Can Urban Beauty Become A Real Underwear Giant?

There are indications that

The next big game is coming.

Following high-profile Fuxing shares, announcing Japan

After brand cooperation and the cooperation fund with Jingdong, recently, the city beauty also set up a joint venture with Shanghai, Kappa, a wholly owned Affiliated Companies in China.

。

Over the past year, the movement of attracting investment and cooperation among urban beauties has attracted frequent attention.

Because the domestic underwear market is more dispersed, the underwear business that will usher in the 20th anniversary birthday at the end of this month raises a conjecture: if the domestic single brand market share is generally not high, can it bring about a real sense of underwear giant?

Expand while raising funds

Looking back on the past year, urban beauty has three main moves: attracting investment, cooperation and entering new fields.

According to the world clothing and shoe net, the net cash flow of urban beauty in 2016 was -693 million, compared with 403 million yuan in 2015.

When cash flow is tight, urban beauty begins to seek financial support everywhere.

In May 5, 2017, the urban beauty introduced the Fosun as a strategic investor and signed the gambling agreement.

According to the agreement, the city beauty issued 240 million shares to the Shenzhen Qianhai Fuxing Group, a wholly owned subsidiary of Hong Kong stock and Fosun International Co., Ltd., which was priced at HK $2.5 per share. After the completion of the paction, Fosun international became the strategic shareholder of the company, holding 11.18%.

In addition, the agreement sets the requirements for the operation of urban beauty.

According to the announcement of urban beauty, the total amount raised by Fosun subscription is 600 million yuan, which will be used for sales distribution channels reform, acquisition and merger projects and liquidity supply.

With a certain amount of money, the urban beauty went on the road of raising funds and expanding territory.

A week later in May 12th, the city beauty announced that it had reached a strategic cooperation agreement with KIMURATAN and Qingdao. It will sell and distribute KIMURATAN's love design and BIQUETTE (Bekat) two brand products as the sole agent in China.

This indicates that the urban beauty of the main underwear has officially entered the field of Chinese children's clothing.

It indicated that through this cooperation, we intend to develop the infant and children clothing market in mainland China.

In June, the city beauty announced that its indirect wholly-owned Affiliated Companies Guangdong city beauty Industrial Co., Ltd. sold CLGIII 95% stake to Guangdong Zheng Ji Innovation Industrial Park for sale at 10 million 809 thousand and 100 yuan.

The sale of the city beauty is to give underwear and other main industries blood pfusion.

The urban beauty who dominated the fast fashion and mid end underwear brands also cut down its low-end brand business and moved towards the high-end market.

Last year, urban beauty sold low-grade business "free time".

The brand is the Korean style underwear brand launched by the urban beauty in 2015, mainly for the three or four line city market. In 2016, it only accounted for about 1% of the group's sales.

Before that, urban beauty put the high-end underwear brand "Ordifen" into the bag, thus completing the missing high-end brand in the underwear area of the company.

After several years of continuous loss, the latter turned into a profit in the year of merger and acquisition, thus becoming a new growth point of urban beauty.

Yao Yao, China analyst at Euromonitor International, told the times weekly that China's underwear industry is facing growing demand from local consumers.

Compared with high-end underwear products, the fast fashion underwear with lower price growth rate slowed down in 2017 compared with the past five years.

From the consumer perspective, the rigid demand for underwear is rising, thanks to the increase of domestic disposable income and living standard of domestic consumers.

In February 7, 2018, the city beauty announced that it would jointly establish a $1 billion fashion industry fund with Jingdong to invest in close clothing and upstream and downstream industries.

The city's beauty related person in charge said that the establishment of cooperative fund was mainly used for industry mergers and acquisitions and resource integration suitable for the group's business, and then further expanded the visibility and footprint of the group in the global clothing industry.

The newest move of urban beauty is to cooperate with Kappa. Its wholly-owned Affiliated Companies Tianjin metropolis beauty and China trend wholly invested Affiliated Companies Shanghai kappa to enter into shareholder agreement and jointly invested 20 million to set up joint venture company.

The joint venture company will produce and sell men's personal clothing and women's sports underwear and main sales channels online.

In addition, the urban beauty has been authorized for five years in the design, marketing, production and sale of Kappa products.

At this point, the layout of the underwear of the city beauty and multi-channel brand has initially formed.

Underwear industry is not big enough.

Behind the ambition of urban beauty is the dispersion of domestic underwear industry and the low concentration of brand.

China's underwear market doubled to five US dollars in the past 18 billion years, according to Market Research Institute.

It predicts that by 2019, the retail value of China's women's underwear market is expected to reach US $25 billion, two times that of the US market, and this figure will increase to 33 billion US dollars by 2020.

