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Public company info - C.banner International Holdings Ltd. , 01028.HK
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C.banner International Holdings Ltd., 01028.HK - Company Profile
Chairman Chen Yixi
Share Issued (share) 2,077,000,000
Par Currency U.S. Dollar
Par Value 0.015
Industry Footwears
Corporate Profile Business Summary: The Group is principally engaged in the manufacture and sale of branded fashion footwear and retail of toys. Performance for the year: For the year ended 31 December 2019, the Group’s total revenue decreased by 26.2% to RMB2,157.5 million, compared to the same period of last year. Gross profit from continuing operations decreased by 14.9% to RMB1,159.1 million. (Loss)/profit for the year from continuing operations recorded a loss of RMB205.3 million, compared to a loss of RMB93.4 million in the same period of last year. Business Review In 2019, global growth recorded its weakest pace since the global financial crisis a decade ago. Rising trade barriers and associated uncertainty weighed on business sentiment and activity worldwide. The World Bank expected the global growth to recover to 2.5% in 2020 – up slightly from the post-crisis low of 2.4% registered in 2019 amid weakening trade and investment. Facing a complex external environment, the Chinese government has been undergoing economic and financial measures to stimulate domestic consumption which has become an important economic growth driver. This presented challenges and opportunities to the footwear industry. In response to the changing consumer behaviour and market trends, the Company has adopted a business diversification strategy to mitigate adverse effects while leveraging its brand and resource advantage to capture growth opportunities. E-commerce has become an important growth accelerator for the economy. According to a study conducted by Shopify Plus, worldwide revenue for the e-commerce fashion industry is expected to rise to US$712.9 billion by 2022. In China, the online retail sales of physical goods in the first eleven months of 2019 grew by 19.7% year-on-year, accounting for approximately 20% of the total retail sales of consumer goods. While China’s 855 million digital consumers represent one of the biggest prizes for both global and domestic marketer, an increasingly crowded marketplace has led to fierce competition between brands. The rising sophistication of Chinese consumers is also requiring a digitally-fuelled strategy to capture the next wave of market growth. This may include a digitally-powered physical retail innovation to tap into omnichannel behaviour; monetizing social attention and engaging with consumers through direct-to-consumer channels; identifying the next pocket of customer growth in the lower-tier cities; fine-tuning the levers of consumer influence, the KOLs; and the use of data-enabled pricing, sales events, and promotions. At the same time, the footwear market in China is seeing a shifting trend toward athleisure and sneakers which continue to grab higher consumers’ attention than other categories. According to a recent research, the global athleisure market size was valued at US$155.2 billion in 2018 and is expected to reach US$257.1 billion by 2026, registering a CAGR of 6.7% from 2019 to 2026. While all segments within the footwear market are growing by more than 10% between 2018 and 2023, the athletic footwear segment shows the highest growth potential and is expected to increase by 46%, reaching US$89 billion in 2023, according to another study. In China, revenue in this segment is expected to amount to US$10.6 billion in 2020, and become the world’s second-largest market after the United States, growing at a CAGR of 10% between 2020 and 2023. With streetwear and athleisure are steadily on the rise in China, many are putting their money towards one prized fashion accessory in particular: the sneaker. The 400 million Chinese millennials are set to constitute up to 69% of this market segment by 2021. Despite the current size and increasing importance of China’s sports footwear and apparel retail market, China still lags behind other major developed economies in per capita annual consumption. The segment continues to show very promising potential. Tapping into the Market The Company strategically identified athleisure as a rising market trend early, and has been directing increased resources to tap into the promising market opportunity. Following years of high-speed growth, the high-tier footwear market in China has become mature and crowded with industry players. In view of the keen competition, the Company has adopted a development strategy that aims at lower-tier markets which have been growing at a considerable speed. Over the years, the Company has successfully established a sturdy reputation for quality products with innovative design. While the sophisticated consumers are becoming more concerned in cost-performance, the Company has adopted the strategy by shifting the focus to consumers with a more modest background but still has ample consumption power by offering products with an affordable and attractive price tag. These measures were part of the swift response to the