Unprecedented! The A-shares women’s clothing brand “Ri Bo Fashion,” endorsed by famous actress Ni Ni, has seen the resignation of 8 senior members, including its chairman! A week before this sweeping personnel change, the actual controller of Ri Bo Fashion had shifted from the couple Wang Weidong and Qu Jiangting to Liang Feng. Consequently, the major shareholder changed from Ri Bo Holdings, controlled by Wang Weidong, to Liang Feng – who is also the major shareholder and actual controller of “Jin Yuan Sheng.”
On the evening of October 13th, the company issued an announcement of significant asset restructuring, planning a transition from clothing to new energy. What happened behind this seemingly unrelated transformation?
Again, senior executives of A-shares listed companies resign en masse.
Recently, the deputy general manager and board secretary of Ri Bo Fashion, a domestic light luxury women’s fashion brand, submitted written resignation reports. Not long ago, there had been significant adjustments to the company’s senior staff, with 7 high-level executives, including Chairman Wang Weidong and Supervisor Chairman Sun Jin, resigning collectively.
Continuous announcements by the listed company:
Announcing significant asset reorganization.
Transitioning from women’s clothing to new energy.
Behind several board member resignations is Ri Bo Fashion’s strategic shift to the new energy sector.
On the evening of October 13th, Ri Bo Fashion announced its progress regarding significant asset restructuring. They plan to purchase 100% of the shares of Shanghai Jin Yuan Sheng New Energy Materials Co., Ltd. (“Jin Yuan Sheng”) by asset swapping and share issuance, while also issuing shares to specific investors to raise matching funds.
After the restructuring, the company’s primary business will focus on new energy battery cathode precursor materials and integrated R&D, development, processing, and manufacturing of upstream key mineral resources. This means that Ri Bo Fashion will gradually transform into a new energy company.
Public records show Liang Feng, with a bachelor’s degree in industrial electrical automation from South China University of Technology and a master’s degree in economics from Zhejiang University, is not only the chairman of Jin Yuan Sheng but also the founder and actual controller of Putai Lai, a leading lithium battery cathode material company. This suggests that if Jin Yuan Sheng successfully lists through this “shell,” Liang Feng will control two lithium battery material listed companies.
After announcing its transition to new energy in May, the company’s stock price hit a historical high after 11 consecutive daily limits.
With the combined leadership of Chairman Liang Feng and General Manager Wang Shengyu, the company has been systematically advancing significant asset restructuring. Meanwhile, the former senior executives continue to serve in Ri Bo Fashion’s clothing business segment. The resignation of the former chairman and some board members will not affect the company’s daily operations, and its current operating conditions are stable.
Despite its partnership with Ni Ni, can the “queen of women’s clothing” no longer sell?
Open records show that the Ri Bo Fashion brand “Bo broadcast” was founded in 1999, one of China’s truly original urban women’s clothing brands, with over 20 years of operational history.
According to the latest financial report, Ri Bo Fashion has brands like “Bo broadcast” and children’s clothing brand “Bo broadcute”. As of June 30, 2023, “Bo broadcast” had 676 physical stores.
The net profit in the first half of the year plummeted by 70%.
From 2018 to 2022, the company’s revenue was respectively CNY 1.132 billion, CNY 1.114 billion, CNY 823 million, CNY 1.025 billion, and CNY 952 million. Net profits for these periods were CNY 38.3643 million, CNY 8.8131 million, a loss of CNY 47.5221 million, CNY 81.2344 million, and CNY 16.5725 million.
In recent years, both the revenue and net profit of Ri Bo Fashion have been on a downward trend. It suffered losses in 2019 and 2020, turned around in 2021, but then saw a drastic drop of 91.89% in 2022.
Ri Bo Fashion’s semi-annual report for 2023 shows that the company achieved a total business income of CNY 452 million in the first half of the year, a YoY increase of 8.46%. Its net profit was CNY 5.2491 million, up 46.66% YoY. After adjustments, the net profit showed a loss of CNY 1.287 million, a YoY decline of 74.26%.
In recent years, the number of Ri Bo Fashion’s offline stores has been decreasing annually. From 2017 to 2022, the number of its stores was 989, 1067, 870, 649, 701, and 703 respectively. Compared to its peak of 1067 stores, Ri Bo Fashion has closed down 391 shops to date.
Inventory has always been a nightmare for the apparel industry, sometimes even becoming the last straw that breaks the camel’s back.
In April 2022, “China’s No.1 Women’s Clothing Stock,” La Chapelle, officially announced its delisting from A-shares. Inventory pressure was one of the primary reasons that dragged the company down. During its initial development phase, La Chapelle rapidly expanded, resulting in a plethora of new brands, a significant number of stores, and a massive buildup of inventory. With a decline in operational capability, inventory issues surfaced first. In 2018, La Chapelle’s inventory reached CNY 2.534 billion, accounting for 30% of its total assets for the same period and 47.93% of its current assets.
Ri Bo Fashion also encountered this challenge.
Data from the 2022 annual report revealed that the 2022 inventory was CNY 372 million, accounting for 29.5% of the total assets, which was an increase of 41.88% from the previous year. Ri Bo Fashion explained this increase in inventory as a “decline in sales.”
From 2017 to 2022, the inventory turnover days for Ri Bo Fashion were 208, 260, 255, 262, 203, and 271 days respectively. For fashion brands, which can be influenced by trends and seasonal changes, these inventory turnover days are not “safe.”
The company has frequently mentioned in its recent financial reports the increased downward economic pressure, the overall downturn of the clothing retail industry, and the impact of short video live streaming on offline terminal sales, which reveals the predicaments it faces. These are also common issues in the entire clothing industry.
Shifting industries is not unprecedented.
Within the footwear and apparel industry, Ri Bo Fashion is not the first to change its course.
On September 22nd, Noble Bird, which also underwent a “major reshuffle” of its board members, announced plans to optimize its business operations. It decided to focus on the grain business as its primary future operational direction, expanding and strengthening the grain business and gradually exiting the sportswear business.
In April of the same year, “Knitting Socks King” Langsha also announced its entry into the lithium battery manufacturing and sales sector. Langsha Knitting Co., Ltd. underwent a change in its operational scope, adding battery parts production, battery parts sales, battery sales, and battery manufacturing.
Earlier, in 2018, Saturday, a women’s shoe company, announced its acquisition of MCN company Yao Wang Network for CNY 1.771 billion and officially changed its company name to “Yao Wang Technology” in December 2022, abandoning its footwear business.
The male clothing giant Youngor’s diversification began even earlier. After entering the real estate sector in the early 1990s, Youngor continued to venture into investment, international trade, tourism, and other areas.
Do you think the transformation of clothing enterprises will succeed? Can a change in focus lead to a breakthrough? Please share your thoughts in the comments section.