Wei Ming Was Sold Cheap, And Urban Beauty Lost 1 Billion. Why Did This Sexy Business Go To The End?

From the capital of Fuzhou, Fujian, to 90 km northwest, there is a small town of more than 1200 years - Gutian.

Gutian is located on the North Bank of the middle and lower reaches of Minjiang. The mountains are undulating and the valleys are interconnected. The northwest is dominated by the stone pagoda, and the East Lake is covered by the mountains. Therefore, the river has a large gap, and contains abundant water energy resources. It is known as the "hometown of Hydropower".

In Gutian, it is not only water power resources that are famous, but also Zheng Yaonan, a Fujian businessman in Gutian.

In other words, Fujian has always been an enterpriser who dare to rush and dare to forge ahead, and it has always been the image of Fu people whether in traditional industries, real estate or the Internet industry.

The same is true of Gutian people in Fujian. Zheng Yaonan, a lingerie enterprise who came to Hong Kong in June 2014, was sitting on the throne of the more than 7000 mainland stores and 4 billion yuan annual revenue.

After listing, the market value of the urban beauty who tried to build the Chinese version of "Vitoria secret" was as high as HK $18 billion. At its peak, its market share even exceeded the sum of second to fifth.

But recently, urban beauty has been in big trouble.

1, the age of high light.

The urban beauty, who is known as "the first brand of national underwear", probably didn't expect that the days would be so difficult.

In December 23, 2019, the city beauty released a notice of profit warning and transformation plan. The announcement shows that by the end of 2019, the annual loss of urban beauty will be no less than 980 million yuan.

This is not the first time urban beauty has suffered any decline in performance. In the first half of 2019, the total revenues and operating profits of urban beauty declined, and operating profit dropped by 81.6% over the same period.

Although early warning, but the huge loss of nearly 1 billion yuan still shocked the outside world, this shock was finally reflected in the stock market. By the end of February 12th, the price of urban beauty was HK $1.12, and the market value was only HK $2 billion 500 million, which evaporated HK $15 billion 500 million at the peak and shrunk by nearly 87%.

However, six years ago, urban beauty was another scene.

In 2012, Zheng Yaonan, the burning eye, signed the "national goddess" Lin Chiling as the brand spokesperson. Although the cost of endorsement is high, Zheng Yaonan is very optimistic about Lin Chiling's national character and is not willing to pay for it.

Through the red star promotion, from roadshow to Hong Kong listing, urban beauty did earn enough attention.

Subsequently, the effectiveness of spokesmen continues to ferment. Prospectus shows that as of the end of 2013, according to the total sales revenue, urban beauty accounted for about 2.8% of the market share of underwear industry, almost 3 times the second largest underwear brand in China.

Under Zheng Yaonan's business, the city beauty continued to run all the way.

In 2015, the fame of the urban beauty, the number of stores and the stock price reached its peak. 8058 stores created 4 billion 953 million yuan of revenue, and the market value once exceeded 18 billion Hong Kong dollars.

The beauty of the city has been on the way, and Zheng Yaonan has also done a great thing.

"Rural encircling the city" is the channel sink when using popular words. In fact, Zheng Yaonan put forward the "Wan Dian plan" as early as 2011. As of the end of 2015, there were 6937 franchisees and 1121 direct outlets in the city. The market share rose from 2.8% to 3.3%, and it had a good match with Shaxian County snacks.

It is easy to see from the expansion speed of urban beauty stores that Zheng Yaonan can be regarded as a typical radical in Fujian entrepreneurs.

What he did not expect was that this decision also buried a secret thunder for the future development of urban beauty.

But urban beauty became the largest underwear retailer in the country, and it was closely related to the early experience of Zheng Yaonan, the founder.

2, inspirational youth

When the spring breeze of reform and opening came, Zheng Yaonan, 20, graduated from technical secondary school. At the age of 20, he was a fearless old man. He decided to step on the era draught.

