Interface News Reporter | Zhu Yongling
The American knitted women's clothing brand St., under the Fulang Group John has significantly reduced its mainland stores in the past two months.
The store information released on the brand's official account at the end of July showed that St John has a total of 8 stores in mainland China, including 4 in Beijing, 2 in Shanghai, and 1 each in Guangzhou and Tangshan. According to Dianping, currently St John only has 2 stores left in Beijing Yansha Friendship Mall and Financial Street Shopping Center, as well as 2 stores in Shanghai Jiuguang Department Store and BFC Bund Financial Center.
But in reality, there are even fewer stores.
The operator of Beijing Financial Street Shopping Center told Interface News that St. John has been withdrawn from the venue, and the mall has also learned from the brand that St. John is currently John only has one store left in Beijing, Yansha Outlets. The staff of Shanghai Jiuguang Department Store also told Interface News that St. John has withdrawn the cabinet. The staff of Shanghai BFC Bund Financial Center replied that St. John is still operating in the mall. It is worth noting that the BFC Bund Financial Center and St John, like Fosun Group, is also a business under Fosun International.
According to the Beijing Business Daily, St. John's stores in Beijing will close at the end of the month, and St. John's national brand stores will also gradually close or withdraw from the Chinese market. However, Interface News noticed that on October 14th, Lifeng Peace Plaza located in Weifang, Shandong posted on Xiaohongshu that St. John will be the first store in Shandong to enter the mall.
Interface News: Call St No one answered the phone calls of John's multiple stores and its operator, Shengqiang (Shanghai) Trading Co., Ltd.
If compared to St Judging from John's performance, this large-scale store closure is not surprising. According to the financial report of Fulang Group, in the first half of 2024, the single brand revenue of St. John decreased by 14% year-on-year to 39.98 million euros (about 310 million yuan), with the largest North American market falling by 10%, and the Asia Pacific market, which accounts for less than 10%, falling by 46%. Fulang Group explained this as an overall market weakness. Actually, St John's growth has been sluggish in 2023, with the brand's revenue increasing by 5% to 90.4 million euros that year, while its growth rates reached 17% and 10% in 2022 and 2021, respectively.
Not only St John's performance has declined, and the overall performance of Fulang Group is also poor.
Fulang Group, formerly known as Fosun Fashion Group, was established by Fosun International in 2017. The company has formed a brand portfolio that currently includes Lanvin, Sergio Rossi, Wolford, St. John, and Caruso through consecutive acquisitions. In the first half of 2024, the company's revenue decreased by 20% year-on-year to 171 million euros (approximately 1.323 billion yuan), and the gross profit margin decreased by 1 percentage point to 57.5%. Among them, except for the smallest Caruso, which fell by 1%, all other brands experienced double-digit declines, with the largest brands Lanvin, Wolford, and Sergio Rossi experiencing revenue declines of 15.4%, 27.6%, and 38.2%, respectively. Fulang Group attributes it to macroeconomic headwinds.
Looking further ahead, although Fosun Group achieved a compound annual growth rate of 24% between 2020 and 2023, largely due to its acquisition of Sergio Rossi in 2021, its total revenue for 2023 was only 426 million euros (approximately 3.3 billion yuan), with a revenue growth rate of only 1%. Considering that Fulang Group has 5 luxury brands and mid to high end brands, which are sold in multiple countries and regions around the world, this size cannot be considered large. In addition, Fulang Group has not been profitable in these four years.
This is far from the previous goals of Fulang Group. The company plans to achieve a compound annual growth rate of 31% when it goes public in 2022, and reach an annual revenue of 1 billion euros by 2025. The untapped Asian market is one of the sources of confidence for its growth. At the 2023 financial report conference, the management of Fulang Group also expressed optimism that there is a turning point in 2024, and the company will accelerate its expansion and achieve profitability.
From the personnel changes in the top management in the past two years, we can feel the urgent need for Fulang Group to seek growth. In 2023, the company's Chief Financial Officer Shang Koo and founding Chairman and CEO Cheng Yun resigned successively, with Huang Zhen taking over as Chairman of the Board, Chen Jianhao as CEO, and CEO Chen Jiyu temporarily serving as CFO. In June and July 2024, Fosun Group intensively appointed new CEOs, artistic directors, and creative directors for its brands Wolford, Lanvin, and Sergio Rossi, respectively. Even earlier in May, Sergio Rossi welcomed a new head of Asia Pacific markets.
According to the statements made by the senior management of Fulang Group at the first half of 2024 financial report conference, the company has begun to pay more attention to cost control and improving investment return. The appointment of the new brand leader mentioned earlier is one of the measures taken to achieve this goal, with the aim of improving the brand's output efficiency. In addition, Fulang Group will also eliminate underperforming retail networks; And limited marketing resources will be more inclined towards Lanvin and Sergio Rossi, who have hired new art/creative directors.
Fulang Group is currently one of the few fashion luxury goods companies in China that operates overseas M&A brands in the global market. Shandong Ruyi, who once had the same ambition, has given up on this ambition, while Biyinlefen, which acquired two overseas luxury brands in 2023, is still in the stage of planning a new brand and has not yet begun formal operations. From the current pressure situation of Fulang Group, even financially strong conglomerates have put effort into post investment management. For example, Fulang Group has introduced multiple companies from upstream and downstream industries to form a strategic alliance, and it is still not an easy task to revitalize and manage overseas brands that have faced more or less difficulties across borders.
In recent years, Fosun International's tendency to shrink has also become the hanging sword of Fosun Group. Under the pressure of tight debt and liquidity funds, Fosun International has gradually disposed of or reduced its holdings of multiple non strategic, non core, and heavy assets in the past few years, including insurance, banking, steel, wine industry, and even cultural and tourism assets known as its "main business". In early 2024, Guo Guangchang, Chairman of Fosun International, publicly stated that in the future, Fosun will focus on its two main businesses of biomedicine and cultural tourism, and embark on a path of light asset operation.
According to the financial report of Fosun International, in the first half of 2024, the revenue of the "Happy" segment of Fosun International, including Fosun Group, increased slightly by 0.4% to 43.172 billion yuan, and the net profit attributable to the parent company decreased by 78.5% to 164 million yuan, mainly due to the sharp decline in the profits of Yu Garden Garden. Among them, the contribution of Fulang Group is less than 10%, and it is also the only business in this sector that has not yet made a profit.