The second generation 'submits the paper'! Children's clothing giant earns 1.1 billion yuan.

The apparel industry exhibits significant cyclicality.

In 2023, the footwear and apparel sector experienced pronounced divergence. Anta Sports, as the industry leader, advanced its internationalization through aggressive M&A strategies. In contrast, companies like Li Ning, which benefited from the "Guochao" (national trend) wave, saw weaker performance growth.

In early April, Semir, a representative of the second-tier in the footwear and apparel industry, released its 2023 financial report. The report showed that the company achieved revenue of 13.661 billion yuan, a year-on-year increase of 2.47%; net profit of 1.122 billion yuan, up 76.06% YoY; and adjusted net profit of 1.021 billion yuan, surging 105.29% YoY.

The sharp rise in net profit briefly boosted the company's stock price, but this advantage was short-lived.

The underlying cause was weak performance growth. Historical financial reports indicate that Semir's performance peaked in 2019, with annual revenue of 19.34 billion yuan and net profit attributable to shareholders of 1.549 billion yuan—its best performance despite a slight decline from 2018's 1.694 billion yuan.

After 2020, Semir's performance fluctuated significantly, with double-digit declines in both revenue and net profit. Compared to the strong performance of Li Ning and Anta at the time, Semir's "difficulties" became evident.

In reality, the footwear and apparel industry has long been plagued by two key factors:

First, store count and scale;

Second, inventory.

Beyond these factors, many legacy apparel companies, after decades of development, are entering a phase of generational transition, which significantly impacts corporate continuity. Some companies have already completed this succession.

In February 2023, Semir founder Qiu Guanghe passed the baton to his son Qiu Jianqiang. Semir then pivoted toward youthfulness and digitalization to drive growth.

Under Qiu Jianqiang's leadership, Semir underwent a brand upgrade and established a new children's sportswear division to expand into the kids' athletic market.

Semir's revenue structure now shows children's apparel surpassing casual wear, marking a successful differentiation strategy. In 2023, children's apparel generated 9.373 billion yuan in revenue (+4.92% YoY), accounting for 68.61% of total revenue, with a gross margin of 46.78%. Casualwear revenue fell 2.58% to 4.171 billion yuan, with a 38.02% gross margin.

In other words, Semir's focus has shifted from casualwear to children's apparel—a key factor in weathering industry cycles. Its 2023 annual report highlighted three strategic priorities: children's sportswear, livestreaming e-commerce, and international expansion.

Notably, store optimization also contributed to Semir's 2023 performance. Casualwear stores decreased from 2,751 to 2,703, while children's apparel stores dropped from 5,389 to 5,234.

Additionally, content-driven e-commerce and livestreaming played a pivotal role, prompting Semir to establish a dedicated livestreaming division in 2023.

Kanjian Finance observes that shifting consumer habits have made online channels critical for apparel brands. Many companies that failed to adapt during the industry downturn struggled with digital transformation. The new generation of leaders typically prioritizes digitalization and brand rejuvenation.

Overall, Qiu Jianqiang's first-year performance demonstrates that while Semir's revenue remains sluggish, its strategic direction is sound. By differentiating through children's apparel—unlike mainstream competitors—Semir has maintained relevance. As the industry enters a new phase of divergence and soft demand, Semir must fortify its children's apparel moat while pursuing global growth opportunities.