The Wave Of Consumer Goods Market: The Collapse Of The British Market, The Transformation Of Domestic Beauty And The Collapse Of The Kettle Industry

Recently, the bankruptcy of the British company in the female consumer goods market has created waves.

According to APP, Vitoria's secret British company is about to enter bankruptcy and liquidation in June 9th. DDT, a commissioned firm, said it would help the British companies to restructure their investments, adjust leasing terms, and look for potential buyers.

Prior to this, the L Brands, the virgin parent company, announced that it would reduce the number of its stores and plans to close about 250 stores in the United States and Canada this year.

Under unfavorable operating conditions, L Brands lost a net loss of 297 million US dollars in the first quarter, of which 46% of its sales fell by a year earlier. In late April, Sycamore Partners, the original planned takeover of the secret service, terminated the transaction.

It is sad to note that when China began to go downhill, the "national underwear" brand city beauty of China had never been single.

1 load transformation to urban beauty performance weakness

By the end of June 12th, the price of urban beauty was HK $0.63, and only the fraction of the highest point in September 2015. In the year of 2019, the price of urban beauty fell by nearly 6. It fell by nearly 5 in 2020, and its share price fell 45 degrees.

Market source: Zhitong finance and economics APP

APP noted that the direct result of the continued decline in the share price of urban beauty was the sharp decline in corporate performance. According to the 2019 annual performance report of urban beauty, in 2019, the company achieved an income of about 4 billion 82 million yuan (the same below), a decrease of 19.91% compared with 5 billion 96 million yuan a year ago, a loss of 1 billion 298 million yuan for shareholders, and a profit of 378 million yuan for shareholders in the same period last year.

In fact, the performance of urban beauty in 2017 and 2018 before the "performance change" has been increasing for two consecutive years. In 2018, revenues increased by 12.2% to 5 billion 96 million yuan. The reason for the sharp decline in performance in 2019 is that urban beauty launched the transformation plan in 2019.

According to the city beauty, the company hired Boston consulting company in August 2019 to review the group's overall operation strategy, main brand operation mode, inventory management, optimization management organization structure, retail management of all channels, optimize the structure of Direct stores, and formulate the group's business strategy and strategic landing and the priorities of all the measures.

The Boston consultation recommends a number of financial reform measures for urban beauty, including: return to practical, functional and cost-effective parts instead of turning to fast fashion sexy sections; speed up the clearance of old stocks; optimize the structure of franchisees; take actions to relieve franchisees' cash flow problems; close down shop losses, open new stores and adopt new images to refurbish existing stores; and launch More classic / evergreen products.

Boston advisory proposal has been adopted positively by urban beauty. In 2019, the urban beauty cleaned up the old stock at a lower discount, so the provision for inventory was about 738 million yuan. In order to alleviate the problem of fund shortage of the franchisee, the urban beauty once exempted the accounts receivable of about 327 million yuan from joining the business. At the same time, the urban beauty accounted for about 68 million 700 thousand yuan for the account receivable allowance and about 24 million 300 thousand yuan for other receivables.

As a result of this series of reform measures, by the end of 2019, the inventory of urban beauty decreased from 1 billion 164 million yuan in the same period last year to 680 million yuan; the amount of accounts receivable decreased from 826 million yuan in the same period last year to 276 million yuan; cash and cash equivalents decreased from 1 billion 496 million yuan in the same period last year to 854 million yuan.

Judging from the change of the flow assets structure of urban beauty, although the company "broke the money", the transformation effect is obvious.

Data source: urban beauty 2019 earnings report

2 traditional brands are facing challenges and transformation is imperative.

Of course, why do good urban beauties transform? Why do they choose 2019? This is another question worth answering.

Looking back on the development of urban beauty in recent 10 years, as a brand of "national underwear", the company developed rapidly in the early days. Revenue grew from 1 billion 656 million yuan in 2011 to 4 billion 953 million yuan in 2015, with an average annual compound growth rate of more than 30%.

In 2015, the urban beauty who began to develop vigorously began to implement the "Wan Dian plan". The total number of retail outlets reached 8058 stores (6937 stores and 1121 self operated businesses), and grew into the leading market of China's underwear market. However, because of the aggressive strategy of expansion, the number of stores was saturated, the rate of store entry declined and the cost increased.

