La Chapelle'S Net Profit Fell By More Than 100% Year On Year In 2018, And The Competition Will Be More Fierce

On March 22, La Chapelle released its performance report, which showed that in 2018, it realized an operating income of 10.1759 million yuan, a year-on-year increase of 13.08%; The net profit loss attributable to shareholders of the listed company was 155800 yuan, down 131.24% year on year.

It is worth noting that in 2018, La Chapelle suffered from a net profit loss for the first time, and the net profit declined significantly year on year, mainly because the gross profit of sales decreased by 427 million yuan year on year, a decrease of 6.04%, of which the gross profit decreased by 182 million yuan due to the decline in operating revenue.

Founded in 1998, La Chapelle mainly designs and sells clothes for urban women. La Chapelle stores can be seen all over the country. While expanding its business scope, La Chapelle is also facing huge problems.

Although La Chapelle's performance is not ideal, it still cannot stop the crazy expansion of offline physical stores. In 2015, the number of La Chapelle physical stores nationwide was more than 7800, and by 2018, it had expanded to more than 9600.

Affected by the slowdown in consumption growth and the decline in customer flow of physical stores, the sales of La Chapelle's direct stores in the second half of 2018 were lower than expected, and the revenue in the third and fourth quarters decreased by 7% and 6% respectively year on year; In addition, under the influence of the continuous decline of department store revenue, in 2018, the revenue of La Chapelle's department store revenue was 4.893 billion yuan, a year-on-year decrease of 369 million yuan, a decline of 7.02%, and its proportion in the total revenue dropped from 50.38% to 48.08%.

As La Chapelle accelerated the adjustment of terminal channels in the second half of the year, closed loss and inefficient stores, and launched the cooperation model of joint operation, franchise and trusteeship. As of December 31, 2018, the number of direct stores in La Chapelle was 9269, a net decrease of 179 compared with the beginning of the year.

The expansion of outlets led to a sharp increase in the inventory of La Chapelle. For the women's wear industry, the fashion trend changes rapidly, and excessive inventory is a big burden for La Chapelle. By the end of September 2018, the inventory amount of La Chapelle was 2.7 billion yuan, accounting for 32.46% of the total assets. This figure increased by nearly 1 billion yuan compared with 1.756 billion yuan at the end of 2015.

Although La Chapelle never mentioned the problem of brand sinking, its total market value of 4.7 billion A-shares and less than HK $3 billion Hong Kong shares could not meet the expansion goal of quality and quantity. The result is that, while expanding the number of stores, the stores will be moved away from the traditional department stores with low flow and crowded into shopping centers, even supermarket stalls.

However, La Chapelle is not only forced to sink the channel, but also international FMCG brands such as H&M and ZARA have begun to try to sink the channel, and the market competition La Chapelle will face will be more intense.

As of February 28, 2019, the closing price of La Chapelle's Hong Kong shares was HK $4.900, 77% lower than its issue price of HK $21.300.

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