Key Takeaways:#
- Having weathered a childrenswear controversy in 2021, the JNBY Group is set for a milestone 2022 powered by flagship line JNBY and minimalist brand LESS.
- The group has expanded well beyond its core offerings into menswear and homeware in recent years to take on rival groups like the H&M Group and Inditex.
- JNBY is poised for success in 2022 as Chinese consumers gravitate towards brands they already trust and which offer the greatest purchase convenience.
Since its founding in Hangzhou in 1994, the JNBY Group has built one of mainland China’s most prominent fashion portfolios, steadily expanding beyond its flagship JNBY brand with menswear line Croquis (速写), minimalist professional brand LESS, kids-and-teen brands jnby by JNBY and POMME DE TERRE (蓬马) and homeware and loungewear line JNBYHOME. By the end of last year, the group operated 1,996 physical retail stores worldwide and offered global e-commerce, giving it international reach beyond its bread-and-butter home market.
While other Chinese fashion groups like the supremely troubled Shandong Ruyi have publicly announced plans to be the “LVMH of China,” JNBY has taken a more low-key approach that’s slower than fast fashion and lower than high-end, succeeding in the crowded middle-market. Yet there have been bumps in the road. Last year’s damaging kidswear controversy, for example, dealt a blow to JNBY’s relatively spotless corporate image, leaving observers to wonder whether or when the group could bounce back from its online cancellation.
According to the group's report for the first half of fiscal year 2022, it appears the scandal failed to make a significant impact, with group revenue rising 7.3 percent year-on-year in the six months ended December 31, 2021 to 2.48 billion yuan ($392 million). Gross profit margin increased 1.7 percentage points to 63.3 percent, while net profit fell 4.25 percent year-on-year to 444 million yuan ($70.2 million). The group attributed its decrease in net profit to “long-term investment in brand-building” and sales and marketing expenses (which reached 798 million yuan, or $126 million). The group also increased product design and R&D investment to 70.6 million yuan ($11.1 million) up from 60 million yuan ($9.5 million) in the same period one year prior.
A look at portfolio brand performance hints at where the JNBY Group may place their strategic emphasis in the year ahead. Revenue at children's line jnby by JNBY – which accounts for around 14 percent of group revenue – fell 0.7 percent, no doubt due in part to the aforementioned 2021 controversy, indicating there is still a way to before the group’s childrens’ division can fully rebound. Teen-and-tween line POMME DE TERRE, however, saw revenue fall off a cliff, dropping 25.4 percent, although the fact that the brand only makes up 0.8 percent of group revenue limited broader damage.
Where JNBY’s financial performance gets interesting is in what is working. Namely, consumers continue to shop for more professional, mature attire, with the flagship JNBY label recording a 9.2 percent increase in revenue. The group’s 19-year-old minimalist line LESS, meanwhile, saw revenue jump nearly 27 percent, indicating how well-placed the label is to capitalize on exploding demand for low-key but premium fashion brands in China. Also reflecting millennial and Gen Z demand for affordable home decor and higher-end loungewear, the group’s six-year-old JNBYHOME line saw a 22.6 percent increase in revenue.
Of JNBY’s portfolio brands, LESS may be best positioned for the current moment. The brand has beefed up its marketing and branding efforts, recently unveiling a new Japandi-tinged visual brand image by Japan’s Irobe Design Institute. The ultra-clean rebranding and recent collections by LESS indicate the brand is poised to take on the higher-end lines of global competitors such as Inditex’s Uterqüe or H&M’s ARKET. But perhaps more interestingly, last July LESS named 47-year-old actress Zhou Xun as its official brand ambassador, while portfolio brands JNBY and Croquis respectively signed model Ju Xiaowen and actor Liu Yaren as ambassadors.
According to Ladymax, over the past two years Chinese consumers have shifted towards the convenience of e-commerce and new retail, but perhaps more importantly have gravitated towards brands they already know and trust. The JNBY Group’s latest financial report indicates that – with the exception of its newer and less established portfolio brands – consumers in China still broadly trust brands like JNBY and LESS, and that this group-wide trust even largely extends to the group’s kidswear lines in the face of an attempted cancellation. This is good news for JNBY and indicates it will remain a strong competitor for international fashion groups in the years ahead.