Urban Beauty Released The First Surplus Police Low Price Strategy Failure

After the farewell of spokesperson Lin Chiling, lingerie brand city beauty begins to gain early warning. In the announcement, the urban beauty expects that the combined profit in the 6 months ended June 30, 2019 will drop by no less than 80%.

Jiayin International released a report that the target price of urban beauty dropped to HK $1.2, while rating "big market".

On the basis of the current situation and causes of the loss, the Times reporter called the city beauty, and the staff were unable to contact the responsible person.

Urban beauty shows in profit police announcements that the drop in profits is due to the weakness of domestic retail industry, the increase of raw material costs, and the higher discount offered by brands.

But in fact, the performance of urban beauty has long been showing signs of weakness. In the red market of underwear market, its sales strategy and brand positioning have been tested.

Cost reduction and continuous financing

Since its listing in 2014, the income of urban beauty has increased by only about 1 billion yuan over the past five years. In addition to breaking through 5 billion yuan in 2018, the rest of the year has been hovering around 4 billion 500 million yuan.

The annual report of 20142018 annual report reveals that the annual sales cost of urban beauty is more than half of revenue, which is 2 billion 440 million yuan, 2 billion 838 million yuan, 2 billion 510 million yuan, 2 billion 577 million yuan, and 2 billion 972 million yuan respectively.

In contrast to the other two underwear listed companies, Li Fang and Hui Jie share their revenue and cost in 2018. The company's revenue is 2 billion 451 million yuan, the sales cost is only 1/5 of its revenue and 491 million yuan, and the sales and sales revenue of Hui Jie shares is 2 billion 338 million yuan, and the selling cost is 746 million yuan.

In terms of inventory turnover, the urban beauty turnover rate in 2015 was 3.9 times higher than that in the first half of 2018, and it was still higher than that in the 1.2 months.

In addition, the urban beauty showed a "roller coaster" ups and downs in the net cash flow from operating activities.

In 2015, the net income of the business reached 402 million yuan. In the same year, the city beauty implemented the "Wan Dian plan" and became the leading underwear enterprise in China rapidly. However, due to over expansion, the cost burden was aggravated, and the passenger flow rate continued to decline.

Then, in 2016, the city beauty closed 407 stores, but it was difficult to change the overall situation. The net cash earned in that year was -693 million yuan. At that time, urban beauty needed a lot of money to make ends meet.

In May of next year, Fuxing, a lucky star, extended the "helping hand" to subscribe for the 11.18% stake in urban beauty to become the largest shareholder except urban beauty. The latter received 529 million yuan and signed a bet agreement. The net cash earned in the year rose to 346 million. In addition, in May 2018, Jingdong affiliate Windcreek, Tencent subsidiary's image architecture investment, vip.com and Quick Returns of China Rui holdings jointly subscribed 121 million shares of urban beauty, accounting for 5.37% of capital stock.

However, the net cash earned in 2018 fell to $50 million 797 thousand again. Insiders close to the urban beauty told the times weekly reporter that this is expected. The gambling agreement requires that the company's revenue reach certain targets. Therefore, shops have been shut down and even more than 300 stores have been closed at the same time. At the same time, the promotion efforts have been intensified, resulting in cash flow obstruction.

In addition, the revenue in 2018 was up to 5 billion 96 million yuan, but the net profit to the mother was only 378 million yuan. The combination of high income and low profit makes the industry doubtful about the profitability of the company.

　　 Repositioning fatigue

In recent years, urban beauty has been trying to change the runway. In June 1st this year, the company invited the star Guan Xiaotong to endorse for two years. Before that, the spokesperson of the city beauty was Lin Chiling.

Lu Shengzhen, an expert in brand interpretation, told the times weekly reporter that the adjustment of the spokesperson is a symbol of the age shift of the consumer group, and is also based on the performance of the previous generation of consumers gradually withdraw from the urban beauty consumption center.

In 2012, the city beauty signed Lin Chiling as the spokesman of the image, and the influence brought by the stars increased its performance. According to the urban beauty prospectus, from 2011 to 2013, the company's annual revenue grew by 700 million yuan, which was 1 billion 655 million yuan, 2 billion 257 million yuan, and 2 billion 916 million yuan respectively.

2014 is the year when urban beauty has gained fame and wealth. It has been successfully listed on the stock exchange of Hongkong, and its performance has reached a new high. City beauty 2014 public data showed that the company's operating income, operating profit and net profit of the parent company increased by 37.4%, 54.8% and 54.3% respectively, and the specific figures were 4 billion 7 million yuan, 575 million yuan and 425 million yuan.

At that time, the city beauty used "fast fashion, high price, popular" brand positioning in the underwear market. But it did not last long. In 2015, the growth rate of the company began to slow down. The three growth percentages increased slowly to 23.6%, 19.8% and 27% respectively. Then, the first decline in operating income, operating profit and net profit in 2016 followed by an increase of -8.9%, -55.7% and -55.2%, respectively, from 4 billion 953 million yuan, 688 million yuan, 540 million yuan in 2015 to 4 billion 512 million yuan, 305 million yuan and 241 million yuan respectively.

"Urban beauty has been showing a trend of profit turbulence since 2016. The reason for its unrest is that it is expanding its market share and improving its absolute market scale. At the same time, there are also problems of large-scale sales promotion, extensive management and low quality, resulting in a decline in profitability." Lu Shengzhen told the times weekly reporter.

The urban beauty who is aware of their own shortcomings has begun to undergo extensive changes, employing many executives to strengthen business management, continuously strengthen the channel of e-commerce, transnational business cooperation, increase market research and technological innovation of new products, cross industry cooperation and expand market segmentation.

Meanwhile, in order to get rid of the "low" image of consumers and improve product design and quality, urban beauty hired digital technology officers and designers to participate in the product development process in 2018, but the final pricing of products is still at a low price.

Compared with the three underwear shops of admiring, Ttiumph, and urban beauty, the times weekly reporter learned that the price of the underwear was only 1880 yuan, 920 yuan and 269.9 yuan respectively, and the lowest location was 108 yuan, 149 yuan and 38.9 yuan respectively for the three underwear shops. Obviously, the difference between urban beauty and the former two is 36 times.

"In the long run, the low demand of enterprises will bring enormous pressure to the supply chain and the cost of upstream procurement." Yang Dayun, a clothing expert, told the times weekly reporter. "Moreover, the urban beauty belongs to the traditional underwear brand oriented to the low-end consumer group. Innovation and transformation are relatively few. If transformation is needed, enterprises need to build new retail businesses based on big data or Internet for young consumer groups."

In this regard, city beauty said in the Ying police announcement that the company will develop brand portfolios in the new retail mode in the future, and expand the retail footprint of the group, especially in shopping centers and e-commerce channels.