In 1995, Zheng Yaonan ran to Fujian alone from Gutian, Fujian for 500 yuan, and became a security guard at the WAL-MART headquarters in China. Although WAL-MART is only a grass-roots staff, but he was thinking of how to make a big chess game.

Zheng Yaonan understood that in any of the top 500 enterprises in the world, any job would be an extremely rare learning opportunity for him.

Therefore, Zheng Yaonan, the inspirational young man, should do the best even when he looks at the gate. He can clearly remember every employee's name and call out directly when he meets. He greets politely and enthusiastically.

Because of his dexterity and carefulness, Zheng Yaonan was transferred to the store for security in a few months. Although it's just a place to look at the gate, it's an important turning point for him.

He began to pay close attention to observing how this large supermarket manages its business and how to build its corporate culture. This personal experience has provided valuable experience for him to create urban beauty in the future.

Zheng Yaonan refused to relax in detail. For example, he would study the psychology of consumers when buying goods, and study how salesmen can sell their products smoothly.

In 1997, Zheng Yaonan finally saved enough money to open a cosmetics shop. Only a year later, Zheng Yaonan, who took the "fight to win" as his creed, opened another 7 branches in one breath.

The days were getting better, but this did not kill Zheng Yaonan's passion. One day in 1998, he happened to see a hawker selling lingerie on the streets of Shenzhen, selling 10 yuan for each lingerie and 100 pieces in an hour. This shocked Zheng Yaonan. The market potential of the seemingly dispersive lingerie market must not be underestimated.

Now, Zheng Yaonan smells the smell of money from disordered markets.

In the same year, Zheng Yaonan resolutely decided to abandon the 8 cosmetics stores that had been on the track, "All In" female underwear, and decided to create a brand new underwear.

In other people's eyes, this is purely "enough to support", but in fact Zheng Yaonan has seen through the business opportunities.

At that time, the market of women's underwear was highly polarized, and domestic brands were all mixed goods. In addition, they are expensive international brands, and few brands are available for women.

In order to avoid its edge, Zheng Yaonan decided to abandon the high-end and low-end market, focus on developing the mid end mass consumer market, and launch underwear products with brand protection.

Zheng Yaonan also predicted the popularity of "one-stop shopping" mode more than ten years ago. He abandoned the traditional underwear sales model and sold all kinds of items related to personal clothing to the same store. Besides underwear, underwear, socks, warm vest and other female supplies, men's underwear supplies are also available.

By virtue of its high performance price ratio, urban beauty quickly gained a large number of loyal users and achieved rapid subsidence in the two or three line cities.

　　 3. Get bogged down in the mire.

In the eyes of the media, Zheng Yaonan has always been a very sensitive person with a strong sense of smell.

There are two things that can be corroborated.

First of all, urban beauty is originally a mode of production and marketing, but in Zheng Yaonan's view, it is proper to concentrate resources and funds on product development and brand marketing.

So he gradually stripped the manufacturing link and shifted the urban beauty to light assets, concentrating on brand and research and development. Only 3% of the capacity was reserved for the improvement of plate making and manufacturing process.

In Zheng Yaonan's own words, only good design and good brands can sell money. His goal is to turn the urban beauty into a Nike in the underwear industry, and become a leading operator in brand operators and China's retail sector.

Secondly, when the urban beauty went on the right track, Zheng Yaonan promptly liberalized the franchise policy. With the help of the chain operation mode, the city beauty's retail network spread all over the country overnight.

In 2003, there were only 50 stores in urban beauty stores. By 2014, the number of stores has reached 6272, and the speed of expansion is alarming.

The effect of the crazy expansion is immediate, and the beauty of the city is quickly leaving behind its competitors.

