Close Shop 2000, Loss 1 Billion, When City Beauty No Longer "Beautiful"

Zheng Yaonan, the founder of urban beauty, has never mentioned his dream many times: to be a world-class underwear enterprise.

The arrival of a notice broke the dream.

In December 23, 2019, the city beauty released a notice entitled "profit warning and transformation plan". It said it expected to lose more than 980 million yuan in 2019.

As the news came out, the price of urban beauty fell continuously, which was once as low as HK $0.92, and then lingered around HK $1.

Before the deadline, the company's share price was HK $1.08 and its market value was HK $2 billion 429 million. Compared with the peak of HK $18 billion in 2015, the market value has evaporated by 86%.

Who would have thought that "the first strand of Chinese underwear" would be reduced to a precarious "penny stock".

　　 How did "national underwear" make low himself?

This loss has long been a harbinger.

City beauty 2019 China Daily reported that in the first half of the year, the company's revenue was 2 billion 210 million yuan, down 5.5% compared to the same period last year, and net profit was only 35 million 466 thousand yuan, down nearly 80% compared with 175 million yuan in the same period in 2018, setting a new low since 2014.

When the time comes back to four years ago, the city beauty is at its peak.

Since its establishment in 1998, urban beauty has been developing rapidly with the vacancy of the high-end underwear market. In 2015, the annual revenue was 4 billion 953 million yuan, the profit was 540 million yuan, and there were 8058 shops under the line. The market share was the first, far exceeding the sum of second to tenth, and became a truly "national underwear".

One of the core problems is that too much emphasis on franchisee's market expansion strategy brings about management sequelae.

As of June 30, 2019, there were 6562 stores in urban beauty, 1269 of which were self owned stores and 5293 were franchised stores.

Reporters visited a number of urban beauty stores, and found the difference.

A city beauty shop in Hangzhou has a large area and merchandise is neat and neat. The five staff members are familiar with the product and can introduce it well.

A franchised store two kilometers away is only 1/5 of the store. The shop is crowded, and the display is disordered. The corridor is only allowed by one person. The only salesperson is a casual worker who asks three questions. Not far away, a slightly larger number of franchisees, two shop staff service attitude is very poor, some consumers after a short exchange after leaving empty handed.

Franchised stores are usually a good tool for rapid development of chain stores, and they can spread the retail network to the whole country overnight. But on the other hand, the extensive management of franchised stores due to geographical decentralization may hurt the company's vitality.

Urban beauty is being rejected by the "meritorious" franchisees.

Besides the channel problem, there are also product problems.

The beauty of the city who had stood firm for the needs of women's high-end underwear became less and less aware of women.

In 2016, "no steel ring underwear" broke out, but the urban beauty did not feel it, thereby missing the opportunity to open up new business lines.

Nowadays, the style of store is too old, and the style of young people is too vulgar. A consumer said that if the discount is not strong, it will not come here to buy.

There are many discount activities. Whether it's a franchisee or a direct store, there are "5 yuan plus" and "buy one get one" announcements at the door. The clerk told the reporter: "this is a new year's event. It will not be available in a few days, but we will have other activities later. It will also be very cost-effective."

365 days a year, every day in the discount as a selling point to attract customers - in the upgrading of consumption today, urban beauty has slowly changed themselves into "low".

　　 Beauty helps itself, and 980 million yuan breaks the boat.

Poor performance, stock prices fell, urban beauty is also worried. In recent years, it has frequently saved itself.

First, we hired Vitoria's Secret predecessor, CEO, as chief strategy officer, hoping to create "China Version of Victoria". I didn't expect it to decline in recent years or even cancel the "secret show".

After realizing the "out of control" brought about by the "Wanjia store" plan, the urban beauty slowly reduced the store. Since 2015, nearly two thousand stores have been reduced. At the same time, the creation of high-end brand Cosmo Lady, stationed in the city's high-end shopping center.

Online, the city beauty upgraded the storage type stores, renovated a total of 700 self run stores and franchisees, and continuously invested resources on the Internet. Tmall flagship store grew significantly and became one of the main sources of revenue.

In addition, the company has replaced Lin Chiling, the "spokesperson" since 2012, and signed a popular young actress Guan Xiaotong, hoping to regain the love of young people.

However, all efforts did not achieve the desired effect.

This announcement at the end of December 2019 indicates that urban beauties will further intensify their transformation efforts.

There is too much stock to sell.

One time write off the stock of about 650 million yuan to 700 million yuan.

Customers default, unable to operate?

A one-time exemption from the group's principal customers in arrears of 310 million to 350 million yuan.

Shop loss, can not be improved?

Close down a number of retail shops with losses, and pay a total cost of 20 million yuan to 30 million yuan for building decoration and staff demobilization.

The huge loss of 980 million yuan came from here.

If you compare the urban beauty to a sick elephant, then it will face two treatments: first, take medicine slowly, reduce the symptoms but increase the inside; second, perform an operation, cut out the meat to remove the rot, and it is short time trauma, but it is more conducive to recovery.

The urban beauty tried the former, but the curative effect was not great. So it chose the latter.

The huge loss of 980 million yuan is a collective outbreak of poor management, and it also breaks the boat and goes all in to light.

　　 Four strong enemies, where are the leading brands of underwear?

According to Euromonitor, an international authoritative institution, the retail sales of Chinese women's underwear market were 161 billion 300 million yuan in 2018 and 197 billion 300 million yuan in 2022.

How much can the urban beauty eat in the 200 billion yuan market?

At present, China's underwear market has more than 3000 brands.

There are traditional brands such as ancient and modern, man, IMI, s, and so on.

Compared with urban beauty, new talent knows more about what young people want.

Internal and external was established in 2012. Liu Xiaolu, the founder of the "no steel ring" underwear trend, is determined to play the role of the product. In 2018, sales of domestic and foreign sales reached 150 million yuan, only squeezed into Tmall bra TOP15.

Just as domestic brands are getting a lot of envy, international brands are also being built.

In 2019, German underwear Sloggi and Holland Centennial underwear Hunkemller opened many stores in China.

In addition, UNIQLO, ZARA, Nike and so on have also developed underwear product line.

If the rise of the underwear market is still a vast expanse of wilderness, urban beauty can wantonly develop, so today, this track is obviously too crowded. It has a long way to go to open the new channel of "young and high-end".