On July 14, *ST Guiren (603555, SH) announced that it planned to cancel 14 branches except the Beijing and Xiamen branches, and *ST Guiren would take over the above-mentioned branches to be canceled. all assets, liabilities and personnel. At the same time, it is planned to optimize and adjust the production model of *ST Guiren sports shoes products to an outsourcing processing and procurement model.
“After the optimization and adjustment of the business model, the company’s sports shoes and clothing-related products will adopt an outsourcing processing and procurement model. Most of the company’s production-related personnel and businesses will no longer be retained. Assets also need to be repurposed,” Guirenniao said.
Guirenniao, which once held the top position in sports brands, has experienced dealer disputes, breach of contract, the height limit of the actual controller, and now it has closed branches and its own production lines. The outlook remains unclear.
In contrast, the footwear and apparel industry recovered strongly in the first half of this year. Xtep International and Anta Sports, both Fujian footwear and apparel companies, have experienced substantial growth in performance, forming a relationship with Guirenniao. Strong contrast.
Canceled 14 branches and converted production to outsourcing
Changshu , Lanzhou, Chongqing, Taiyuan, Quanzhou Taiwanese Investment Zone, Shijiazhuang, Harbin, Shenyang, Changchun, Hangzhou, Guangzhou, Wuhan, Jinan and Zhuzhou, these 14 branches of Guireniao are all included in the cancellation list.
“Considering that the sales of the company’s products have been fully completed by dealers, the existing branches that were originally engaged in direct sales business have basically no actual business operations. In order to further optimize the company’s internal management In order to improve the company’s management efficiency and reduce operating and management costs, the company has decided to cancel 14 branches except the Beijing and Xiamen branches, and the company will take over all the assets, debts and personnel of the branches to be canceled.” Guirenniao stated in the announcement.
Guirenniao said in the announcement: “After the cancellation of the 14 branches this time, they will no longer be included in the company’s consolidated financial statements. The above-mentioned branches to be canceled are basically no longer actual Operating business will not have a substantial impact on the company’s consolidated financial statements, nor will it have a significant impact on the company’s overall business development and profitability.”
While canceling the branch, Guirenniao The board of directors also passed a motion today that “agreed to optimize and adjust the production model of the company’s sports shoe products to an outsourcing processing and procurement model.”
Guirenniao said that the company’s current sports shoes products are mainly self-produced, with some outsourcing processing; sportswear and accessories products have long adopted the outsourcing processing and procurement model, and have accumulated Has rich experience in outsourcing. The company plans to further optimize and adjust its business model based on the existing outsourcing processing and purchasing model of sportswear and accessories, and adjust the current production model of mainly independent production of sports shoes products to an outsourcing processing and purchasing 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 sustainable operating capabilities and profitability.” Guirenniao said.
They are both Fujian footwear and clothing companies, but they are in a world of ice and fire
In fact, thanks to the effective control of the epidemic, the clothing, shoes and hats knitted textile industry has experienced strong growth this year. Wind data shows that from January to May this year, the cumulative retail sales of clothing, shoes, hats, needles, and textiles above designated size reached 556.77 billion yuan, a cumulative year-on-year increase of 39.1%.
Picture source: wind data screenshot
And just recently, Anta Sports disclosed that its Anta brand retail sales in the first half of this year were year-on-year. The retail sales of FILA brand increased by 35%-40% year-on-year, and the retail sales of other brands increased by 90%-95% year-on-year. Xtep International disclosed that its unaudited comprehensive profit attributable to ordinary equity holders in the first half of 2021 increased significantly by no less than 65% year-on-year.
However, judging from the first quarter report, although Guirenniao’s operating income has increased, it still has not 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%; net profit attributable to shareholders of listed companies was approximately -59 million yuan, and the loss narrowed compared with the same period last year.
It is worth noting that many industry insiders and media attribute the decline of Guirenniao to its poor M&A decisions. 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 cause of Guirenniao’s decline.
In October 2020, the Xiamen Intermediate People’s Court issued a “Consumption Restriction Order”. Lin Tianfu, the founder of Guirenniao, is not allowed to engage in high consumption and consumption behaviors that are not necessary for life and work.
Lin Tianfu’s net worth rose sharply due to the rise in Guirenniao’s stock price, and he became the richest man in Quanzhou with a net worth of nearly 20 billion yuan. However, the reason for his height limit was that Guirenniao could not afford to repay “Guirenniao Co., Ltd. The company’s first phase of non-public directional debt financing instruments in 2016 has a principal of 80 million yuan, interest of 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 implement the capital reserve fund transfer to increase shares but will not transfer the original shares toDong distributes the debt in a way that repays the debt. This move will cause Guireniao’s parent company, Guireniao Group (Hong Kong) Co., Ltd., which is 100% owned by Lin Tianfu, to reduce the shareholding ratio of *ST Guiren from 66.2% to 26.48%.
Not long ago, the company announced that it planned to use 50 million yuan of its own funds to establish Shanghai Michenglai Trading. In addition to engaging in the sales of sports shoes and clothing, it also added food trade and Food business. This business coincides with the business of Taifu Jingu. Many people in the industry have said that Taifu Jingu took the opportunity of reorganization to enter the company, and the business will not only be difficult to help the company’s main business of sports shoes and clothing, but there may be variables in the future.
From the perspective of ownership structure, Taifu Jingu holds 20.36% of the company’s shares, and the other four natural person restructuring investors hold a total shareholding ratio of 14%. Affected by the reorganization, the company’s equity held by Guireniao Group (Hong Kong), which is 100% controlled by Lin Tianfu, was diluted from 66.20% to 26.48%. The total shareholding ratio of the restructuring investors is close to 35%, far exceeding that of the controlling shareholders. </p