In the next few years, its opening speed almost doubled every year. Whether it was early commercial street, pedestrian street, community, traffic hub, campus periphery, or in recent years, the popular Shopping Mall, the city beauty shop can be seen everywhere. Correspondingly, the market share of urban beauty has also soared, and the annual revenue is directly to the 5 billion yuan mark.

However, how spectacular the aggressive expansion is and how embarrassed it is to be "caught".

Huge losses of nearly 1 billion yuan, the market value shrank by 87%, and the beauty of the city is declining. One of the core problems is that Zheng Yaonan relies too heavily on the market expansion strategy of the franchisee.

As a result, these more than 8000 stores which had been expanding in a crazy way were scattered and mostly husband and wife shops. These franchisees gradually broke away from brand control, which made many top-down measures impossible to implement.

Secondly, because the urban beauty is totally dependent on the factory, the quality of the products is not good enough and difficult to control, which seriously damages the reputation of the brand, and the vicious circle has also formed.

Franchisees can not sell products, in order to clear inventory and achieve cash flow back, can only be forced to discount sales, and the discount is very great, although it can solve the urgent matter at the time, but it has irreparable damage to the brand image.

The mine is still exploded.

After realizing the "Wan Dian plan" and "out of control", Zheng Yaonan was determined to scrape the bone and poison, reduce the stores and clean up the offline channels.

Once the blockbuster "Wan Dian plan" was forced to stop, urban beauty began to close the loss stores nationwide. Data show that since 2015, city beauty has closed nearly 2000 stores.

But things are not going as well as Zheng Yaonan wishes.

In 2016, the urban beauty products began to be unsalable, and the sales amount to the franchisee also declined, which eventually reduced the net profit of that year by 55.2%. By the first half of 2019, urban beauty did not show signs of improvement. Instead, the red light was on again.

At the same time, urban beauty faces a reality: the market environment today will be even more brutal than it was twenty years ago. Large scale underwear brands, cross-border phenomenon also occurs, such as ZARA, UNIQLO fast marketing brand underwear sales increase rapidly.

In addition, there are numerous minority and net red brands. These small roles even overturn the corners by virtue of the electronic commerce channel. They have exceeded the urban beauty in popularity and brand reputation, and the products are comfortable and cheap, which are popular among users.

I have to admit that in the face of the strong impact of these new brands, the beauty of urban beauty will gradually be weakened on the scale and supply chain.

　 4, the general trend is hard to break.

In fact, the whole underwear industry is experiencing an unprecedented big shuffle.

According to media sources, the "secret of Vitoria" of the American underwear brand will be sold, and its founder, L Brands Leslie Wexner, will leave.

It is also reported that the sale of the company will soon be launched this week. The parent company L Brands is close to a private Holdings Company Sycamore Partners, but the details have not yet been disclosed.

It is not without warning that weir fell to this level.

In May 2019, media reports said that Leslie Wexner, CEO of L Brands, said it was "reconsidering the traditional" Secret Fashion Show "and" network TV live in the future may not work "because of the decline in the ratings of Wei Ming show. The 23 year old show was finally called off.

As well as the decline in the ratings of the show, there is also the market value of the company.

L Brands reported that sales of core brands in 2016, 2017 and 2018 were $7 billion 800 million, $7 billion 387 million and $7 billion 375 million, respectively, while net profit fell from US $1 billion 170 million in 2016 to US $462 million in 2018.

Because of poor market performance, the stores of the company are also shrinking. In 2018, it closed 22 stores in the United States and closed 45 stores again in 2019.

Bad business data quickly triggered a chain reaction that led to an era of aesthetic trends. Its market value shrank from $29 billion in 2015 to $6 billion, and it was not summed up in a word "miserable".

In addition to the Wei and the urban beauty, the listed companies, Hui Jie shares and an Li Fang, have also experienced a decline in their performance.

In the great era, the underwear giant of the past could not be spared. Zheng Yaonan has talked about his dream countless times: to be a world-class underwear enterprise. But now it seems that this wish is just a dream of South Ke.