A Surprising Turnaround: Jiangnan Buyi, the &#34;Number One Designer Brand in China,&#34; achieved a remarkable performance despite the severe impact of the pandemic and competition in the industry, when more than 40% of listed apparel companies reported losses last year.
In the fiscal year 2023 (July 1, 2022, to June 30, 2023), Jiangnan Buyi achieved a total revenue of 4.465 billion yuan, a year-on-year growth of 9.3%; and a net profit of 621 million yuan, an increase of 11.2% compared to the previous year, successfully turning losses into profits.
This is a positive signal, indicating that Jiangnan Buyi is gradually emerging from the shadow of the pandemic and the children's clothing incident, and returning to a path of business growth.
At the earnings report interpretation meeting, Jiangnan Buyi revealed the secret behind its counter-trend growth.
As a brand renowned for its design capabilities, Jiangnan Buyi has been consolidating its foundation in the past fiscal year. Fan Yongkui, the CFO of Jiangnan Buyi, revealed that the company adheres to a design-driven approach, with a design and research and development expenditure of 168 million yuan in the fiscal year 2023, accounting for 3.8% of its annual revenue.
This practice embodies the &#34;design-driven, multi-brand matrix&#34; concept that Li Lin, one of the founders of Jiangnan Buyi, has always insisted on.
In addition, Jiangnan Buyi has made efforts in both online and offline channels, creating a comprehensive retail network. After the adjustment of epidemic prevention policies in the second half of last year, the company finally witnessed the recovery of offline customer traffic. As of June 30, 2023, the total number of independent physical retail stores of Jiangnan Buyi worldwide has increased to 1,990.
The empowerment of the &#34;Internet+&#34; strategy is the key to the counter-trend expansion of Jiangnan Buyi's performance.
In the past fiscal year, when the customer traffic in physical stores was restricted by epidemic prevention measures, Jiangnan Buyi took a different approach and innovatively launched several digital retail channels, including &#34;More Than a Box,&#34; &#34;Micro Mall,&#34; and &#34;Diversified Social E-commerce.&#34;
With this move alone, Jiangnan Buyi achieved a total transaction volume (GMV) of 1.107 billion yuan, a year-on-year growth of over 70.4%. Jiangnan Buyi stated that the performance of digital retail compensated for the significant fluctuations in offline customer traffic.
Mi Hanjie, an analyst at GF Securities, stated that AI is expected to empower the textile and apparel production and design retail sectors. Leading companies are actively promoting digitalization and intelligent transformation, which can generate more popular designs, reduce marketing costs, improve marketing quality, and help the company operate its online platforms and offline stores.
Fan (membership) operation is the main focus of Jiangnan Buyi's performance.
As one of the apparel groups in China that attaches the greatest importance to fan operation, Jiangnan Buyi added nearly one million new member accounts in the past fiscal year.
Today, nearly 7 million members have become increasingly important &#34;patrons&#34; of Jiangnan Buyi. Through services such as free trial shipping and outfit recommendations based on big data, the company has increased customer repurchase rates. The proportion of retail sales contributed by members has further increased to about 80%.
Qiang Yilan, the Director of Investor Relations at Jiangnan Buyi, stated that &#34;these loyal members have brought strong 'immunity' to the company, making it less susceptible to macroeconomic conditions.&#34;
Specifically, this is the result of Jiangnan Buyi's integration of fan economy with &#34;Internet + strategy&#34;.
Huang Mo, Director of Jiangnan Buyi's Smart Retail Business Center, explained that the main pain point of traditional offline store operations is how to sell to consumers who are not in the store most of the time. Jiangnan Buyi empowers this by leveraging consumer information based on store salesperson's understanding and using &#34;smart&#34; retail methods.
&#34;For example, extracting consumer information in the background and then having salespersons invite consumers back to the store for purchases. By using big data to achieve precise matching of people and products, the success rate and conversion rate can be significantly improved,&#34; said Huang Mo.
After reaching a new starting point in performance, Jiangnan Buyi has set a steady and progressive goal.
Jiangnan Buyi stated that it will continue to expand its influence on the basis of ensuring abundant cash flow, including enhancing design and research and development capabilities; using internet thinking and technology to layout diversified social channels, retail and other emerging consumer scenarios, and improving fan experience.
A member of Jiangnan Buyi expressed that Jiangnan Buyi's clothing has a sense of design and is suitable for commuting. Even the texture and color matching of socks are beautiful. I have been buying them for several years, and the company is also attentive to its members. Shopping is convenient both online and offline, and the annual member festival is a good time for shopping.
Jiangnan Buyi is also a case study of observing various aspects of the Chinese economy and diversified consumption. As long as opportunities are seized, companies with different business models can thrive.
From the industry perspective, leveraging AI-based Internet+ strategies is the trend in China's clothing industry.
The &#34;14th Five-Year Plan for the Textile Industry&#34; points out that during the 14th Five-Year Plan period, it is necessary to guide the transformation and upgrading of China's textile industry, with a particular emphasis on promoting the deep integration of new generation information technology and the textile industry.
Currently, listed companies such as Hongdou Group, Hailan Holdings, Wanshili, Shengtai Group, Nanshan Zhishang, Nobang Technology, and Huafang Holdings are actively promoting the Internet+ strategy.
According to a research report by GF Securities, AI-empowered textile and clothing will bring about a profound transformation of the entire industry chain, helping leading clothing companies reduce costs and increase efficiency, and offering considerable long-term investment value.
For Jiangnan Buyi, next year will be the company's 30th anniversary. How to turn challenges into opportunities in the new consumption cycle and industry transformation will be the key to whether Jiangnan Buyi can consolidate its performance moat and open a new era of development. Jiangnan Buyi cannot afford to lose.

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Turnaround: Jiangnan Clothier turns losses into profits Jiangnan Clothier has successfully turned its losses into profits, marking a significant turnaround for the company.