China'S "Underwear First Stock" Overwhelmed By A Steel Ring

In 2019, the days of urban beauty were not good. As a former "underwear first stock" in China, it was once seen by the market as the next "secret" underwear brand, and suffered a cliff shaped performance decline.

From "national goddess" Lin Chiling to "national daughter" Guan Xiaotong, from a small shop to a shop, there is no lack of big name, no shortage of topics, no shortage of market urban beauty, what is wrong?

Annual deficit of 980 million yuan

In December 23rd, urban beauty issued a profit warning and transformation plan. Urban beauty predicts that the group's deficit will not be less than 980 million yuan after tax in 2019, but the profit after tax will be 378 million yuan in 2018. The reason why urban beauty will turn from profit to loss is attributed to the change of economic environment and the slowing down of internal demand. In the past, the rapid expansion of urban beauty has led to increased inventory in self owned stores and franchisees, and some business strategies have failed to meet the different needs of customers.

Under this background, the store efficiency and profitability of the urban beauty shops have been adversely affected, and the financial situation of the group and franchisee has weakened. Many dealers are also unable to solve the related problems by improving their internal operations alone.

At present, urban beauty has taken many ways to improve business performance, such as executives' adjustment, hiring consultants, etc. In the announcement, the urban beauty put forward a new transformation plan, including the new spokesperson Guan Xiaotong launched a new advertisement, opened a store with "family concept" as the theme, and the seventh generation of intimate clothing stores, increased the investment of electronic business, and expanded the low line city market.

Taking into account the transformation plan and the actual financial performance, urban beauty plans to cut the inventory of about 650 million yuan to 700 million yuan at a time, with a one-time exemption from the major customers' Arrears of 310 million to 350 million yuan, and closing a number of retail stores (which will cost about 20 million yuan to 30 million yuan). The above accounting provision has become an important factor affecting the performance of urban beauty in 2019.

In fact, the predicament of urban beauty has long started. As early as July this year, the profit warning issued by urban beauty released in the first half of 2019 showed that net profit in the first half of the year was down 80% over the same period, and gross margin would also drop due to the rising cost of raw materials.

Poor operating data also led to the collapse of urban beauty's share price. This year, in December 24th, the city beauty magazine closed at HK $1.01, with a total market value of only HK $2 billion 272 million. In 2015, the market value of urban beauty had exceeded HK $18 billion. The price of urban beauty fell by more than 60%.

That is to say, in the past four years, the market value of urban beauty has evaporated to more than HK $15 billion, or about 13 billion 500 million yuan.

A rime caused by a steel ring.

According to media reports, the founder of urban beauty, Zheng Yaonan, known as "China's most understanding of women," was born in a farm in Gutian, Fujian.

In 1995, Zheng Yaonan, a technical secondary school graduate, found his first job, security at WAL-MART China headquarters. Two years later, he chose to quit his job at the age of 22 and opened a cosmetics store with more than 20 thousand yuan. Since then, it has found that the sale of the bra stalls has made a lot of money, so it founded the city beauty beauty wind underwear company, which is the predecessor of the urban beauty.

However, these years, this "China's most understanding woman" does not seem to really understand Chinese women. That little steel ring on the women's underwear is the epitome of everything.

With the constant awakening of women's consciousness, the design of sacrificing women's comfort is becoming more and more abandoned by more and more women. On the other hand, no steel ring underwear and sports underwear are becoming the new favorites of more consuming young women. "

Official data show that in 2018, the sales share of Tmall's bra category has exceeded the traditional steel ring underwear, accounting for more than 60%. This year, this figure is continuing to grow.

However, whether it is all over the world, or once the "national brand" urban beauty, "sexy" seems to be the goal that these brands once pursued.

In 2016, the urban beauty ignored the huge growth of the steel ring underwear market, and continued to focus on the sales of steel ring underwear. In the past two years, the percentage of underwear without steel ring has climbed by 300%. The urban beauty who missed the "draught" also missed the best chance to save himself.

For urban beauty, deviating from the basic needs of the market and ignoring the user's product experience may be more fatal than a strategic mistake. That little steel ring has also become the last straw to crush the huge urban beauty. "Sexy is no longer synonymous with women's underwear. "Today, the design concept of women's underwear is more diverse, and the pursuit of health, fashion and other different positioning underwear makes the market more subdivided, consumers choose more, and the market competition is more intense. "

Xi Mengyao was born and Lin Chiling married. Wei and urban beauty are no longer "absolute kings" in their respective fields.

In recent years, with the sports brands like UNIQLO, ZARA and other fast fashion brands and Adidas and Nike entering the underwear market, the domestic underwear brands headed by city beauty have to face a larger market and a stronger competitor.

Urban beauty of "Jedi survival"

In the background of increasingly fierce market competition, urban beauty not only lacks suppliers of brackless bra, but also can not catch young consumers, and is labelled with "poor quality" and "ugly design".

Radical expansion is a hidden danger for business, which not only causes cost burden to increase, but also decreases passenger traffic.

Since 2016, the underwear of urban beauty has been slow-moving, and the sales volume of franchisees has also declined, resulting in a year-on-year net profit decline of 55.2%.

As a result, urban beauty began to offer discounts, but this did not change the status quo of its poor earnings. Instead, it led to a wave of offline shopping.

In 2016, the sales revenue of urban beauty dropped by about 8.9% to 4 billion 512 million yuan, and net profit dropped by about 55.2% to 242 million yuan. The net cash earned from operation was converted to 6 million 930 thousand yuan from the net flow of 403 million yuan in 2015.

In the first half of 2016, the number of urban beauty shops was 238; in 2017, the net number of stores decreased by 362.

As of the first half of 2019, there were 6562 urban beauty distribution networks, of which 5293 were franchised stores, 743 fewer and 606 fewer than those at the end of 2018. Meanwhile, the sales volume of urban beauty to franchisees in the first half of the year was 1 billion 82 million yuan, down 14.26% from the same period last year.

Now, faced with the impact of new brands, urban beauty has finally begun to make changes.

In the latest announcement, the city beauty also put forward a new transformation plan, including the new advertising spokesperson Guan Xiaotong launched the "new idol" as the theme of the new advertising. This is interpreted by the industry as the adjustment of the age of the urban beauty consumers. In addition, last year, the city beauty made several important personnel appointments: in July 2018, the former president and CEO Sharen Jester Turney became the chief strategy officer of the urban beauty, and another important figure was harvested, former Daudin designer Vincent Daudin. At the end of last year, Tang Sheng, head of Wacoal Technology Department, joined the urban beauty and was appointed chief technology officer, specializing in underwear structure and future fabrics.

City beauty July announcement also said that next will hire new CEO. Before this position has been run by Zheng Yaonan, he will retire behind the scenes when he is taken over by a professional manager.

Whether this series of initiatives can improve the company's performance is unknown. After all, no matter whether R & D can get new products in the market, pleasing the current consumers and upgrading the brand image will not be the short-term achievement.

In the future, how urban beauty goes, everything is unknown.