Closing More Than 1300 Stores, City Beauty Decided To Expand Low Line City Business

Urban beauty (02298) announced its 2019 annual results.

According to the announcement, the income of the group decreased by about 19.9% to about 4 billion 82 million yuan, and shareholders accounted for 1 billion 298 million yuan, compared with 378 million yuan in the same period last year.

From the point of view of channels, sales to franchisees achieve 1 billion 950 million yuan, accounting for 47.8% of total revenue, retail accounts for 33.5% to 1 billion 379 million yuan of total income, e-commerce accounts for 15.4% to 627 million yuan of total income, and raw material sales account for 3% to 125 million yuan of total revenue.

According to product category, bra is still selling well, accounting for 45.9% to 1 billion 872 million yuan of gross income, 18.3% to 746 million yuan for underwear, 14.1% to 578 million yuan for pajamas and household clothes, 8.8% to 358 million yuan for thermal clothing, and 3% to 125 million yuan for raw materials trading.

In addition, the announcement pointed out that the gross profit margin of urban beauty fell to about 22.6% in 2019 (2018: 41.7%), and the sharp drop was mainly due to the provision of the old stock depreciation allowance of about 738 million yuan. Excluding this special item, the gross profit margin is about 40.7%, mainly due to the fierce competition in the market and the higher discount offered to customers.

In order to improve its performance, the group has taken various measures to appoint Mr. Xiao Jiale, who has extensive experience in the domestic retail industry in the second half of 2019, as the new chief executive officer and other senior managers to lead and drive the group's strategic measures, and to enhance the executive capability and efficiency of the group.

In August 2019, the Boston consulting company, an international consulting company, was appointed for a long time to review the group's overall operation strategy, main brand operation mode, inventory management, optimized management organization structure, full channel retail management, and optimize the structure of direct store.

Urban beauty decided to put forward a transformation plan in November 2019 and December:

Return to focus on practical, functional and cost-effective products.

In December 2019, Guan Xiaotong, the new spokesperson, launched the new commercial advertisement on the theme of "making his own idol" to promote the quality of the new design.

In the fourth quarter of 2019, we opened six shopping center stores with the theme of "family life concept" and opened and renovated seventh generation personal clothing stores in December 2019 to attract consumers.

Increase investment in e-commerce channels and Tencent programs to break the boundaries between online and offline marketing and achieve full channel marketing;

Expanding business territory to domestic low level cities to fill market gaps;

Establish a large-scale channel to clean up old and overdue Inventory (such as special stores and discount stores) to maintain inventory at a healthy level for a long time.

Optimize franchisee's structure and explore potential Southeast Asian market;

And strictly control costs, optimize the organizational structure and reduce unnecessary expenses.

The Board believes that the above measures will gradually restore the healthy growth and profitability of the group and its franchisees.

As of December 31, 2019, there were 5970 stores in the city (2018: 7305), of which 1269 (2018: 1406) were self owned stores and 4701 (2018: 5899).