Lingerie boom pays off for Cosmo
Chinese women are splurging more on their underwear, producing rich results for Cosmo Group.
Cosmo, China’s largest branded intimate wear business in total retail sales and store numbers, says sales revenue soared 27.2 per cent in the six months to June 30. Profit rose 40.7 per cent.
The company says while it continues to focus on the affordable end of the market, it is expanding its range and reach in the high end of the market, to capture the increasing discretionary spending of China’s rising middle class.
“The increase in the national per capita disposable income of China… and the increase in retail sales of China’s intimate wear industry in the past three years, according to Frost & Sullivan, entails enormous business potential for the group,” the company said in its earnings statement on Monday.
“It is believed the group’s strategy of offering consumers with products of high quality standards at affordable prices has effectively rendered it one of the most popular intimate wear brands among the Chinese consumers.”
For the six months to June 30, Cosmo recorded revenue of RMB2.207 billion and profit attributable to shareholders of RMB 270.35 million.
In March of this year, Cosmo bought the lingerie brands Ordifen, Rubii and Ilsee, which aided its expansion into high-end intimate wear distribution channels in China, including department stores and shopping malls in tiers one and two cities.
As at June 30, there were 578 retail outlets of the acquired brands – 344 franchised and 234 self-managed. The majority of these are located in the shopping malls and department stores in tiers one and two cities in China.
Immediately after the acquisition, the group launched several initiatives to realise the synergies of the integration and consolidation of the new brands into the group’s operation, including improving its retail capability, strengthening marketing, enhancing logistics, research and development and re-negotiation with suppliers for more favorable terms.
“The group will improve the performance of the retail outlets on an on-going basis and will also consider establishing new retail outlets in places with high growth potential.”
At the time of acquisition the new brand portfolio was trading at a loss. Cosmo says the business is already profitable.