Saturday has become the first mainland women's shoemaker to list on the domestic A-share market after Belle, Yeonn, and Hongguo went public in Hong Kong or Singapore. With so many shoemakers in the market, what sets Saturday apart? In response to this question, SWS analyst Wang Liping noted that Saturday benefited from a favorable timing, as five years ago, consumer brand awareness for shoes wasn't as strong as it is today, which gave them an edge. Similar sentiments were shared by Lan Xuanpu, Secretary General of the Asian Footwear Association, who believes that the next five years will see rapid growth in China's overall footwear market.
Despite Saturday's ranking third in sales of branded women's leather shoes across 270 major department stores nationwide, according to statistics from CIIIC (National Information and Communication International Innovation Park), it trails behind Belle and Daphne, which hold more senior positions in the market. Haitong Securities' Textile and Apparel Sector analysts agree, pointing out that as of June 30, 2009, Belle had 5,730 retail locations for its own brands in mainland China, while Daphne had 3,798 retail stores and counters. Saturday, on the other hand, only had 1,311 stores.
Opening new stores and entering department stores can lead to longer aging periods. According to Saturday's prospectus, the company’s “accounts receivable turnover ratio†was 5.07 in 2008, down by 0.13 from 2007, placing it at a relatively low level within the industry. Inventory turnover also dropped from 2.77 in 2007 to 1.73. Guotai Junan analyst Li Xian attributes this primarily to the company establishing numerous new stores in recent years. Many of these stores have been operating for less than 12 months, yet they are prepared at normal levels, causing inventory turnover to decrease. Additionally, Saturday’s "accounts receivable turnover ratio" differs from other companies due to its reliance on the "shop-in-shop" sales model in department stores. Revenue is collected by the mall on behalf of all vendors, and settlement and payments take time, creating a certain amount of accounts receivable, thus lowering the turnover ratio compared to competitors like Belle International, which has a higher proportion of independent stores.
When asked about their strategy during Saturday's listing, Vice Chairman Yu Hongtao emphasized the importance of channel expansion. The company plans to use fundraising to establish 900 brand chain stores across major shopping malls nationwide. According to the company's prospectus, 76% of the total investment is allocated to the "women's shoes sales chain expansion project." Lan Xuanpu, Secretary General of the Asian Footwear Association, supports this approach, stating that focusing on channels rather than branding is more practical, given the lengthy process and significant energy required to build a brand. Besides channel investments, Yu Hongtao mentioned using funds for other projects such as expanding women's shoe production lines, improving logistics and distribution systems, and upgrading the R&D center.
Haitong Securities' textile and apparel industry analyst Zhibi observed that the company has prioritized developing its direct sales network. Between 2005 and the first half of 2009, the number of chain stores grew from 354 to 1,311, an increase of 2.7 times. Self-operated stores surged from 146 to 945, while distribution outlets rose from 208 to 366. This clearly highlights the significance of direct sales stores for Saturday’s growth.
In conclusion, Saturday’s success lies in its strategic focus on expanding its direct sales network and leveraging the current market environment to its advantage. However, to truly compete with established players like Belle and Daphne, the company must continue to innovate and improve its operational efficiency while balancing brand development with channel expansion.
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