Plummeting 90% And Losing 1 Billion, What'S Wrong With Urban Beauty?

"New underwear, new you, I am a beauty in the city. How about you?"

How long have you not heard this sentence? In those days, Zhi Ling's sister's slogan made the Chinese version of "02298.HK" popular across the river.

As the Hong Kong stock listed "China underwear first stock", the market value of urban beauty has been as high as 20 billion Hong Kong dollars, and China's underwear brand's top seat (second to fifth underwear brand share) is less than that of urban beauty.

But now the urban beauty who has just passed the 20 birthday is facing the biggest crisis since its establishment.

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Market capitalization plunged 90% in 4 years, loss in 1 years or 1 billion

In December 23, 2019, the urban beauty issued a profit warning. It is expected that the deficit will not be less than 980 million yuan after tax in 2019. For this reason, the urban beauty explained that the changes in the economic environment and the slow pace of internal demands were mainly caused.

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. The group has failed to respond quickly to the structural adjustment of the industry in various aspects such as diversification of sales channels, product quality and product mix.

In the first half of 2019, the urban beauty also 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 December 24th, on the second day after the earnings warning was issued, the urban beauty newspaper closed at HK $1.01, only one step away from the "penny stock", with a total market value of HK $2 billion 270 million. Compared with nearly HK $20 billion in 2015, the market value shrank by nearly 90% in 4 years. In 2019 alone, the share price of urban beauty fell by 61.69%.

In contrast, the urban beauty earned 378 million yuan in 2018 and overfulfilled the gambling agreement with Fosun International (00656). But once the deadline is over, the performance of this underwear company has changed dramatically. In the first half of 2019, the urban beauty recorded a net profit of 35 million yuan, a 79.75% drop year by year, which means that the net loss of the company in the second half of the year was as high as 1 billion 15 million yuan.

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Every reason must have fruit.

The "cliff" loss that the urban beauty encountered in 2019 was entirely the "thunder" buried by the company.

1. line aggressive expansion, missed the golden opportunity of electricity supplier

In the early days, the urban beauty of the "horse racing enclosure" put forward the "Wan Dian plan" in 2011 -2015, expanding under the crazy line. The number of stores rose from 3494 to 8609. However, this period is also the golden age for the development of domestic electric business. Many domestic brands have overtaken the corners by virtue of the electricity supplier channels, and have surpassed the urban beauty in popularity and brands.

AIMER, founded in 1993, has gained a large number of loyal female customers through continuous efforts in the field of electronic commerce. It loves the comfort experience of women in underwear, designs products around women, and has many times the top of the most popular underwear brands in China.

There is also a hidden danger of deterioration of channel quality under rapid expansion.

In 2016, the urban beauty report showed that both the company's revenues and profits declined: net profit was cut to 242 million yuan (540 million yuan in 2015); the average inventory turnover period was rapidly extended to 142 days, (2015 was 92 days); stock stock amounted to 1 billion 200 million yuan, accounting for 30% of total assets.

City beauty once used discount and sales promotion to save the declining trend, but the effect was not good. So the urban beauty had no choice but to embark on another way: a large number of stores were closed, inventory was cleared, and sales were greatly discounted. However, none of these measures changed the company's management difficulties.

2. miss the underwear with no steel ring.

In 2016, the demand for steel free underwear was greatly increased in the underwear market. At that time, the market accounted for only about 10% of the products. But at that time, the urban beauty still went online to shop in large shops with steel ring underwear. When they realized that no steel ring underwear was the future of underwear, they were unable to respond in time because of the lack of technical suppliers who had no scar and no steel ring bra.

3. more challenges, underwear market has become the Red Sea

In 2019, the spokesperson of the city beauty changed from Lin Chiling to Guan Xiaotong, and the renovation of the offline shop was also updated. The brand is trying to be younger, but will it be too late to do it now?

Nowadays, the domestic underwear market is quite different from that of five years ago. Besides familiar 6sixty, 8ight, Ttiumph and so on, fast fashion brands, UNIQLO, Zara, sports brand Nike and lululemon have all entered the underwear market.

In addition to the number of competitors, the field of underwear market has also become more detailed: sports underwear, body sculpting underwear and body underwear have given consumers more choices while increasing the intensity of competition in the market.

Competition in the domestic underwear market has shifted from the blue ocean to the Red Sea.

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Urban beauty's self rescue

In 2016, faced with the plight of the company, the urban beauty put forward the transformation plan in 2017. The initiatives include: top management change, sales and distribution pipeline reform (including image renewal, closing loss stores, increasing the development of electric business, expanding the Southeast Asian market, opening discount stores in three or four line cities), product innovation, cost control and supply chain management reform.

The next year, the city beauty introduced Fosun international and signed a gambling agreement.

In 2017, urban beauty income increased by not less than 3% year-on-year, and the income in 2018 increased by not less than 6%; or in 2018, the income was not less than 9.18% in 2016; the net annual profit of 2017 was not less than 20% after deducting special items; the annual growth rate of 2018 net profit was not less than 15%; or the net profit of 2017 was not less than 8%.

In 2017 and 2018, the annual growth rate of urban beauty was 0.67% and 12.20% respectively. In 2017, the growth rate of revenue was lower than the first condition. However, compared with 2018, the income in 2016 increased by 12.94%, which was higher than 9.18%. In addition, the annual net profit of urban beauty in 2017 and 2018 increased by 31.01% and 19.31% respectively.

This is the first time that city beauty has saved itself. In the 2017-2018 year, the company's revenue and revenue have improved, but for the first year of gambling, the urban beauty went through a round of performance diving.

Urban beauty has increased significantly during the gambling period (2017-2018) compared with 2016, but this good momentum has not been maintained. In the first half of 2019, the net profit margin of the company dropped by over 80% over the same period last year.

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Can the two transformation save the former underwear owners?

With the rise of the new generation and Z generation consumer groups, more and more consumption patterns will emerge in the future. The two urban beauty who lost their draught is the core of the brand transformation.

Signing Guan Xiaotong, showing the determination of this underwear company to make a comeback, but now moves more toward the company's brand image and its influence on the business is insufficient. The offline sales as the main force can hardly be changed at the moment. Therefore, if the urban beauty wants to regain its hegemonic position in the new ten years, it needs to aim at the market demand for a new round of consumption upgrading, re create the brand image, and even hatch out different branch brands to adapt to the emerging underwear market.