Nuoqi men's clothing was repeatedly checked into unqualified franchise stores

The issuing committee of the China Securities Regulatory Commission will review the initial application of Fujian Nuoqi Co., Ltd. today. Fujian Menswear is a private-label clothing retailer (SPA for short) which is mainly engaged in the business of retail and wholesale of men's fashion apparel and apparel, and it is one of the companies that have implemented the SPA model earlier in the country. However, the risk of its production product outsourcing model, multiple spot checks and performance-dependent franchise stores has been questioned by the market.

Product Production Dependency Outsourcing

After reading the prospectus, Fujian Nuoqi outsourced the production links with lower added value to the suppliers. Although the company has established a set of strict screening mechanisms and procedures for screening suppliers, the output, quality, and production cycle of the products are limited by factors such as the supplier's production capacity, processing technology, and management level. With the growth of product sales in the future, Fujian Nuoqi needs to find more suppliers that meet the company's requirements. If the company's management of suppliers fails to meet the company's development needs, it may result in delay in product supply or decline in product quality. , which will have an adverse effect on the company's operating performance.

Many times have been pumped out of product quality is not qualified

Fujian Nuoqi has a "bad record" in the quality inspection of products. In the provincial supervision and inspection of T-shirts products in the Fujian region in the third quarter of 2010, Fujian Noqi Co., Ltd. Fuzhou Yangqiao Branch model number was "175/92A, 180/96A two T-shirt products were found not to be of quality Qualitatively, in the provincial product quality supervision and inspection in the third quarter of 2009 in Fujian Province, Fujian Nochi Co., Ltd. Jinjiang Qingyang Yingbin Branch’s casual pants of type “170/76A” were also tested for product quality. Failed.

The franchise model has been questioned

Fujian Nuoqi's sales model mainly adopts a combination of direct sales stores and franchise stores. As of June 30, 2011, the company had a total of 286 stores, of which 179 were franchise stores, accounting for 62.59% of all stores. The franchise's contribution to Fujian Nuoqi’s performance is also increasing year by year. During the reporting period, the proportion of franchise sales as a percentage of main business income was 30.82% in 2008, 47.92% in 2009, 57.93% in 2010, and 58.64% in 2011. It can be seen that Fujian Nuoqi depends on the franchise model. But the franchise model is a "double-edged sword" for the company. As the number of franchise stores continues to increase, if the level of management training fails to match the growth rate of franchise stores, there may be situations where the management level of some franchise stores declines, which in turn adversely affects the company’s brand image and operating performance.