Unable to make a profit by selling clothes, Metersbonwe’s continues to rely on borrowing and the sale of assets to services its debt.
Photo by Fan Jianlei
By ZHU Yongling
Apparel company Metersbonwe Group on Monday said has sold a property in Chengdu to Youngor Group, a public textiles and clothing enterprise based in Ningbo.
Bargain basement
At 680 million yuan (US$95 million), it was not the first time Metersbonwe had liquidated properties through Youngor. Since October last year, the struggling casual wear maker has sold three properties to Youngor for a total of 620 million yuan.
The current property is a five-story building covering a total of 10,700 square meters in the core business area of Chengdu. The lower three stories are a Metersbowne store, which is still operating as normal.
Metersbonwe has been trying everything to save itself. In 2021, it sold a subsidiary for 448 million yuan, and a 10 percent stake in Shanghai HuaRui Bank for 424 million yuan.
Its parent company Huafu Investment has been injecting cash into Metersbonwe since 2018. At first, it was 120 million yuan, but last year Metersbonwe received 1.1 billion yuan from Huafu.
Metersbonwe has predominantly directed the funds towards debt repayment. According to its Q3 financial report, as of September 30, the company still had short-term borrowings of 724 million yuan, accounts payable of 561 million yuan, and other accounts payable of 601 million yuan, resulting in an exceptionally high asset-liability ratio of 90.1 percent.
What’s more exacerbating than the high level of debt is Metersbonwe’s incapacity to generate profit from its main business, selling clothes. It continues to rely on borrowing and the unsustainable practice of selling assets to meet its debt obligations.
In the first three quarters of this year, Metersbonwe’s revenue dropped 13.5 percent year on year to 837 million yuan. From 2019 to 2022, the company lost a total of 2.9 billion yuan.
This year, Metersbonwe turned halfheartedly to e-commerce for redemption. It started live streaming on Douyin and saw a 13.9 percent year-on-year revenue growth in Q3, which turned out to be 279 million yuan, far from enough to solve the problems facing the company.
Metersbonwe is aware that its fundamental problem lies in not distribution channels but in out-of-date designs and branding. The company wants to make a change, but it’s easier said than done.
The bestselling products in Metersbonwe’s Douyin shop are still the old designs under 500 yuan, its latest down jacket, which the company rolled out in a major promotion, has only sold 206 pieces.