In 2016, the net sales of metropolitan Li distribution network decreased by 958 to 7651. Revenue decreased by 8.9% to 4 billion 512 million yuan in the same year, and the net profit of the company dropped by 55.19% to 242 million yuan due to the substantial increase in cost.

In 2016, the main comfort product "no steel ring underwear" products challenged the mainstream products, accounting for more than 10% of the city's market share.

Looking back now, the urban beauty of that time may not be unable to see the development opportunities of the "no steel ring underwear" market, but because of the pressure of growth performance, so it has to make trade-offs.

In May 2017, Fosun rose subscribed 11.18% of the equity of the urban beauty to nearly 6 hundred million of the funds. However, Fosun also made requests for the performance of urban beauty in the next two fiscal years, including the urban beauty guarantee that the income growth in 2017 and 2018 was no less than 3% and 6% respectively, or 2018's income was not less than 9.18% in 2016; The profit growth rate is not less than 20% and 15% respectively, or the net profit in 2018 is not less than 38% in 2016.

In 2017 and 2018, the urban beauty sales revenue reached 4 billion 542 million yuan and 5 billion 96 million yuan respectively, representing an increase of 0.67% and 12.2% compared with that of the previous year. Net profit of 317 million yuan and 380 million yuan, respectively, increased by 31.01% and 19.75% respectively.

To get this report card, the urban beauty must not be able to fight the products and sales channels. In 2017, there were 7171 stores in the company's distribution network and 7305 in 2018. At the same time, urban beauty also vigorously develop online channel business. The electricity revenue of the two years has reached 543 million yuan and 712 million yuan respectively.

Data source: urban beauty 2018 earnings report

It is worth pondering that the gross profit margin of urban beauty fell from 44.37% in 2016 to 41.67% in 2018. Accounts receivable increased from 451 million yuan to 826 million yuan, and the deposit, prepaid accounts and other receivables increased from 503 million yuan to 790 million yuan. The net cash income of the company's operating activities in 2018 was only 51 million yuan.

Although the urban beauty has successfully completed the "betting" condition, the company's distribution network has become rather redundant. In 2019, after the company's distribution network reform, its distribution network stores dropped to 5970.

According to the recent clarification announcement issued by urban beauty, as of December 31, 2019, the group had about 2200 franchisees, and more than half of the franchisees owned only one shop, resulting in higher administrative costs. In addition, smaller franchisees have limited opportunities for further expansion due to limited resources. This shows that there is still room for further integration of urban beauty distribution channels.

Then, after the transformation of urban beauty, is it possible to return to the peak?

3 is it not too late to mend?

The city beauty, who is the number one of China's underwear market, still has a broad mass base.

According to Tmall's data, the number of fans in the official flagship store is 4 million 50 thousand, VICTORIA 'S SECRET is 3 million 770 thousand, the number of fans in the flagship store is 6 million 870 thousand, the number of fans in the official flagship store of Manifen is 3 million 220 thousand, and the number of fans in the official flagship store is 2 million 478 thousand.

According to AI media consultancy data, the size of China's underwear market in 2019 was about 200 billion yuan, of which the female underwear market accounted for more than 60% of the total market size.

These data show that urban beauty is still ranked the first tier in China's underwear industry, and the company has broad room for development in the underwear industry. Looking ahead, urban beauty needs to do more about women and better products.

According to urban beauty, in order to transform, the company appointed Xiao Jiale as the new chief executive officer in the second half of 2019 in addition to the appointment of Boston consulting company in 2019, as well as other senior management personnel adjustment.

After considering the financial and operational detailed recommendations of the Boston consulting company, the urban beauty decided to put forward a transformation plan in November 2019 and December. Including the return to focus on practical, functional and cost-effective products; joint new spokesperson Guan Xiaotong launched a new commercial advertisement to promote new design products; in the fourth quarter of 2019, opened six shopping center stores with "family life concept" as the theme, and opened and renovated seventh generation intimate clothing stores in a completely new way in December 2019; and increased business channels and Tencent. Investment in order to break the line between online and offline marketing and achieve full channel marketing; expand business territory to domestic low level cities to fill the market gap.

To sum up, the transformation of urban beauty includes management upgrading, product upgrading, and channel upgrading, which are essential elements of consumer goods. Of course, it is time to observe the effect of "chemical reaction" if we want to do a good job in consumer goods.