Wei Mi lost: the parent company's net profit in the first quarter fell 38% year-on-year

[ Abstract ] L Brands released the first quarter financial report of the new fiscal year. The data showed that the company's sales declined, down 6.8% year-on-year; net profit fell 38% year-on-year.

Even on weekends, there are few people waiting in line at the door of the secret flagship store of Victoria, the American lingerie brand in Lippo Plaza, Huaihai Road, Shanghai.

This is very different from the situation when it was first opened in March this year. At that time, the store was known as the first Victoria's flagship store in the mainland. People flocked to the queue and wanted to go in and find out. "I went with my girlfriend. But we found an interesting phenomenon. Many girls came to visit with her boyfriend or husband." Fashion watcher and senior fashion editor Echo told the First Financial Reporter.

As early as the 1990s, Wei Mi has become a US lingerie sales giant. As of the end of January 2016, Vimy has more than 1,100 retail outlets in the US, UK and Canada, and has more than 390 retail outlets in more than 75 countries worldwide through franchising, licensing or wholesale. Because of its annual underwear show, Wei Mi is famous.

Wei Mi entered the Chinese market a few years ago, but at the time they all opened smaller retail stores. And because the agent's authorization is limited, the domestic Wei Mi shop can not sell its most distinctive underwear products, but mainly perfumes, accessories, beauty products, handbags and other products.

The reporter learned that starting from 2016, the company's parent company L Brands has recovered the management rights of more than 20 Chinese stores from its Chinese agents and intends to operate it personally. In March, the company opened two stores in Shanghai and Chengdu. The Shanghai store is also known as “the first flagship store in Asia”. In addition, its opening plans in Hong Kong, Beijing, Chengdu, Guangzhou, Nanjing and other cities are also in preparation.

Why did Wei Mi suddenly accelerate the process after years of unswerving business in China?

The reporter noted that L Brands released the first quarter earnings report of the new fiscal year. The data showed that the company's sales declined, down 6.8% year-on-year; net profit fell 38% year-on-year. Among them, the same store sales of the brand of Wei Mi fell 14%.

L Brands' explanation for this is that Vimy's withdrawal from the swimwear and ready-to-wear business has had a negative impact on the group's sales. In the first quarter, the company paid $34.5 million for severance payments related to business restructuring, cancellation of fabric contracts, and cancellation of catalogue documents. In addition, the cost of opening stores in China and upgrading US stores have increased the cost in the first quarter.

Bad performance is not what happened this quarter.

It is understood that in the native United States, Wei Mi is currently being involved in a war of underwear, more and more brands are joining the manufacturing and sales of this market, which means that the loss of brand market share is accelerating, The dominance of the past will not be guaranteed. This has also affected suppliers of the brand's production and processing, such as Virginie, whose profit fell by 89% in the first half of 2016 due to the reduction in orders by its largest customer, L Brands. The former's orders account for 35% of its annual sales.

Therefore, it is particularly important to tap the purchasing potential of emerging markets, especially in the highly-purchasing Chinese market.

When it comes to Wei Mi, it is impossible to mention the Wei Mi show that it has been holding since 1995. Today, Wei Mi has turned this annual lingerie fashion show into a big IP across the fashion and entertainment world. The high-profile "Victoria Angel" models extended by the Vimy brand, as well as the high-volume content generated around the "Victoria Angel", add a lot of added value to the Vimy brand.

"Many people in China have seen Wei Mi Xiu on the Internet to know the brand of Wei Mi. They are curious about Wei Mi." Echo thinks this is why so many people in the store see his wife and girlfriend shopping. One of the reasons.

But how long can such curiosity last? Every year, Wei Mi Xiu is lost because of its similarity, and the sense of existence is getting lower and lower. According to statistics, the ratings of Wei Mi's big show fell by 32% in 2015 compared to 2014, and fell by 9% in 2016. Last year was the 20th anniversary of the Victoria show, and the results were low in innovation, even setting the worst record in 2006.

Wei Mi’s former agents and partners have said that Wei Mi’s lack of authorization for the underwear business is due to differences in the size of Chinese women and American women, and direct introduction of sales is not suitable. However, according to the reporter, the current underwear sold by Wei Mi in China has not been improved for Chinese women.

It is undeniable that Wei Mi's big show quickly opened its name in the new market and attracted fans. How to use such a good foundation to firmly grasp the hearts of Chinese consumers? Wei Mi seems to have not found a good solution.

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