Tebu Annual Report: The Total Revenue Reached 8.172 Billion Yuan, A Decrease Over The Same Period Of Last Year

At noon on March 18, TEB International (01368. HK) released its annual performance report for 2020. This has made Tebu a local sports brand that publishes financial reports on the Hong Kong stock market, and has drawn people's attention back to the year 2020 when the epidemic is rampant.

According to the financial report, in 2020, the total revenue of Tebu group reached 8.172 billion yuan, a slight decrease of 0.1% year-on-year. Among them, the revenue of main brands was 7.1 billion yuan, a year-on-year decrease of 7.9%, accounting for 87% of the total revenue; the net income was 513 million yuan, a year-on-year decrease of 29.5%.

It is worth mentioning that while H2 revenue fell by 6.9% year-on-year, the non operating income after deducting one-off increased by 23.9%, while this index fell by 46.5% in the first half of the year.

The group's shares closed at HK $3.72 in the afternoon, down 1.33% after the midday financial report was issued on the 18th. However, the stock price closed up 7.53% on the 19th, which also reflected the attitude of the secondary market to its performance.

From the data, we can see that Tebu has gradually stabilized in the second half of the year. For example, in the third quarter, the front-end sales recorded a medium unit growth, while the fourth quarter saw a high unit growth, and the retail inventory turnover time was gradually shortened.

The number of stores continues to shrink. At present, the total number of Tebu's main brands in the country is 6021, which is 358 less than that at the end of last year. However, at the same time, "closing small stores and opening big stores" has not changed much. Tebu has been promoting the opening, upgrading and transformation of the nine generation stores.

Yang Lubin said: "in the next five years, the main brands of Tebu can maintain a low to medium double-digit growth, and the growth of new brands will be faster."

But at this stage, "new brand" leisure sports and professional sports category is obviously more difficult. The year 2020 was originally the first full financial year for the group's multi brand start-up, but it collided with the epidemic situation head-on, resulting in a delay of more than half a year before the launch of the strategy in the second half of the year.

According to the financial report, in terms of professional sports category, sokoni and Melo have opened 32 and 6 stores this year. In 2020, on-line sales of sokoni are three times that of the same period last year, and Melo has a year-on-year growth of 38%; in terms of leisure sports category, gasway and paladin have 43 and 54 stores respectively in the Asia Pacific region, with significant growth in online retail.

However, due to the direct marketing mode adopted by many brands, plus a series of expenses such as marketing and cooperation, it is difficult to achieve immediate results in a short period of half a year. In the first and second half of the year, the main brand of Tebu still contributed 87% to the revenue, and the contribution ratio and pattern of the three categories hardly changed.

Ding Shuibo, President of Tebu group, also admitted that sokoni's store efficiency is not high at this stage. Due to the high-end product route, all 32 outlets of sokoni are opened in the first and second tier cities. Unlike the sinking market, high-end international brands need time to settle before they can be recognized in the first and second tier markets.

For multi brand development, Tebu group will promote orderly in the future.

According to Ding Shuibo, professional sports category, "the focus of the group will be placed on sokoni first, while Melo is relatively the second step.". This strategy is based on the special step's judgment of the market. At present, the development of the running market is better than that of the outdoor market, and there are more opportunities.

For fashion sports category, the main market of paladin and gasway is still overseas, and there are too many uncontrollable factors. Therefore, special step still focuses on the development of China and the Asia Pacific region. In the next two or three years, the group will promote the growth of paladin, and gaswell needs to further evaluate the market. Dante Shuibo also stressed: "in the short term, we will be very cautious in the prevention and control of costs, and there will not be too much loss."

In addition to the multi brand strategy, the topic of gross profit margin was most frequently asked at the financial press conference. This time, the gross profit rate of Tebu group fell to the lowest point in five years. The main reason for the reduction of gross profit rate is the crazy discount brought by inventory sales and the impact of the epidemic on upstream factories. In addition, the recovery of Q1 inventory and the change of entry method will also affect the gross profit margin. Considering the special situation of the epidemic year, Yang Lubin stressed that 2020 will be the lowest point of gross profit rate.

At least in terms of inventory, TEB has sent out positive signals. According to the financial report, the inventory at the end of 2020 was 970 million, a year-on-year decrease of 6.8%, and the order quantity in Q1 of 2021 also decreased. Inventory turnover days at the end of the year have dropped to 74 days, not only 20 days less than the middle of the year, but also 3 days less than that of 2019.

However, the turnover days of trade receivables and trade receivables increased by 24 days and 19 days respectively, partly due to the fact that the agency was provided with one more month account period during the epidemic period.

The clothing industry as a whole should pay attention to the rise of raw materials this year. After the Spring Festival, the spot prices of cotton, cotton yarn and staple fiber have been rising, and the price of spandex, a textile raw material, rose by more than 30% in February.

At the e-commerce level, during the epidemic period, Tebu group increased the sales of e-commerce channels, accounting for about 25% of the revenue of e-commerce. Interestingly, the promotion of e-commerce channel sales has also affected the pattern of Tebu's shoes and clothes, because more than 80% of online sales are for shoes and shoes. The revenue from shoes increased by 8.5% instead of falling, and the proportion of revenue increased from 56.8% in 2019 to 61.7%. However, it is expected that the proportion of clothing will rise in 2021, and the proportion of the two should not be much different in the long run.

Finally, in terms of cash flow, as of December 31, 2020, the company's cash and equivalent items were 2.25 billion, higher than 2.13 billion in the same period of 2019, and the debt ratio was 17.2%, which was the low point in recent five years, and it was relatively healthy in general.