, La Natsu Bell's loss is a harbinger. In 2016, La Natsu Bell's net profit has begun to slide. In the first year of listing in 2017, La Natsu Bell achieved a revenue of 8 billion 999 million yuan, an increase of 5.24% over the same period last year, while net profit fell 6.29% to 499 million yuan. Gross margins dropped from 71.7% in 2012 to 66.6% in 2016. In this regard, La Natsu Bell said that the decline in gross profit margin was due to a slight decrease in the sales price of the average unit product and a rise in the proportion of online platform sales, of which the sales rate of the online platform was lower than that of the physical shop.

In addition to the early performance and huge losses, La Natsu Bell executives and directors have left. In February 3rd, Xing Jiaxing resigned as chairman of the board of directors; in February 25th, President Yu Qiang resigned; in February 29th, La Natsu Bell's director Wang Wen Ke and his independent director Rui Peng resigned successively; in March 29th, La Natsu Bell chief financial officer Shen Jiaming resigned.

Although high-level changes are understood by some of the industry as La Natsu Bell's "self-help measures", but in the fashion industry investors, international CEO Yang Dayun, the meritorious executives and founders successively leave, which means that management has no longer optimistic about the development of La Natsu Bell, pull Baer to withdraw from the market, it is only a matter of time.

It is worth mentioning that Yin Xinzai, La Natsu Bell's new president, has been working hard for more than 20 years. The appointment of this person has been highly regarded by the industry, and it is also said that the appointment of Yin Xin Tsai is conducive to La Natsu Bell's strategic transformation and adjustment in the future.

In Cheng Weixiong's view, no matter how the management changes, La Natsu Bell still has the possibility of delisting. If there is a chance to restructure after ST, La Natsu Bell may still be able to catch the last straw.

La Natsu Bell, responsible person replied to the Beijing Commercial Daily, said: "the company will actively promote the process of transformation and adjustment, and strive to achieve the goal of deficit reduction in 2020. In the future, the company will continue to shrink its operating resources, focus on core business development, raise inventory turnover speed and capital turnover efficiency, reduce fixed costs and control unreasonable expenditures. At the same time, the company plans to further improve the company's assets and liabilities structure by effectively revitalizing long-term stock assets, seeking more cooperative resources and optimizing the use of funds.