On March 31, Urban Beauty released its 2021 annual financial report. The financial report shows that the annual revenue in 2021 is 3.36 billion yuan (unit: RMB, the same below), a year-on-year increase of 9.7%. After 2 years of negative growth, Metro Beauty has finally achieved positive revenue growth; net profit and the company’s previously released profit The warning was consistent, and the loss was 496 million yuan. In terms of gross profit margin, it decreased by about 6 points to 42.1%. Like last year, the current number of stores across the country has not been announced.

As of today's close, Metro Beauty's stock price closed at HK$0.415, an increase of 1.22%, with a market value of HK$933.5 million.

From the financial report data in recent years, it can be seen that in the three years from 2018 to 2020, the operating income of Urban Beauty has dropped significantly, reducing by nearly 1 billion yuan every year. In 2021, it finally achieved a positive year-on-year growth of 9.7% in revenue, with revenue of 3.355 billion yuan. The net loss was 496 million yuan, an increase of more than 4 times compared with the net loss of 116 million yuan last year. The total gross profit was 1.413 billion yuan, a slight decrease of 5.24% compared with the previous year's 1.491 billion yuan, and the loss per share was 22.49 cents.

Regarding the growth in 2021, Metro Beauty said that after taking various reform and transformation measures, product sales revenue in 2021 will increase by about 6.5% to 32.4 yuan, while total revenue will increase by about 9.7% to 3.355 billion yuan.

Divided by product sales channels, in 2021, revenue from retail, sales to franchisees, e-commerce, and others (logistics and warehousing, delivery services, and buying and selling of raw materials) will be approximately 1.781 billion, 628 million, 832 million, and 115 million, respectively, accounting for The proportion of total revenue is about 53.1%, 18.7%, 24.8% and 3.4% respectively.

In 2021, the total offline sales revenue of Metro Beauty is 2.41 billion yuan, accounting for 71.8% of the total revenue, a year-on-year increase of 5.7%, mainly due to the focus on promoting the direct-to-consumer sales model; of which, retail revenue is 1.781 billion yuan, a significant year-on-year increase. It increased by 54.7%, and the sales revenue to franchisees decreased by 44.27% year-on-year to 628 million yuan.

The online e-commerce business also achieved revenue of 830 million yuan, a year-on-year increase of 8.9%. In addition to Taobao, Tmall, JD.com and Vipshop, Douyin, Kuaishou and Pinduoduo will be added in 2021. At the same time, it launched new online products, arranged multiple live broadcasts, and reached multiple interactions and cooperation with talents and celebrities.

In recent years, the domestic intimate clothing market has undergone rapid changes. Compared with the relatively "sexy" products of Urban Beauty, consumers have begun to pay more attention to comfortable and healthy products; the emergence of various online brands of intimate clothing has also made the competition more intense.

In the financial report, Metro Beauty stated that in order to achieve revenue growth in 2021 and better realize transformation, Metro Beauty has significantly increased various expenses, including improving the incentive plan for franchisees and employees, launching extensive promotion activities, and adding more executives. However, these expenditures did not bring results as planned, but seriously affected operating results, mainly reflected in the decline in sales revenue for franchisees, returns and lower-than-expected revenue in the second half of the year, declining gross profit margins, high expense ratios, and additional inventory. The provision for impairment and the provision for bad debts of other receivables increased.

In 2021, Metro Beauty's gross profit margin will drop to 42.1%, mainly due to the provision for inventory impairment of 146 million yuan, the above-mentioned transformation measures have brought a series of disappointments, and the price of raw materials has risen sharply. In 2021, the epidemic will have a major blow to the global supply chain, and the price of raw material cotton will increase by about 44% year-on-year.

In addition, the financial report data shows that the commissions generated by consignment sales in Metro Beauty franchise stores increased by 413% year-on-year to 292 million yuan, and the operating expenses of stores under the joint venture arrangement also increased by 38.95% year-on-year to 225 million yuan. In 2021, Metro Beauty will sell And marketing expenses reached 1.539 billion yuan, an increase of 13.62% over the previous year's 1.355 billion yuan.

Disappearing store data

According to public statistics, by the end of 2018, there were 7,305 urban beauty stores, of which 1,406 were self-operated stores and 5,899 were franchise stores. By the end of 2019, Urban Beauty had 5,970 stores, including 1,269 self-operated stores, 4,701 franchise stores, and more than 1,300 stores closed within a year, resulting in a sharp drop in revenue.

No. 1 in national sales for ten consecutive years, Metro Beauty's stores used to be like its company name, all over the country's major cities.

According to incomplete statistics, at its peak, Urban Beauty opened 8,058 stores in more than 330 cities across the country, with a market value of up to HK$20.5 billion, 20 times more than today.

At the end of June 2020, Metro Beauty issued a profit warning: continue to implement the transformation plan. In the announcement, as of June 30, 2020, the company is expected to lose no less than 120 million yuan for six months. In addition, the announcement also shows that Metro Beauty Group and its franchisees temporarily closed about 90% of its stores from mid-February to March 2020.

In the 2020 and 2021 annual reports, the disclosure of the number of relevant stores is omitted. In the 2021 financial report, there is no mention of the word "store".

It is worth mentioning that during the reporting period, Embry, Aimer and Huijie achieved revenues of HK$1.652 billion (equivalent to RMB 1.338 billion), RMB 3.362 billion and RMB 2.373 billion respectively in 2020; It is -02.8 million Hong Kong dollars (equivalent to ***-0.0227 billion yuan), 444 million yuan, and 211 million yuan. In terms of revenue, Urban Beauty ranked second with 3.057 billion yuan, lower than Aimer's 3.362 billion yuan; and the loss during the year in 2020 reached 116 million yuan, the bottom of the four companies.