Under the influence of the epidemic, Victoria’s Secret in the West is struggling, and the urban beauty known as the “Chinese version of Victoria’s Secret” is also in business difficulties.
A few days ago, Metro Beauty (02298.HK), “China’s No. 1 underwear stock”, issued a profit warning. As of June 30, 2020, the company is expected to lose a lot in the six months at 120 million yuan.
In addition, the announcement also showed that Urban Beauty Group and its franchisees temporarily closed about 90% of their stores from February to mid-March 2020.
It is worth mentioning that in June 2019, Urban Beauty announced a new spokesperson – “National Daughter” Guan Xiaotong, officially bidding farewell to the era of “Sister Zhiling”. On the day of the official announcement, the number of views on Weibo exceeded 200 million, and it became a hot search.
Picture source: Urban Beauty official website
Although there is a new spokesperson, however, in 2019 Urban Beauty Still a huge loss of over 1.3 billion yuan.
Urban Beauty lost at least 120 million yuan in the first half of the year
June On the 26th, Urban Beauty issued an announcement stating that after preliminary assessment, Urban Beauty is expected to lose no less than 120 million yuan in the six months as of June 30, 2020, compared with a profit of 35.5 million yuan in the same period last year.
Picture source: Urban Beauty Announcement
As for the reasons for the loss in the first half of 2020, the Urban Beauty board of directors stated , since the outbreak of the new coronavirus in mainland China and the subsequent social isolation and city closure measures taken by relevant departments to prevent the further spread of the virus, the group’s retail sales and sales to franchisees have been affected. The board of directors of Urban Beauty believes that the above measures have greatly restricted the flow of people in the areas where the group’s self-operated stores and franchisee stores are located, thus having a significant impact on the group’s operating performance.
In addition, store closures also led to a decrease in revenue. According to the announcement, Urban Beauty Group and its franchisees temporarily closed approximately 90% of their stores from February to mid-March 2020. However, as physical business gradually resumes, Urban Beauty’s closed physical stores will resume operations around late March.
It is worth mentioning that the transformation plan implemented by Urban Beauty in the past two years has already achieved results. The announcement shows that the retail sales of Urban Beauty’s self-operated stores and franchise stores in May this year have reached more than 80% of the retail sales in May 2019; while e-commerce sales have achieved growth in May, and some e-commerce platforms have achieved double sales. Digital growth.
Metropolitan Beauty said that the performance changes since May are inseparable from the transformation plan previously promoted. Under the influence of omni-channel, it is expected that the overall performance in June and the second half of this year will be able to Continuous improvement.
The huge loss exceeded 1.3 billion yuan in 2019
In fact, Before the outbreak of the new coronavirus pneumonia, Urban Beauty’s performance was not satisfactory.
Its 2019 annual report shows that in 2019, Urban Beauty’s revenue dropped by 19.9% and its operating loss reached 1.389 billion yuan. In 2018, the company’s operating profit was as high as 4.84 billion yuan. billion.
In addition, in 2019, the number of Urban Beauty stores decreased by 1,335 from 7,305 in 2018 to 5,970. Affected by discounts and promotions to clear inventory, gross profit fell from 41.7% to 22.6%. .
Picture source: Urban Beauty 2019 Annual Report
In the 2019 annual report, Urban Beauty stated, Rapid expansion in the past has allowed it to quickly gain a leading position in the market. However, the retail and replenishment capabilities of each franchisee vary greatly. At the same time, China’s intimate apparel market is rapidly fragmenting. Urban Beauty’s direct-operated stores and franchise stores have experienced inventory hoarding, and some of the products used The business strategy failed to meet the needs of most female consumers for practical, functional and cost-effective products, which resulted in a weakening financial situation.
Public information shows that Urban Beauty was founded in 1998 and was listed on the Hong Kong stock market in 2014. It became the “No. 1 underwear stock in the Mainland” in the Hong Kong market and has been in the limelight for a while.
In 2015, the number of Urban Beauty stores reached a peak of 8,058. In 2015, Urban Beauty’s stock price also rose to HK$9.12. However, starting from 2016, the number of Urban Beauty stores began to decrease, and its net profit fell by 55.2% to 242 million yuan in 2016.
As of press time on June 30, City Beauty’s share price has dropped to HK$0.48 (approximately RMB 0.44). Since the beginning of this year, Urban Beauty’s share price has fallen by more than 50%.
Image source: Wind
A drastic move Transformation
Can the “Chinese version of Victoria’s Secret” get out of trouble?
It is worth noting that as for the reason for the company’s loss in 2019, Urban Beauty explained in the annual report that it was mainly due to the one-time provision of 738 million yuan for old inventory, which directly led to The company’s net profit attributable to parent companies dropped significantly. At the same time, Urban Beauty also exempted the company’s major customers from arrears of 327 million yuan, accrued impairment provisions of 69 million yuan for accounts receivable, and store closing costs of 52 million yuan, for a total of 447 million yuan.
Some insiders pointed out that in 2019The young urban beauty did not hesitate to sacrifice herself to get rid of the operating shortcomings, which fully demonstrated the company’s determination to “break its arms and seek transformation”. Previously, due to rapid expansion, the inventory of self-operated stores and franchised stores increased, and the company suffered from inventory problems. Large-scale reform actions may be a new beginning.
In recent years, urban beauties have begun to carry out drastic reforms in order to seek transformation.
In August 2019, City Beauty appointed Xiao Jiale as the new chief executive officer and made other senior management personnel adjustments.
On June 21, 2019, City Beauty changed its spokesperson from Lin Chiling to Guan Xiaotong. It is worth noting that Lin Chiling began to endorse City Beauty in 2012. During this period, City Beauty became the number one underwear brand in China and completed its goal of listing in Hong Kong.
Picture source: Urban Beauty official website
From “Sister Zhiling” to “National Daughter” The transformation also means the turning of an era for Urban Beauty, which is regarded as one of the ways for Urban Beauty to attract young consumers.
In July 2018, Urban Beauty also hired former Victoria’s Secret President and CEO Sharen Jester Turney as its chief strategy officer, and in the same year introduced financing from JD.com, Tencent and Vipshop. , strengthen the business development of e-commerce channels.
Urban Beauty issues media clarification
In the performance forecast released on June 26, Urban Beauty Expressed that it will continue to implement the transformation plan.
The transformation that the company will continue to adopt includes:
From fast fashion and sexy products to practical, functional and cost-effective products ;
Increase investment in e-commerce channels and Tencent mini-programs to achieve omni-channel marketing;
Focus on classic products and significantly reduce the number of inventory units;
Provide reasonable discounts through various sales and distribution channels, open more than 100 factory discount stores;
Open shopping mall stores with the theme of “family life concept” and open or renovate the seventh generation with a new image Stores, it is expected to open or renovate about 200 stores from May to August this year.
Regarding the transformation of Urban Beauty, some investors said: “Apart from price wars, Urban Beauty has no other advantages at all. It can only return to user-centered and precise positioning. Only then will it be possible to return to the market.”
The industry is changing and consumption is upgrading. The “Chinese version of Victoria’s Secret” wants to reverse its image through transformation and re-establish itself in the fierce market competition. There is still a long way to go to gain the attention of young people.
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