Why Do Urban Beauty Shop Crazily?

According to the world clothing and shoe net, last Thursday, Zhi Ling's sister endorsed China.

Faucet

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(02298-HK) issued 2017 annual results announcement.

There are three sets of data in the financial summary at the beginning of the announcement, which are very interesting: in the year of 2017, urban beauty recorded a revenue of 4 billion 542 million yuan (RMB, the same below), a slight increase of 0.7% over the same period last year, and a 9.2% operating profit. However, the operating profit of urban beauty actually increased by 37.4% in 2017, reaching 420 million yuan.

02298-HK: a financial summary source: HKEx

According to the most basic financial formula, "profit = income - cost", there is only one reason for the increase in income and the sharp rise in profits. That is, the urban beauty has slashed expenses in 2017.

The consolidated income statement shows that in 2017, the urban beauty sales expenses and general and administrative expenses were reduced by 97 million yuan and 51 million yuan respectively.

In this regard, the explanation of urban beauty is that during the year, sales and distribution channels have been adjusted, closing many stores that have recorded losses, and negotiating the reduction of rentals and reducing unnecessary human resources expenditure.

Urban beauty comprehensive income statement (part) source: HKEx

Why is it so crazy?

Closing stores to protect profits? Sounds a bit embarrassing. Besides, the speed of city beauty's closing up in 2017 is really scary.

There are 362 stores in a year, almost every day. It is doubting that there is something else behind it. Is it related to the gambling agreement signed last year with Fosun?

Last year, a wholly owned subsidiary of Fosun was a premium city beauty, requiring urban beauty to grow by 3% in 2017, not less than 6% in 2018, or in 2018 than in 2016.

There are similar requirements in terms of profits. It is required that the increase in 2017 and 2018 should not be less than 20% or 15%, or that the profit growth in 2018 will be no less than 38% in 2016.

If the demand for gambling is not met, the urban beauty needs to pay HK $100 million to Fosun.

Is it possible for city beauty to close shop on a large scale to avoid expediency?

A fact that can not be ignored is that the income generated by urban beauty sales and retail sales to franchisees has declined, but the income generated by e-commerce platform has increased by 73.5% over the same period last year.

Last year, the city beauty also reached a deep cooperation with Jingdong. Jingdong has promised to give full channel publicity resources, and use the platform big data to select target customers for the urban beauty. Jingdong logistics will also take part in the pfer and distribution function of some stores.

In other words, urban beauty is taking the initiative to develop e-commerce business.

The source of urban beauty income: the Hong Kong Stock Exchange

Moreover, the gambling agreement between Fosun and the urban beauty does not absolutely require that the revenue growth in 2017 will reach 3%. If the 2018 revenue growth is more than 9.18% over 2016, it will also be regarded as the urban beauty income standard. Therefore, the urban beauty has not paid the pressure at the moment.

Based on the above two points, large-scale business closure should be a simple business adjustment and appropriate resource mobilization for e-commerce business.

A new question arises: is underwear selling online?

Do you sell underwear online?

According to the survey results of the first financial and business data center, it is quite reliable. Data show that, because of the backward domestic underwear consumption habits, the average per capita consumption of domestic personal clothing is only about half that of the European and American countries. In recent years, the overall sales scale of the domestic clothing industry has been maintained above two digit growth.

Women's underwear market accounted for more than 30% of the domestic clothing market, and it also faced huge business opportunities.

Unfortunately, with the gradual saturation of the offline channels in the second and second tier areas, the development of women's underwear underline market is facing bottlenecks.

At the same time, the online women's underwear market is developing steadily.

Take Taobao Tmall as an example, from 2011 to 2015, the scale of platform women's underwear grew steadily, and underwear enterprises such as Ann Li Fang and Hui Jie group began to expand vigorously to the electricity supplier channel as early as 2014.

Taobao Tmall platform women underwear category size and trend source: CBNdata

For the lingerie brand that city beauty is positioning and pursuing cost-effective, the steering line is not only complying with the trend of the industry, but also the objective requirement of development.

The target customers of urban beauty groups pursue cost performance, which means that they can give up other factors that affect purchasing factors, such as whether they can try on and whether they are fashionable enough. It also means that the profitability of urban beauty is relatively weaker, mainly relying on small profits but quick turnover.

Therefore, the urban beauty will have a higher risk to the three or four line city expansion line, and the pfer of sales to the relatively low cost electricity supplier platform with the help of e-commerce channels will help to reduce the operational risks and uncertainties of urban beauty.

Nevertheless, the bet agreement between city beauty and Fosun is still a sword hanging overhead, which can not be ignored.

Whether or not urban beauty can meet the requirement of gambling agreement in a year will let us wait and see.

More interesting reports, please pay attention to the world clothing shoes and hats net.