Smith Barney Clothing Revenue And Profits Fell By 22.8% And 50.4%, Respectively.

Smith Barney Clothes & Accessories In the first half of 2013, operating income reached 3 billion 700 million yuan, down 18.7% compared to the same period last year. Net profit was 220 million yuan, corresponding to earnings per share of 0.22 yuan, a sharp decrease of 48.5% over the same period last year, which is in line with our expectations. The sharp drop in profits is mainly affected by lower income and higher cost. In the 2 quarter, revenues and profits decreased by 22.8% and 50.4% respectively.

Income growth is still weak and gross margin has increased. Due to the sluggish end demand, the revenue of direct and franchising in the first half of the year decreased by 13.9% and 23.7% respectively. Direct revenue declined and closed down inefficient stores. The decline in franchise revenue was mainly affected by the company's reduction in the discounts of franchisees and the reduction of some futures orders. Thanks to product innovation and channel reform and direct income increase, gross margin increased by 0.9 percentage points to 46.9% year-on-year.

During the period, the cost has dropped slightly, but still brings much pressure of achievement. During the period, the company refined the organizational structure and personnel, and integrated various resources. The results showed that although sales and management fees had dropped by 6.8% in the new retail outlets and renovated shops, the cost rate increased by 4.7 percentage points over the same period, and the business profit rate was 3.9 percentage points lower.

Inventory turnover days increased 4 days to 162 days, basically stable; cash flow of franchisees improved payment of goods in succession, accounts receivable decreased by 32.1%, turnover days decreased substantially from 17 to 19 days, and monetary funds increased by 33.6% to 840 million yuan from the same period.

Developing trend

It is expected that the company's revenue and profit will be basically the same in the second half of the year. This year, based on the adjustment and closing of inefficient stores, we estimate that there may be negative growth in the number of stores throughout the year. In addition, the 2013 autumn and winter orders decreased year by year, which was not conducive to the performance in the second half of the year. But the autumn new product series "science and technology velvet" has a good start effect. The franchisee began to make up the order. It is expected that the company will increase its promotion and support to franchisees, and strengthen this series of products, which will lead to an increase in revenue and sales expenses.

Profit forecast adjustment

Respectively, down 2013-14 years earnings per share 22.3% and 21.7% to 0.59 yuan and 0.68 yuan, 2013 net profit decreased 30.5% compared to the same period, the performance in 2014 increased 16.5% over the same period.

Valuation and suggestion

Maintain prudent recommendation ratings. At present, the P / E ratios in the 2013-14 years are 16 times and 13.7 times respectively. The demand for youth casual wear is sluggish and fierce competition. The company's self adjustment is conducive to enhancing long-term competitiveness, but the improvement is lower than expected. At present, channel inventory is basically digested, and along with the adjustment and promotion and the second half year's low base effect (especially in the 4 quarter), the performance is expected to rebound, but the amplitude still needs to be tracked.