On March 20, the night before the 2023 earnings report was released, Urban Beauty (02298) announced three things: an official partnership with the National Figure Swimming Team, a strategic partnership with Meituan (03690), and an ambitious plan to open a thousand new offline stores in 2024.

“It's a collaboration between the champion team and the champion brand.” Zheng Yaonan, Chairman and CEO of Urban Beauty Group, commented on the cooperation with the National Figure Swimming Team. Urban Beauty is the country's leading seller of good and inexpensive national underwear. The Chinese Figure Swimming Team is a perfect combination of strength and beauty. “The cooperation between the two shows the perfect combination of fashion and technology.”

The data shows that from 2017 to 2021, Urban Beauty led the country's women's underwear sales for 5 consecutive years; from 2013 to 2021, the cumulative retail sales of women's underwear nationwide for 9 consecutive years. With these two indicators, Urban Beauty became the leading professional underwear brand in sales in the country, and will continue to maintain this leading edge in 2022.

On the day the cooperation was reached with the National Figure Swimming Team, Urban Beauty officially reached a strategic cooperation with Meituan Flash Purchase. Since the pilot operation in August 2023, Meituan Flash Shopping has helped Urban Beauty digitally upgrade and launch an instant retail model. Since the trial operation, Urban Beauty's sales have increased 222% month-on-month, and brand exposure has increased 142% month-on-month.

Up to now, Urban Beauty has launched Meituan flash sales at over 2,500 stores nationwide. Meituan Flash Shopping said it will develop continuous and in-depth cooperation with urban beauties by leveraging digital advantages such as traffic, compliance, marketing, and scenarios.

“Instant retail has become an important trend in modern commerce, and this is a powerful step in line with consumer trends.” Urban Beauty COO and Executive Director Xian Shunxiang anticipates that the combination of offline stores and instant retail is a new battleground. By the end of 2024, Urban Beauty will fully launch Meituan flash sales at more than 4,200 stores across the country.

At the same time, Xie Shunxiang told the Zhitong Finance App that in 2023, Urban Beauty opened more than 800 new offline stores, and has already found an offline store model that continues to make profits. The company plans to open about 1,000 new offline stores in 2024.

In December 2022, in order to expand the sinking market, Urban Beauty officially launched the “One Hundred Cities, One Thousand Stores” campaign. Entering 2023, Urban Beauty's “One Hundred Cities and a Thousand Stores” plan continues to hand over brilliant answers. Many provinces such as Anhui, Guangdong, Inner Mongolia, Sichuan, Fujian, Hunan, and Jiangsu have already opened 100 stores.

Financial reports also positively confirm the viability of “100 Cities and 1000 Stores”. In the first half of 2023, Urban Beauty achieved revenue of 1,368 billion yuan and net profit attributable to the parent company of 26.129 million yuan, an increase of 158% over the previous year, and gross margin rose to about 47.4% from 46.6% in the same period in 2022.

Zai Shunxiang said that as China's largest economic province and the base of the company, Guangdong currently has more than 500 stores, hoping to break through more than 1,000 stores in the future; Henan currently has more than 300 stores and hopes to break through to 1,000 in the future. Provinces such as Sichuan and Shandong with a population of over 100 million also expect such business penetration.

The CICC Research Report also pointed out that the company began comprehensive changes in 2022, including establishing the country's leading sales professional underwear position and creating professional cost-effective products. A total of 800+ stores on the 1H23 channel side have signed franchise agreements, a record high. The profitability and operating capacity of the financial reporting side have improved markedly. The bank is optimistic about the company's determination and results to continue to push forward strategic changes.