Lilang confident orders uptrend will continue

June 30, 2015 10:05
The menswear market in China has bottomed out, says China Lilang chairman Wang Dongxing. Photo: HKEJ

Mainland menswear firm China Lilang Ltd. (1234.HK) expects to sustain an uptrend in orders as it prepares for the 2016 spring and summer trade fairs.

Chairman Wang Dongxing said he's very confident that Lilang will continue to record increased orders in terms of value, following the good performance notched during this year’s trade fairs.

Speaking to EJ Insight in Shanghai last week, Wang said he believes the menswear market in China has bottomed out.

Lilang targets menswear markets in lower-tier Chinese cities and towns. Core brand LILANZ is designed for middle-aged men while sub-brand L2 serves the younger generation with trendy casual wear. L2 accounted for about 10 percent of Lilang's total sales in 2014.

The company announced earlier this month that orders growth, in terms of value, for LILANZ during an "autumn trade fair" held in March was in the 15-17 percent range compared to the previous year.

L2 reported 10 to 13 percent order value growth. In the 2015 spring and summer trade fairs, order value of LILANZ increased by high single-digit while that of L2 was up by low double-digit in percentage terms.

Good cost performance is key to survival in the current highly-competitive environment, Wang said, adding that his firm will continue to adopt a strategy of "improving product quality without raising the price".

One special cost-cutting measure is to cooperate with garment factories that mainly make military uniforms. The garment factories, with advanced equipment and comparative cost advantages, could become ideal production bases after optimizing the production processes, Wang said.

Talking about distribution channels, the chairman said Lilang will leverage more on roadside stores and those inside shopping malls, which are usually larger, as sales through department store channels have been declining in recent years.

Lilang is not interested much in developing the e-commerce channel, with Wang pointing out that shopping experience in physical stores is irreplaceable.

He also said the firm wants to stay away from the price wars that happen frequently on online platforms, arguing that such tactics would hurt Lilang's brand image.

Lilang has reached a cooperation agreement with commercial property developer Dalian Wanda Group. Under the deal, the menswear retailer expects to have 50 stores in Wanda shopping malls by the end of the year, up from over 20 as of now.

Gao Yulan, Lilang's chief financial officer, said same-store sales of LILANZ recorded mid-single digit growth in the first five months of 2015 compared with the corresponding period last year, while that for L2 climbed by a high single digit.

Lilang reported 5.8 percent revenue growth for 2014 at 2.43 billion yuan (US$391.39 million), while net profit climbed 7.5 percent to 554.9 million yuan.

[Chinese versionl中文版] 

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EJ Insight reporter