Urban Beauty In The Interim Net Profit Decreased By More Than 80% Traffic Floret Difficult To Change Sales Performance

Recently, urban beauty released a profit warning that the net profit in the first half of the year was expected to be no less than 80%. The urban beauty side said that the profit of the group was reduced due to the rising market price of raw materials and the higher discount offered to customers.

For the reason that its profit is expected to decline, analysts pointed out that urban beauty has been expanding too fast in recent years, and the impact of the Internet business is very large. At the same time, the beauty of the city is dominated by "fast fashion" or "high performance price ratio", and its brand positioning is not clear enough, which makes it difficult to stand out from many underwear brands.

The Chinese New Jingwei client noted that as of July 30th, the urban beauty came to HK $1.50, with a market value of HK $3 billion 374 million, a sharp fall of 68.27% compared with April this year, and its market value shrank by nearly HK $8 billion.

Medium term net profit decreased by more than 80%

Recently, the city beauty released a profit warning that it is expected that as of June 30, 2019, the total profit attributable to the owners of the company will fall by less than 80% compared with the same period last year.

The reason for the decline in performance is that urban beauty says the main reason for the decline in gross margins is the rise in raw material market prices used by the group and the tightening of some suppliers' environmental regulations, resulting in an increase in the cost of raw materials for their supply, resulting in an increase in the cost of raw materials. In addition, the company has offered a higher discount to customers.

In some industry circles, after the crazy shop expansion, the urban beauty has been playing the "price war" to occupy the low-end underwear market in recent two years.

In a shopping mall under the urban beauty line in Beijing, the Chinese New Jingwei client noticed that the price of the products in the store was mostly around one hundred yuan, and some goods were second pieces 70 percent off, third pieces and fourth pieces 35% off. For example, the price of a new underwear is 119 yuan and second pieces 70 percent off, that is to say, it is only 35.7 yuan to buy second underwear. In addition, the store's shopping guide also said that the purchase of two underwear will give a lady's bra.

Not only offline stores have a big discount rate, but the new China Jingwei client noted that in the Tmall city beauty official flagship store, the store publicize as "second pieces 50 percent off", as well as "bra 99 yuan 3 pieces", "underwear 69 yuan, five optional" and other preferential activities. Some underwear is only priced at 80 percent off at a clearing price, and some underwear is only sold for 23 yuan after some discount.

As early as last year's earnings report, the urban beauty disclosed that the gross profit margin of the company dropped to about 41.7%. The company explained that it was mainly due to the intense competition in e-commerce business and the promotion of the old stock.

CEO, the chief strategist of the urban beauty group and the electricity supplier of the city beauty, has said that the decline of the urban beauty revenues and the great impact on the offline line will lead to the strategic implementation of "online and offline two wheel drive". Sha Shuang also said that at present, the Chinese underwear market has entered a mature stage. The future underwear market will focus on supply chain management, whether the fund is strong and the channel development situation.

Can "flow floret" endorsement save urban beauty?

In order to improve the future operation results, the city beauty announced six measures in the Ying police announcement, such as the appointment of new chief executive officer, the hiring of new brand spokesmen, the increase of product development, the adoption of appropriate price strategies to optimize gross margin, the expansion of sales channels and the search for strategic investment in quality suppliers, participation in the merger or acquisition of local Underwear Companies in China.

It is worth noting that in order to seize the young people's market, the urban beauty also aimed at the influence of "flow floret" brand endorsement. According to the announcement, in June 1st this year, young actor Guan Xiaotong became the spokesperson of the "city beauty" brand underwear and home furnishing in China, with a contract term of two years.

The above city beauty shop manager said that in the past month, the major stores have been replacing the new spokesmen's billboards and commodity labels. The new underwear, which was endorsed by new Guan Xiaotong, is promoting the "BAR 88 Festival". It is understood that "BAR 88" is the first time the city beauty launched the underwear Festival, the time for August 8th of this year, the slogan from the previous Lin Chiling endorsement of the "new underwear, new you" replaced Guan Xiaotong endorsement "I have my new sexy."

Xu Xiongjun, a strategic positioning expert and founder of the nine German positioning consultancy company, said that the depression of the global economic environment has had a great impact on the entire female consumption industry in recent years. The urban beauty has been dominated by offline franchisees for many years, known as the "Wan Dian plan", but the expansion of the shop is too fast, and the sales mode dominated by offline stores is greatly affected by the Internet business. In addition, the brand positioning of urban beauty is not clear, brand name is "fast fashion" or "high cost performance", but the "cost performance" as a brand positioning itself is not reliable.

In addition, Xu Xiongjun also believes that the declining sales performance of urban beauty shows that there are problems in the company's management system and dealer system. Whether it is offline or online, price war is endless, and competitors will always have lower prices. If the urban beauty continues to fight the price war, it is hard to make profits. Xu Xiongjun said.

For urban beauty replacement spokesperson initiatives, Xu Xiongjun said, replacing the new traffic star endorsement can really make the brand younger, so as to attract post-90s and even 00 consumers, can be regarded as icing on the cake initiatives. But it is unrealistic to expect to change the sales performance of an enterprise by replacing the spokesperson. "In the future, enterprises will still have to follow the path of individuation and differentiation. If the differentiation of brand positioning is not accurate enough, they will be drowned in the sea of homogenization." Xu Xiongjun said.