In 2019, Nearly 1 Billion Of The Urban Beauty Transformation Pains Were Due.

In December 23, 2019, the "China underwear first stock" urban beauty China Holding Co., Ltd. (02298.HK) issued a profit warning and transformation plan. In 2019, the company's loss was no less than RMB 980 million yuan, while the net profit of the company in 2019 was about 378 million yuan after tax.

In this regard, urban beauty explains that economic environment changes and internal demands slow down. The company's board of Directors believes that the existing operation mode used to enable the group to expand rapidly, seize market share and become a leader in the industry. However, the group is unable to respond quickly to the structural adjustment of the industry in terms of diversification of sales channels, product quality and product mix.

In fact, as early as the first half of 2019, the urban beauty issued a profit warning, announcing that the performance in the first half of 2019 dropped by nearly 80%, and the net profit was 35 million 466 thousand yuan. In August last year, many efforts were made to turn the urban beauty down. Why do urban beauty have huge losses? After announcing the transformation, its future opportunities, geometry, employment performance and transformation and other related issues have been contacted by the urban beauty agency for many times, but the company has not responded.

Radical expansion sequela

"The loss of cliff style in 2019 is precisely the" thunder "buried by the company. One industry insider said.

In the early days, in order to occupy the market, the urban beauty who developed the "horse race enclosure" style increased the number of stores from 3494 to 8609 in the 2011 -2015, and once became the largest underwear enterprise in China. However, after a long period of time and quickly occupied the market dominant position, the urban beauty began to "fall" rapidly in 2016.

Financial reports show that in 2016, urban beauty sales and profits declined for the first time since listing. Among them, the net profit of urban beauty was cut to 242 million yuan (540 million yuan in 2015). Specifically, the average inventory turnover period of urban beauty was rapidly extended to 142 days, (92 days in 2015), and the stock stock amounted to 1 billion 200 million yuan, accounting for 30% of total assets.

In this regard, urban beauty has used discount sales and other means to save the declining trend, but the effect is not good. Under the helpless, the urban beauty goes to another way: a large number of closing stores, cleaning up inventories, a large discount sale. Data show that in the first half of 2016, the number of urban beauty shops was 238, the total number of stores in 2017 dropped by 362, and the number of urban beauty stores increased by 124 in 2018 (the total number of stores in 2018: 7305).

In fact, for the development mode of urban beauty, Everbright Securities has pointed out two reasons in August 2018: first, the initial store expansion strategy is too radical; the weaker dealer portfolio and the lack of scientific management site selection strategy make the quality of the channel deteriorate; two, the internal retail business has not been able to respond to the changes in the retail market in a timely manner. For example, in 2016, no steel ring underwear began to erupt, and the market share jumped from 10+% to 30%-40%. But the urban beauty is hesitant, miss the best time and so on.

In September 2019, Everbright Securities further released the report that at present, the clothing industry in our country is scattered, and the urban beauty has long been a big growth space as a leader. Taking into account the pressure on the company's performance in the short term, it will be lowered to a "neutral" rating.

According to the 2019 China daily data, thousands of urban beauty shops were closed in the first half of 2019. There were 6562 urban beauty distribution networks, including 5293 franchised stores, 743 fewer and 606 less than the end of 2018. Meanwhile, the sales volume of urban beauty to franchisees in the first half was 1 billion 82 million yuan, down 14.26% from the same period last year.

Track congestion transformation effect to be determined

Comparing the two years' style of urban beauty, it is easy to find that the beauty of city in 2019 is becoming younger.

First of all, in the brand image, in June 2019, after announcing the spokesperson from Guan Xiaotong to "national girl" Guan Xiaotong, the founder of urban beauty Zheng Yaonan once said that miss Guan Xiaotong's fashion, vitality and youth image are highly consistent with the brand image of urban beauty, and clearly convey the fashionable and young brand atmosphere of urban beauty, which is an important sign of brand transformation. It can be seen that on the way of brand building, urban beauty begins to transform into younger.

Secondly, in terms of talent, in August of this year, the city beauty appointed Xiao Jiale, who has many years of experience in China's garment industry, as the new chief executive officer and appointed Boston consulting company. On the channel side, the urban beauty said it would strengthen investment in the electricity supplier channel and expand its business territory to the domestic low level cities to fill the market gap, strictly control costs and cut unnecessary expenses.

As the global fashion industry started a new round of shuffling due to the change of consumption habits of the millennial generation (80, 90s) and Z generation (95 later), the underwear market has undergone a comprehensive transformation this year. Taking the world famous brand "Vitoria secret" as an example, due to its long-term losses, Berger F, the chief financial officer of her parent company L Brands in November 21st, officially announced the cancellation of the 24 year old show.

In addition, from the perspective of garment industry, the clothing market suffered a cold year in 2019 due to the weak environment and weak domestic demand. According to the National Bureau of statistics, in 2019 1-6, the growth rate of China's garment industry added value was 3%, down 1.5 percentage points compared with the same period last year. During the period, the apparel industry above designated size enterprises completed a 1.09% decline in garment production year-on-year.

At the same time, Forever21, which was popular with young girls, announced in May 2019 that it had withdrawn from China and filed for bankruptcy protection. The fast fashion brand Gap was overburdened and shut down gradually. It can be seen that in 2019, under the environment of the cold garment industry, more and more international brands began to fall in the cold winter.

In addition to the big circle, the urban beauty is worried about the competition. The strong competitors in the underwear market include: 6sixty8ight, Ttiumph, Wacoal, JU, atelier intimo, NEIWAI and other foreign brands such as inside and outside, and admiration. Even the brands such as UNIQLO, Zara, Nike, lululemon and so on are strongly involved in the underwear market. After all, in the big cake of the Chinese underwear market, the market share of urban beauty market is only about 3%.

Then, can the strong urban transformation beauties be able to "turn the tide" and boost the performance of the company in the competition of the underwear market?

"The general direction of urban beauty transformation is right, but from the point of view of effectiveness, or the impact of its measures on business is limited. With the fierce competition in the underwear industry, the traditional line sale scheme will eventually be phased out" because the cost is too high for the offline channel to eventually become a supplier of electricity on the line ". Therefore, although the urban beauty has launched a younger transformation, it still needs to upgrade with consumption, re create the brand image, identify the location and build the city, so as to eventually adapt to the new generation of consumer groups. An analyst of clothing industry in a large organization in Guangzhou said.