The Urban Beauty Cliffs Loss Was 980 Million, And Her Transformation Plan Was Not Convincing.

Recently, urban beauty (China) Holdings Limited announced a profit warning. It is estimated that the group's deficit will not be less than RMB 980 million yuan after 2019, while the net profit of the company will be about 378 million yuan after tax in 2018. Affected by the news, the price of urban beauty fell 2.88% to HK $1.01 on the day of the announcement, and the market value of the company is HK $2 billion 137 million.

Why did it make profits in 2018? Only about a year did urban beauty lose nearly 1 billion?

To save the decline by discount? There are two main reasons why this Everbright Securities research paper has commented. First, the expansion strategy of the previous stores is too radical, the quality of the channel is deteriorating, and there is a competitive food effect, resulting in a decrease in passenger flow. The beauty of the city has successfully captured the market gap of the mid end underwear market. Since its successful landing on the HKEx in 2014, its revenue and net profit have been rising all the way. With the rapid expansion of the single store franchise, there were 7026 stores in that year, 6049 of which were franchised stores.

In 2015, the market value of urban beauty was HK $20 billion. The company implemented the "Wan Dian plan". The number of stores reached 8058, of which 6937 were franchised stores and 1121 were self operated stores. Radical expansion has hidden risks for business, leading to increasingly serious homogenization of stores, increasing cost burden and decreasing passenger traffic.

In 2016, the underwear of urban beauty began to be unsalable, and net profit fell 55.2% year-on-year. The company has adopted a vigorous discount sale to deal with the crisis, but this has not changed its poor profitability. The second reason is that the company has not responded to the changes in the retail market in a timely manner. Women's underwear was mainly made of steel products. In 2016, the popularity of steel rings began to break out. The company thought that the phenomenon of underwear without underwear was a short-term phenomenon, ignoring the significant change in women's demand for underwear: from the sexy appearance to the comfort fit, from a single demand to a multiple choice. The transformation plan is a little dull while announces the profit warning, and the urban beauty also gives the transformation plan. Including the new spokesperson Guan Xiaotong, launched the new advertisement of "making his idol" as the theme, set up a shopping center store with family concept as the theme, and strengthened the investment in the business channel and expanded the business territory to the domestic low level city to fill the market gap. It is noteworthy that the company did not give a clear explanation of distributors' management, channel quality and product upgrading.

Since the city beauty changed its spokesperson in June 2019, people thought that the company had sent out signals to adjust the age of the consumers. However, no matter from the channel operation or marketing strategy, the operation had changed. Nowadays, more and more underwear brands are emerging. Just over 3000 new underwear brands have been launched on the mainstream e-commerce platform. The brands of these non vertical sectors such as UNIQLO, Zara and H&M have also begun to emphasize underwear products, and the competition has become increasingly fierce. If the urban beauties don't take the lead again, I'm afraid the next year will be even more sad.