Bags / Shoes & Accessories

On July 14, *ST Guiren (603555, SH) issued an announcement stating that it intends to cancel 14 branches except Beijing and Xiamen branch, and *ST Guiren will take over all the assets of the above-mentioned branch companies to be cancelled. , Debts and personnel. At the same time, it is planned to optimize and adjust the production mode of *ST noble sports shoes to an outsourcing processing procurement mode.

"After the optimization and adjustment of the business model, the company's sports shoes and clothing related products are all used outsourcing processing and procurement models, and most of the company's production-related personnel and businesses will no longer be retained, and related assets need to be re-planned for use." Guirenniao said.

Guirenniao, who used to be the first share of the sports brand, has experienced dealer disputes, breach of contract, actual controller height restrictions, and now closed branches and its own production lines, the prospects are still uncertain.

In contrast, the footwear industry recovered strongly in the first half of this year. Xtep International and Anta Sports, which are also Fujian footwear companies, have seen substantial growth in their performance, forming a sharp contrast with Guirenniao.

Cancelled 14 branches and transferred production to outsourcing

Changshu, Lanzhou, Chongqing, Taiyuan, Quanzhou Taiwanese Investment Zone, Shijiazhuang, Harbin, Shenyang, Changchun, Hangzhou, Guangzhou, Wuhan, Jinan, Zhuzhou, the 14 branches of Guirenniao, are all listed as cancelled.

"Considering comprehensively, the company’s product sales have been fully completed by the distributors, and the existing branches that originally engaged in direct sales have basically no actual business operations. In order to further optimize the company’s internal management organization, improve the company’s management efficiency, and reduce operating and management costs, the company It was decided to cancel 14 other branches except the Beijing and Xiamen branches, and the company will take over all the assets, debts and personnel of the aforementioned branches to be cancelled." Guirenniao said in the announcement.

Guirenniao stated in the announcement: “After the cancellation of the 14 branches this time, they will no longer be included in the scope of the company’s consolidated financial statements. The aforementioned branches to be cancelled have basically no actual business operations and will not have a substantial impact on the company’s consolidated financial statements. , Will not have a significant impact on the company’s overall business development and profitability."

While deregistering the branch, Guirenniao’s board of directors also passed a proposal today that “agree to optimize and adjust the company’s sports shoe product production model to an outsourcing processing procurement model”.

Guirenniao said that the company's current sports shoes products are mainly self-produced, with some outsourcing processing; sports apparel and accessories products have long adopted the outsourcing processing procurement model, and have accumulated a wealth of outsourcing experience. The company plans to further optimize and adjust the business model on the basis of the existing sportswear and accessories outsourcing processing procurement model, and adjust the current production model of the company's independent production of sports shoes products to an outsourcing processing procurement model.

"The optimization and adjustment of production and operation-related assets, businesses, and personnel will help the company further reduce production, operation and management costs, and improve the company's ability to continue operations and profitability." Guirenniao said.

The same Fujian shoe and clothing company is in a two-tiered sky

In fact, thanks to the effective control of the epidemic, the apparel, footwear, and knitted textile industry has seen strong growth this year. Wind data shows that from January to May this year, the cumulative retail sales of clothing, footwear, needles, and textiles above designated size reached 556.77 billion yuan, a cumulative year-on-year increase of 39.1%.

And recently Anta Sports disclosed that its Anta brand retail sales in the first half of this year increased by 35%-40% year-on-year, FILA brand retail sales increased by 50%-55% year-on-year, and other brand retail sales increased by 90%-95% year-on-year. Xtep International disclosed that its unaudited consolidated profit attributable to ordinary equity holders in the first half of 2021 has increased significantly by no less than 65% year-on-year.

However, according to the quarterly report, although Guirenniao's operating income has increased, it has not yet achieved profitability. In the first quarter of this year, Guirenniao achieved operating income of approximately 210 million yuan, a year-on-year increase of 22.35%; realized net profit attributable to shareholders of listed companies of approximately -59 million yuan, and its loss was narrowed compared with the same period last year.

It is worth noting that many people in the industry and the media attribute the decline of Guirenniao to its failure in mergers and acquisitions. In fact, the FILA brand acquired by Anta Sports has been able to achieve strong performance growth. Mergers and acquisitions are one of the effective strategies for corporate growth, and mergers and acquisitions that exceed cognitive capabilities may be the real reason for the decline of Guirenniao.

In October 2020, the Xiamen Intermediate People's Court issued a "Consumption Restriction Order", and Guirenniao founder Lin Tianfu must not implement high consumption and consumption behaviors that are not necessary for life and work.

Lin Tianfu once became the richest man in Quanzhou with a net worth of nearly 20 billion yuan due to the high share price of Guirenniao. The reason for his height restriction was that Guirenniao couldn’t afford to repay the “Guirenniao Co., Ltd. 2016 first phase of non-public targeted debt financing instruments”. The principal is 80 million yuan, the interest is 4 million yuan, liquidated damages, legal fees, etc.

On April 26 this year, the Quanzhou Intermediate People's Court ruled to approve Guirenniao's "Reorganization Plan". Guirenniao will repay debts by implementing the capital reserve fund to increase shares but not to distribute to the original shareholders. This will cause Guirenniao’s parent company, Guirenniao Group (Hong Kong) Co., Ltd., which is 100% owned by Lin Tianfu, to reduce *ST Guiren’s shareholding ratio from 66.2% to 26.48%.

Not long ago, the company announced that it plans to set up Shanghai Michenglai Trading with its own funds of 50 million yuan. In addition to selling sports shoes and clothing, it also increases grain trading and food business operations. This business coincides with the business of Taifu Jingu. Many industry insiders have said that Taifu Jingu took advantage of the opportunity to enter the company. The business is not only difficult to help the company's main sports shoes and apparel business, but there may be variables in the future.

From the perspective of shareholding structure, Taifu Jingu holds 20.36% of the company's shares, and the total shareholding ratio of the other four natural person reorganization investors is 14%. Affected by the reorganization, the company's equity held by Guirenniao Group (Hong Kong), which is 100% controlled by Lin Tianfu, was diluted from 66.20% to 26.48%. The total shareholding ratio of restructuring investors is close to 35%, far exceeding the controlling shareholder.