fast-changing market leveraging the Company’s robust brand and national retail coverage advantage. The Company has successfully dodged substantial loss to the business amongst the complex macro environment. The nurturing of the growing consumer base will also empower the Company to generate high profits again once the consumer market has recovered from the economic slowdown. The Company continues to foster its industry leadership with a sophisticated and fashionable brand image. The longstanding reputation as a leading international integrated retailer and manufacturer of mid to high-end women’s footwear in China is a valuable asset that lays a solid foundation for sustainable growth. It allows the Company to retain a trustworthy brand value among consumers in spite of adverse market conditions. The Company will continue to bring innovative footwear design to the market, keep up with trends and offer an edgy, fresh portfolio. Re-centering Our Business to Reinforce Market Visibility The Company has established market leadership in the women’s footwear industry in China, contributed by the immense effort spent since its establishment. It has always been the Company’s major business, the most valuable asset that led to our success. As part of the refocusing strategy, the Company decided to seek disposal of its toys business (Hamleys Global Holdings Limited) in late 2018, and the disposal has been completed as indicated in the announcement dated 16 July 2019. Following the disposal, the resources invested by the Company in the Hamleys business has been released. The Company is a well-established and reputable retailer in the market, and it has re-focused on its self-developed brands, namely “C.banner”, “EBLAN”, “Sundance”, “MIO”, “BADGLEY MISCHKA” and “Natursun”. The Company is now standing in a stronger position to direct the resources in strengthening its core business of manufacturing and selling mid-to-premium women’s footwear. It demonstrated the Company’s unassailable and long-term commitment to its core business, as well as reassuring its leading position in the market. The disposal will also enable us to deploy the resources necessary for enhancing our role as OEM or ODM manufacturer for international shoe companies. The Company intends to continue to operate the Hamleys stores that had opened in the PRC on a franchise basis, as agreed between the Company and the purchaser of the Hamleys business. After the disposal, the footwear business generated a revenue of RMB1,836.9 million, representing 85.1% of the Company’s total revenue (including continuing operations and discontinued operations) during the year ended 31 December 2019, whilst the revenue on retail of toys contributed only 14.9% (RMB320.6 million) of the total revenue. The footwear business has again comprised the major contributor to the Company’s principal business. As part of our business strategies, the Company will continue to optimise and expand its extensive shoes retail network with an effort of expanding e-commerce sales channels and realising growth through the seamless sales system. Increased operating capital will also allow the Company to allocate more resources in diverse sales and joint promotions to stimulate inventory turnover and boost sales revenue. In the year under review, the Group recorded a net reduction of 203 proprietary shoes retail outlets and 48 third-party shoe retail outlets respectively. As at 31 December 2019, the Group operated a network of 1,214 proprietary retail outlets and 245 third-party retail outlets across China, maintaining a strong presence in 31 provinces, municipalities and autonomous regions. In response to the changing consumption mode and habit, the Group further optimised its retail networks comprising both online and offline stores. We strategically cooperated with retailers such as department stores, shopping malls and outlets of varying scale to increase market presence and coverage, and strived to enhance same store sales growth of each offline store whilst actively promoting online sales. Enhancing E-commerce Presence to Drive O2O Business Development Driven by digitalization, the development of the omnichannel and new customer requirements, trade, and retail have undergone profound changes in recent years. Using online resources to reach more consumers while providing a comprehensive offline experience will allow the Company to stand out from the competition in the industry. We adopt a forward-thinking approach to engage our customers and to integrate products into the overall customer experience—which includes not only shopping but learning about a product, using it and recommending it. With big data, multi-dimensional digital marketing can help increase the monetization rate of advertisements as well as the conversion rate of the online and offline merchants with the platforms. These will enable the Company to identify trends and continue to create products that speak to particular groups of consumers. Led by experienced management team, we are able to take advantage of retailing’s new realities, and making those operations more efficient in the process. We will use real, comprehensive and timely understanding of consumers to optimise