Urban Beauty Transformation Pains: First Half Loss 120 Million, Cut 40% SKU

This year, affected by the new crown pneumonia epidemic, the brand clothing industry is facing difficulties, and even women's body clothing is inevitable.

Recently, the national underwear brand city beauty (02298.HK) announced that the main shopping area of its own stores and franchisees were restricted, resulting in an impact on their performance and expected to lose at least 120 million yuan in the first half of this year.

"The epidemic is accelerating the pace of change in the industry. This year we will continue to deepen the reform and find the core competitiveness of urban beauty." In July 6th, Zheng Yaonan, the founder and chairman of urban beauty, told an interview with the twenty-first Century economic report that in response to the transformation pains and market situation, we must advance the transformation with the determination of "the two undertaking".

The underwear brand, which has a history of 22 years, is trying to innovate from the aspects of brand, product, storefront, channel, organization and management.

Transformation pains

In 1998, Zheng Yaonan, who came out of WAL-MART, founded the city beauty. From the very beginning, it chose to target the large and scattered female underwear market in China. In 2003, during the SARS and 2008 financial crisis, the market expanded to the bottom of the market, and then came the sexy goddess "Zhi Ling elder sister".

However, the urban beauty who has gone through the stage of retail and king is suddenly slowed down. From 2016, the company's revenue growth and gross profit margins began to fall.

In 2019, urban beauty realized business income of 4 billion 82 million yuan, an increase of 19.91% over the same period last year. Net profit attributable to shareholders of the parent company was -12.98 billion yuan, down 443.13% compared with the same period last year. Gross profit margin also dropped sharply from 41.7% in 2018 to 22.6%, the worst performance recorded by the company since its launch in 2014.

Zheng Yaonan blamed it on a strategic mistake in the past few years. "At that stage, we went the wrong way. When we push the whole product reform, we are more concerned about the sexy and fashionable underwear." He said.

At that time, the city beauty once wanted to build itself into an oriental "secret", sexy, fashionable and accompanied by expensive prices. But the fact proved that comfort and practicality are always the biggest consumer demands in the field of women's underwear. In order to sell the products as soon as possible, the franchisee will have to discount, buy one, send and sell first, so as to digest the backlog of inventory, and eventually lead to a continuous decline in gross margin.

So from the second half of last year, urban beauty began to transform and transform. Not only did Xiao Jia Le, who had more than 20 years of retail experience from Adidas, take the position of CEO, but also replace her spokesperson with Guan Xiaotong, a national daughter. Reporters noted that before this, the city beauty has hired Wacoal former research and development minister Tang Qianteng as chief technology officer, to assist the company's product development.

"Last year, we re positioned the brand and products through consultancy research, and returned to the position of" practical, good quality and good quality ". At the same time, we made a lot of reform on the product line, including focusing on some evergreen money and creating more explosive products. Xiao Jiale told the twenty-first Century business news reporter that since last year, the company has reduced the number of its original products by 40%, from over 2000 SKU to more than 1200 SKU this autumn and winter.

Today, the market has changed dramatically under the new crown epidemic. Previously, GXG, the parent company of ESPRIT, the mainland's GXG operator, said that ESPRIT would close all stores in China, and the brand OldNavy of the group's group also announced that it was officially withdrawing from the Chinese market. In Zheng Yaonan's view, the urban beauty faces not only the challenges brought by the epidemic, but also the pains in the process of transformation.

At present, the number of urban beauty who is the first brand of Chinese underwear is still less than 4%. Zheng Yaonan hoped that China could produce more than 20% of China's underwear brands, with the market share of more than 30%. "The United States has more than 30% share of the secret market, more than 20% of Japan's Wacoal, and 20% of German Ttiumph." Therefore, he believes that the domestic underwear market still has great room for development.

The two venture

According to Xiao Jiale, as a personal clothing brand, urban beauty not only has underwear, but also body shaping products, underwear, household clothes, apparatus, thermal clothing, Bottomwear, socks and so on. Therefore, how to make product planning, reduce inventory and increase profits of franchisees is one of the focuses of urban beauty change.

To this end, Xiao Jia Le divides the stores of urban beauty into five types: community type, youth type, fashion type, comprehensive store and factory store, and the different business areas and consumption groups of different stores are also different. Then, the headquarters will decide the category and quantity of the products according to the characteristics of different stores.

At the same time, combined with the current situation of "more channels and more stores", urban beauty began to transform and digitalized the store. Following the principle of "big shops and bigger stores", urban beauty began to renovate old stores and set up new seventh generation stores, aiming at different age groups and consumption scenarios.

"The end of the season is a part of retail business, but whether it is on the electricity supplier discount or inventory, or the use of outlets, it is necessary for the good operation of the goods." Xiao Jiale believes that there are more than 6000 stores in urban beauty, and less than 2% of factory shops, which will not affect the price system of other stores.

In June 24th this year, the largest flagship store in Asia, 2000 square meters, was opened in Dongguan, Guangdong. Reporters at the scene saw that the flagship store not only assembled all the products of the city beauty, but also introduced many elements of homes, parents, and even catering. In the two floor of the simple design style, they could meet the needs of clothing, food, entertainment, entertainment and shopping.

According to the planning of the urban beauty, this flagship store model of more than 1000 square meters will be gradually launched in the core business circle of other major cities in the whole country, and it will take the whole direct camp mode, and it is expected to reach 100 scale in the next few years.

In recent years, new changes have taken place in the whole garment home textile industry. The electricity supplier has become an important sales channel for the clothing home textile industry. Many listed companies account for nearly 30% of the electricity supplier income, and some companies even exceed 40%. For electricity providers, the late start of the urban beauty next how to force the attention of the outside world.

In this regard, Xiao Jiale believes that although the electricity supplier has become one of the important channels for footwear and apparel industries in recent years, this epidemic has also deepened everyone's dependence on online shopping, but he believes underwear is a category that needs on-site experience, and offline stores are still the most important channel for urban beauty.

"We will regard the electricity supplier as an important consumer test platform, and publicize new products, sell well products and explode money online." According to its disclosure, urban beauty is accelerating the layout of the business channel, Tencent's small program, live broadcast and shaking voice.

After the outbreak of the outbreak, the urban beauty business channel grew rapidly, and the main selling platform of its electricity supplier increased by more than 30% in May and June after the outbreak. Today, Tmall flagship store has 4 million 60 thousand fans, and direct stores and franchisees have quickly restored sales growth through e-commerce platforms and small programs.

In May this year, the city beauty set up Li Zhi Technology (Shanghai) Limited company, further revolve around the digital transformation, create the company's data platform, business integration solutions and digital operation products of the people's freight yard.

Zheng Yaonan told reporters that in June, retail sales of urban beauty self dealers and franchised stores had returned to 80% in the same period last year. "It is estimated that by August this year, the number of renovated stores and new stores will increase to more than 200." In his view, if the outbreak is not an outbreak, the series of reform measures will be reflected in this year's performance.

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