"National Underwear" Urban Beauty Transformation In Full Swing, Can It Be Warmer?

In 2019, China's economic and internal demand slowed down, and the prosperity of textile and apparel industry continued to decline. Many garment enterprises were faced with the predicament of declining performance. "National underwear" city beauty also issued a profit warning. It is estimated that the company's deficit will be no less than 980 million yuan in 2019. In order to reverse the fatigue, urban beauty meets difficulties and moves frequently. Although the pressure is heavy, the transformation determination is also very firm. From the spokesperson to the management level, then to the supply chain and the franchisee, we have to say that the transformation plan of the urban beauty has been very sufficient.

First, what efforts have been made by the urban beauty in their comprehensive transformation?

The urban beauty who was founded in 1998 has gone through more than 20 years and has a wide range of popularity. Facing the cold winter of garment industry, urban beauty actively inject new blood into brand, so as to maintain brand vitality and seize the market of young consumers.

In the process of transformation, urban beauty launched a new store image, and hired "national girl" Guan Xiaotong as a new image spokesperson to attract new generation of consumer groups. Guan Xiaotong, a new spokesperson for urban beauty, launched a new advertisement, opened a shopping center store with "family concept" as its theme, and opened a seventh generation personal clothing store with a brand new image. The new image store has also been accepted by consumers.

In addition to changing the brand image, urban beauty has also made changes to the management team. The founder Zheng Yaonan has retired to the second line, which fully demonstrates the strong transformation of the company.

In 2019, city beauty appointed Xiao Jiale as the new chief executive officer to improve operation and internal management. Xiao Jiale is experienced in the clothing retailing industry, and has worked for about 17 years in AI DAS, and has finally served as senior vice president of all the operations of the company in Greater China. In addition, city beauty also hired Boston consulting company to review its business strategy, brand operation mode and inventory management, to assist in the formulation and implementation of business strategy.

The transformation measures of urban beauty are more specific to the supply chain and franchisees. As of 2019, urban beauty has invested 27 suppliers to improve product design and quality. In view of the problem of inventory increase in self store and franchisee stores, the urban beauty actively adjusts its management strategy, closes the poorly managed stores, and shares the difficulties with franchisees. As of June 30, 2019, there were 6562 urban beauty distribution networks, including 1269 Direct stores and 5293 franchised stores. The total number of stores and franchisees decreased by 743 and 606 respectively compared with the end of last year.

Urban beauty also carried out a one-time large-scale accounting provision, leaving behind the burden of past problems. In December 2019, the urban beauty decided to make accounting provision for the company's financial statements, and cut off the inventory of about 650 million yuan to 700 million yuan in a lump sum. After handling the problem once and for all, the urban beauty can go into battle lightly, while the franchisee's steady profitability will be restored and the confidence in the future development will also be enhanced.

Two, the leading edge of urban beauty is still in existence, but transformation takes time.

Although in recent years, with the emergence of no steel ring underwear, emerging brands such as UNIQLO, Zara, Nike and so on have emerged in the market. But urban beauty still has strong competitiveness in the industry.

On the one hand, urban beauty still keeps the leading position in the competitive underwear market. In the first half of 2019, the business income of urban beauty was 2 billion 210 million yuan, and the scale of revenue was ahead of peers. At present, the clothing industry in China is still highly dispersed. In the long run, it is an inevitable trend to increase the concentration of industries. As the leader of the industry, the urban beauty has the advantages of first mover advantage and scale effect.

On the other hand, unlike the vertical brands that focus on sports underwear, light outdoor underwear or sexy underwear, the products of urban beauty are facing the mass market, having a broader market scale and a more spacious track. At the same time, the company can gain more market share through the diversification of underwear. For future growth, a whole category of underwear brand obviously has a higher ceiling.

Of course, because of the wide audience, the products of urban beauty need to take into account the needs of a wide range of consumers. Unlike sports underwear, it only needs to focus on meeting the needs of a small number of consumers. The so-called "ship is difficult to turn around", which also led to a transformation of the company more time than small businesses, but every change that the company is making now will see changes in the future.

Three, conclusion

Urban beauty 2019's China Daily reported that the company has time deposits, restricted bank deposits and cash and cash equivalents of about 896 million yuan, and has ample cash in its books, and has the financial strength to promote transformation. Besides, urban beauty's provision for old inventories will not affect the cash flow of the company, so the overall financial situation of urban beauty is healthy and can ensure the implementation of the transformation plan.

Looking back at the performance of urban beauty in the capital market, the low share price has fully reflected the pessimistic expectations of investors. As the leading industry in the industry and the "underwear first stock" in Hongkong market, the urban beauty has only 2 billion 452 million HK dollars in total market value under the ferment of pessimism. The valuation has reached the bottom of history. With the continuous change of business, will the city beauties be able to usher in the simultaneous improvement of performance and valuation?