Rapid Expansion And Hidden Danger, Urban Beauty Is Not Beautiful.

City beauty announced recently that it expects to lose nearly 1 billion yuan after tax in 2019, which has aroused great concern in the industry. Reporters interviewed found that urban beauty shop location coverage coverage coincide relatively high, and stores have been temporarily closed. Insiders say that "temporary closure" is not necessarily related to performance losses. But with the change of consumer habits, the global fashion industry is launching a new round of competition. Underwear brands represented by urban beauty are facing new challenges.

The urban beauty who also made a profit of 378 million yuan in 2018 suddenly announced that due to changes in the economic environment, internal demand slowdown and rapid expansion and other reasons, it is estimated that the deficit in 2019 will be nearly 1 billion yuan after tax, which will make investors and the industry extremely surprised. In December 25th, the price of urban beauty fell 2.88% to HK $1.01 / share, and is about to enter the "penny stock" camp.

Existing stores are temporarily closed.

According to the announcement issued by the urban beauty, it is estimated that the urban beauty group's loss after tax will be no less than 980 million yuan in 2019, while the profit of urban beauty in 2018 will reach 378 million yuan. But this year there have been closed stores, according to China daily data, as of the first half of 2019, the city beauty shop thousands. There were 6562 urban beauty distribution networks, including 5293 franchised stores, 743 fewer and 606 less than the end of 2018. Meanwhile, the sales volume of urban beauty to franchisees in the first half was 1 billion 82 million yuan, down 14.26% from the same period last year.

On the 25 day, a reporter interviewed found that the location of the city beauty shop was more concentrated. The brand has two stores in the top of the gang and another one in Tianhe City, and the location of each store is only about one hundred meters. In addition, near the end of the year, most of the goods in the shop are being discounted, and some merchandise discounts have reached second yuan. A salesperson said that the current passenger flow in the store was relatively stable, and the weekend was about 80, with a working day of about 60 people. Some of the discount items were even broken. However, during the visit, the reporter noted that one of the city beauty shops in Tianhe and another city had been closed. The notice at the door indicated that the shop was temporarily closed because of a leave of duty. According to the owner of the store, the store had been closed for about 5 days.

Rapid expansion of hidden business risks

City beauty said in a notice that the company's profit and loss is due to changes in the economic environment and internal demand slowdown. In addition, the rapid expansion of urban beauty in the past has led to increased inventory in self owned stores and franchisees, and some business strategies have failed to meet the different needs of customers. Under this background, the store performance and profitability of urban beauty shops have been adversely affected, resulting in the weakening of financial status of the group and franchisees. Many dealers are also unable to solve their related problems by improving their internal operations alone.

In addition, taking into account the transformation plan and the actual financial performance, urban beauty plans to cut the inventory of about 650 million yuan to 700 million yuan at a time, with a one-time exemption from the group's main customers from 310 million yuan to 350 million yuan, and closing a number of loss retail stores (which cost about 20 million yuan to 30 million yuan). The above accounting provision has become an important factor affecting the performance of urban beauty in 2019.

It is understood that urban beauty has taken a variety of ways to improve business performance, such as executives adjustment, hire consulting companies. In the announcement, the urban beauty put forward a new transformation plan, including the new spokesperson Guan Xiaotong launched a new advertisement, opened a store with "family concept" as the theme, and the seventh generation of intimate clothing stores, increased the investment of electronic business, and expanded the low line city market.

　　 Underwear market faces new competition

Public information shows that city beauty listed on the main board of China's Hongkong in 2014 and became the "first stock of Chinese underwear". In 2015, there were more than 8000 stores in the city, with a profit of 4 billion 553 million yuan and a net profit of 540 million yuan, with a market value of HK $20 billion. In the same year, city beauty implemented the "Wan Dian plan". The total number of stores reached 8058, including 6937 franchised stores and 1121 self operated stores.

However, rapid expansion is also a hidden danger for the operation of urban beauty. In 2016, the sales revenue of the company decreased by 9%, and its net profit was cut to 240 million yuan. The average stock turnover period jumped from 92 days in 2015 to 142 days, and the stock stock was nearly 1 billion 200 million yuan, accounting for 30% of the total assets. Since then, urban beauty has been forced to discount sales and close down the loss stores. In the first half of 2016, 238 stores were closed, and the total number of stores in 2017 dropped by 362.

Reporters noted that in 2018, urban beauty performance improved, revenue grew 12% to 5 billion 100 million yuan, net profit increased 19%, reaching 378 million yuan. However, the gross profit margin also dropped from 44.4% in 2016 to 41.7% in 2018, and accounts receivable increased from 450 million yuan in 2016 to 830 million yuan in 2018. In terms of share prices, as of December 25th, the price of urban beauty dropped from 8.50 per share in 2015 to 1.01 Hong Kong dollars per share, and its market value also dropped from nearly HK $20 billion to HK $2 billion 272 million today.

Everbright Securities in research report said that the experience of the United States, underwear in the past 12 years has a relatively high degree of prosperity, and continued to enhance concentration, leading to benefit. At present, the clothing industry in our country is scattered, and the urban beauty has long been growing as a leader. However, in the short run, the pressure of the company's performance is greater. In addition, insiders said that with the change of consumer habits, the global fashion industry is launching a new round of shuffling. The underwear brands represented by urban beauty are facing greater challenges.