research and development, new design and the supply chains by adapting to shorter cycles while engaging with consumers directly in the product development process. In the year under review, the Company continued to deploy resources in implementing creative online marketing strategies that is engaging and enhancing the overall consumption experience. The Company’s official WeChat account, for example, is an effective and matured platform through which we speak to our customers directly with informative and interesting marketing messages such as the latest fashion trend, new product launch, and brand promotion feeds. The Company’s online flagship stores on various popular E-commerce platforms are also generating a steady income for the Company. The Company’s extensive geographical network of retail outlets, comprising self-developed and licensed brand stores spreading across China’s first, second and third-tier cities, give us a robust reach to customers offline. Integrated into the omnichannel, store renovations, VIP shopping schemes, sales promotions, outdoor advertisements, as well as product catalogues and brochures were among the tools to increase brand visibility, maintain consumer loyalty, and more importantly, enhance the shopping experience in the offline context. Prospects: Looking ahead to 2020, the global economy is still facing various uncertain factors. The signing of the first phase of a trade agreement between China and the United States is giving ease to the trade conflict, but the world’s economy lacks a strong driving force to grow. At home in China, the economy is undergoing a structural transformation that will bring along both change and opportunity. Since its inception, the footwear business has always been the Company’s core business and strength. This gives us a robust advantage to minimise business risks with our strategy of refocusing on its footwear operation and latching onto new growth engines, aiming at generating new values from existing resources. Over the years, the Company has established an image of premium product. Our ability to deliver exceptional consumption experience through a comprehensive and complementary online and offline retail network is a core strength for it to course through the challenging market environment. We will leverage the online-offline synergy to maximise the potentials of its online business and direct online traffic to offline stores, meanwhile converting offline shoppers into online buying force, in order to accelerate growth and boost sales. Marketing efforts will also be devoted to both online and offline communication channels to enhance brand visibility and awareness. We will employ a robust in-store display strategy to generate a strong desire to buy, in a more consumer-centric way so that products will be set up to please consumers helping them make purchasing decisions quickly. A more personalised consumption experience to consumers will help maintain customer loyalty. Today the fashion and footwear industries have become more data-driven than ever. We are partnering with Aliyun of Alibaba Group in revamping an all-new IT system that will unify and centralise the data generated and collected across different departments and functions. This system, expected to launch soon, is redesigned to comprise eight major centres and built with Aliyun’s most advanced technology architecture. It signifies our unwavering effort in elevating the efficiency of an omnichannel operation and the strategy in keeping ourselves abreast of the latest technology advantage that further empowers the digitalization of our operation and competitiveness differentiation. In the future, the Company will continue to build its global brand image through the implementation of various branding strategies, retail network expansion, implementation of marketing strategies, and operation efficiency enhancements to sail through adverse market conditions. The Company’s global branding strategy is diligently crafted to increase its brand popularity in both Greater China and overseas markets. It will pave the way for the Company to continue to explore new potential licensed brands and further extend our product offering. Introducing new distribution channels to achieve horizontal expansion and market share increment, as well as new partnerships and product launch, will allow the Company to maximise its market share in the industry. Further optimization of offline sales and distribution network to enhance individual store efficiency and shopping experience, as well as actively developing its online business and platforms will continue to drive the Company’s sales performance. The disposal of the Hamleys overseas business demonstrated the Company’s perennial commitment in our core footwear business. Now we are refocused, and more determined than ever to withstand adverse environment and challenge and continue to foster our market leadership with market insights and extensive experience in supply chain management. The Company will continue to explore new growth drivers that can unleash our resources advantage and potential, leading us to a new page in the women’s footwear industry.

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