Urban Beauty Will Get Into A Performance Dilemma And Will Change To CEO In The Next Few Months.

The fashion retail environment continues to shake. Following the myth of the underwear industry, the Chinese version of "Wei" has begun to encounter bottlenecks.

According to the fashion business news, the urban beauty released its first profit warning in nearly a year last week. It is expected that net profit will exceed 80% over the first half of 2019, and gross profit margin will also decline due to the rising cost of raw materials. However, urban beauty is still the highest brand of underwear in China and has about 8000 stores nationwide.

Last year, the performance of urban beauty was also strong. In the year ended December 31, 2018, urban beauty income increased year-on-year. 12.2% to Fifty point nine six Billion yuan, operating profit growth 15.4% to Four point eight four Billion yuan, net profit growth 19.31% to Three point seven eight Billion yuan, gross profit margin fell to 41.7% 。

It is noteworthy that the original spokesperson of the urban beauty is Lin Chiling, now replaced by Guan Xiaotong. This underwear giant's determination to completely reverse the stereotype of the consumers is more and more obvious.

　　 At present, the overall style of urban beauty continues to move towards young consumers.

The city beauty was founded in 1998. It was influenced by the successful mode of the United States in the United States. It was positioned as "the first fast fashion underwear brand in China". Its products are mainly targeted at young women. In 2012, Lin Chiling became famous as a spokesperson for the city beauty.

In June 26, 2014, the city beauty (China) Holdings Limited was listed on the main board of Hongkong, and was called "the first Chinese underwear". After entering the capital market, the urban beauty ushered in the first small peak. Annual revenue grew by only 1 billion in a year. Forty point zero eight Billion yuan, further increased in 2015. Forty-nine point five three Billion yuan.

However, as consumers' definition of "sexy" changed, urban beauty suddenly encountered challenges in 2016, and revenue fell to Forty-five point one two Billion yuan, net profit plunged 55% to Two point four two Billion yuan. In the same year, the performance of the company began to deteriorate and targeted the Chinese market. It opened all kinds of stores in major cities such as Shanghai, Beijing, Chengdu, Hangzhou and Guangzhou, and even moved the 2017 annual show to Shanghai. But the final response was flat, and its performance has not recovered yet.

In order to better consolidate the market, in May 5, 2017, the city beauty offered shares to Fosun international. Two point five Hong Kong dollar subscription Two point four Billion shares become the second largest shareholder of urban beauty. 11.18% 。 Fosun shares also signed a performance bet agreement with four major shareholders of urban beauty, including the revenue requirement. The urban beauty grew by not less than 3% in 2017, and not less than 6% in 2018.

In February 7th last year, the city beauty announced the establishment of a partnership fund with Jingdong's company, which is mainly used for mergers and acquisitions and resource integration suitable for group business. According to the main provisions, the target size of the cooperative fund is expected to be 1 billion yuan, and the scale of the fund will be expanded according to actual needs. Three point five Billion yuan, of which Guangdong urban beauty invested Two point five Billion yuan, while Jingdong invested 100 million yuan.

Some analysts point out that the strong penetration of brand and the substantial increase in online sales of urban beauty are important reasons for Jingdong's willingness to cooperate with them. Since 2014, the online sales of urban beauty have maintained double-digit growth, and increased by 137% in 2015, 2016 and 2017 respectively. 78.9% And 73%.

Last April, a consortium composed of Windcreek, image architecture investment, vip.com and Quick Returns also signed subscription agreements. Five point zero nine HK $1 billion, the proceeds are mainly used for urban beauty sales distribution channels reform, potential merger, acquisition and cooperation projects and general liquidity funds.

After the capital is in place, the urban beauty has become more and more bold in its own reform. First, the CEO Sharen Jester Turney was first taken as the chief strategy officer, and then appointed Wacoal's largest underwear retailer, Wacoal's former research and development minister, as chief technology officer, and at the same time increased investment in upstream suppliers.

Among them, Sharen Jester Turney, which has rich experience in the European and American underwear industry for nearly 20 years, is regarded as the key leader in the strategic transformation of urban beauty. Under her leadership, the income of L Brands, the parent company of the parent company, increased from $4 billion 500 million to $7 billion in the 10 years from 2006 to 2016, and sales increased by more than 70%. In 2009, she was named third of the 25 highest paid female executives by Fortune magazine for $20 million 300 thousand in 2009.

After joining the urban beauty, the first shot of Sharen Jester Turney was put on the line. In November last year, the first flagship store for Gen-X was built for urban beauty, located in Shenzhen Imperial Court Square. Besides selling goods, the shop also has "sexy girls" fitting room, rabbit card wall and other net red elements, aiming to cater for the likes of 90 and 00. At present, the official website of urban beauty has adopted a completely new design layout, and the overall style is constantly approaching young consumers.

In the first half of last year, the city beauty refurbished 98 self operated stores and 634 franchised stores. At the same time, it also worked with Tencent and WeChat to reach new smart retail business, aiming to achieve all-round innovation from inside to outside.

In June 14th, the city beauty said its wholly-owned Guangdong city beauty has entered into sixteen joint venture cooperation agreements with its respective controlling shareholders of the sixteen existing suppliers. According to the cooperation agreement of the joint venture company, the contract holder has the holding of a joint venture company held by the Guangdong urban beauty. 19.99% The remaining shares are held by the controlling shareholders of their respective suppliers for business cooperation activities.

It is alarming that urban beauty releases earnings early warning after the agreement is reached, which means that its actual sales performance and profitability are vulnerable. As with Zara, H&M and other fast fashion, too radical expansion strategy and nearly 10000 stores have become the two major burdens of urban beauty development.

Matthew Crabbe, director of Mintel, a market consultancy, has also talked about the development prospects of China's high-end underwear market. She also said that local brands are facing competition from overseas brands, not only in terms of quality, but also in innovation.

In order to restore its performance as soon as possible, city beauty announced that it would increase product research and development efforts, launch more new quality products in the market, launch more new advertising and promotional activities around the new spokesperson Guan Xiaotong, and plan to appoint a new CEO with rich experience in the garment industry within a few months, but did not disclose specific candidates.

As the global fashion industry starts a new round of shuffling due to the change of the millennial generation and Z generation consumption habits, the underwear industry is also at the crossroads of reform. The domestic underwear brands represented by urban beauty are faced with enormous challenges, whether brand vitality or product quality.

As of press release, urban beauty prices fell sharply. 3.03% to One point six The Hong Kong dollar has fallen by nearly 38% since the beginning of this year, and its market value is HK $3 billion 600 million. Author: Zhou Huining