However, the whole industry is extremely fragmented.

Guoxin Securities research report pointed out that China's underwear market structure is decentralized, with a large number of brands, up to more than 3000, but 99% of the brand sales scale are below 100 million yuan, and there are few brands that sell over 1 billion yuan.

"Urban beauty is the largest underwear company in China. By the end of last year, our listed companies and non-listed company combined about 10 billion of sales revenue.

Urban beauty is the first in the Chinese market, but in fact the market share is three.

China's (underwear) brand is very fragmented. There are about more than 3000 practitioners (underwear brands), and the names are about more than 300.

On April 19th, at a business forum in Guangzhou, Zheng Yaonan, chairman and chief executive of city beauty (China) Holdings Limited, told the media, including journalists.

Yao Yao told reporters that in the face of such a potential market in China, the players in the domestic clothing market want to seize the competitive edge and share a cup of cake.

In particular, many small businesses in China have entered the low threshold underwear industry, which is the reason why China's underwear market is decentralized and homogeneous.

And because local underwear enterprises have been concerned about the richness of product lines and distribution through e-commerce, leading to a wider penetration of brand awareness into China's lower tier cities.

{page_break}

As the leader of domestic underwear enterprises, the development process of urban beauty fully illustrates the "ceiling phenomenon" of underwear industry.

In 2008, Zheng Yaonan, a security and sales source, was keenly aware of the market opportunities of the mid-range brand underwear, and set up the brand of "urban beauty".

In the early days of expansion, Zheng Yaonan's "Wan Dian plan" has brought the city beauty stores to blossom all over the country. In 2015, there were as many as 8058 stores under the city beauty line.

However, in 2016, in the face of the squeeze of electric providers and the challenges of competitors, the performance of urban beauty came to a turning point. Operating income and net profit fell by 8.9% and 55% respectively.

In 2017, the urban beauty performance recovered, but the store has fallen to nearly 1000 from its peak.

Buying and seeking cooperation has become the next step for urban beauty.

"In the coming year, we will continue to focus on improving group business and enhancing core competitiveness.

The group will introduce the "amoeba management mode" and "partner system" and actively look for opportunities for acquisitions, equity participation or cooperation so as to further develop our group's existing business in the industry adjustment while seeking new breakthroughs and changes.

City beauty related person in charge told reporters.

The odds are not yet known.

However, in order to become a real giant in the industry, urban beauty still has a long way to go.

Last month, the city beauty released its 2017 earnings report. According to the relevant data, as of December 31, 2017, the group realized revenue of 4 billion 542 million yuan, an increase of 0.7% over the same period last year, operating profit of 420 million yuan, an increase of 37.4% compared with the same period last year, and the profit of the company's equity holders was 317 million yuan, up 31% over the same period last year.

The annual report shows that the total number of urban beauty stores decreased by 362 in 2017.

According to last year's gambling agreement between Fosun Group and urban beauty, urban beauty increased by 3% in 2017 compared with 6% in 2018, or less than 9.18% in 2018 compared with 2016.

After deducting non recurring items, the profit growth in 2017 will be no less than 20%, not less than 15% in 2018, or less than 38% in 2018 compared with 2016.

In this way, the performance of urban beauty in the first year is not up to standard.

However, the relevant person in charge of the city beauty told reporters that "the agreement signed between the major shareholder and Fosun needs to see the performance of two years, and the key is in 2018.

If sales and profits in 2018 increased by no less than 9.18% and 38% respectively compared with 2016 figures, they would still meet the requirements of Fosun, and large shareholders do not need compensation.

This means that 2018 is an important year for urban beauty to cash in on their achievements.

If the city fails to meet the standards, the city beauty will pay HK $100 million for compensation, and whether it will be divestment is unknown.

"I feel very confident."

In April 19th, when asked about winning the bet against Fosun, Zheng Yaonan told reporters.

In addition, urban beauty is facing increasingly fierce competition in the industry.

Dozens of investment enterprises including Xiang Feng capital, Zhen Cheng capital, Kai Fu capital, Huaqiang capital, real fund, today capital, far mirror venture capital and surging capital have been laid out in the underwear industry, thus boosting new industries such as NEIWAI, DAREONE, theIPS and other related industries.

Eyeing the international underwear giant, also moved to the Chinese underwear market.

Last year, the "Victoria secret" (s Secret), which hosted the secret show in China, has directly moved the product line in Europe and the United States to China. Up to 30% of its products are ultra-thin, but this type of underwear has only 6% market share in the Chinese market. "S"

Italy luxury underwear brand La Perla, German underwear brand Ttiumph (Triumph) and so on have also increased the intensity of layout in China.

Will this urban beauty win?

More interesting reports, please pay attention to the world clothing shoes and hats net.