After transforming into a "high-end" brand, Zara's revenue and profit rose sharply in the first three quarters
Zara, which has transformed into a high-end brand, continues to recover.
In the nine months to October 31, sales of Zara's parent company, Inditex Group, surged 11.1 percent year-on-year to 25.6 billion euros. Net profit surged 32.5% to 4.1 billion euros, while inventories fell by 5.3%.
After taking over the baton from the brand's founder, Amancio Ortega, Chairman Marta Otega has been focusing on redefining Zara's brand and product strategy, firmly following the high-end and local route.
Due to the change of brand positioning, Zara has closed stores and renovated old stores this year, focusing on "sales quality" rather than quantity. According to the Q3 financial report, the number of stores of Zara's parent company worldwide decreased by 585 year-on-year to 5,722.
Even the brand's first live broadcast held on Douyin last month also borrowed from the live broadcast mode of luxury brands: supermodel You Tianyi and the anchor's chat-style explanations created a sense of substitution and presence for the audience to shop in ZARA stores, mainly to show the brand's concept and style.
With the gradual deepening of the premiumization strategy, the pricing of the brands under Zara's parent company has continued to rise. For example, the average selling price of Zara products increased by 23% in Q4 last year, and the high-end Zara Origins series increased by 17% of all products.
Globally, Zara is facing the offensive of affordable fast fashion brands like Shein. According to research firm Coresight, Shein's global revenue in 2022 was about $23 billion, accounting for nearly one-fifth of the global fast fashion market, surpassing Zara and H&M. Affordable fast fashion has become a red sea, and Zara has turned around and embarked on the road of high-end, embarking on a path of differentiation.
Focusing on "medical beauty" and "big health", Shiseido established a venture capital fund
When consumers are no longer satisfied with using daily skin care products to maintain stability, senior Tang is looking for new breakthroughs across borders.
Adequate funding is a stepping stone, which helps Shiseido find allies in the fastest way possible. Shiseido recently announced the formation of LIFT Ventures, a venture capital fund headquartered in New York, as well as two investment targets: Phi Therapeutics Inc ("Phyla"), a skin microbiome research company, and Patrick Kidd Holdings Pty Ltd, a men's grooming brand.
The venture capital fund will focus on investing in new technologies, innovation platforms, high-growth brands, and new business models. For example, its investor, Phyla, is developing alternative antibiotic therapies in an attempt to replace acne-causing pathogens with probiotics.
With the slowdown in the growth of skin care products, Shiseido has been expanding its business boundaries in the past two years, expanding from the existing "beauty and skin care products" to "medical beauty" and "big health". At the CIIE held last month, Shiseido said that it would become a "personal skin and health company" by 2030, focusing on cosmetics and giving consumers more comprehensive solutions in multiple dimensions such as medical beauty, oral beauty, and beauty equipment.
To this end, Shiseido has chosen to start with oral cosmetology, and has made it clear that it will be one of the group's new growth points, and announced that from January 2024, Shiseido Japan Co., Ltd. will take over the pharmaceutical business of Shiseido Pharmaceutical Co., Ltd.
Extending to areas with higher unit value will help improve Shiseido's earning power, which has always been Shiseido's shortcoming, and this contradiction has become even more prominent under the epidemic. According to the 2023 semi-annual report, Shiseido Group's net profit attributable to its parent company fell by 27.7% year-on-year.
Mars' annual revenue has grown to $50 billion
In the era of zero sugar, the performance of Mars, a food giant that started with candy, has reached a new high.
A few days ago, Mars' new CEO Poul Weihrauch pointed out in an exclusive interview more than a year after taking office that the company's annual revenue has increased from $45 billion (about 358.7 billion yuan) when he took over.
Even after many cultural shifts, consumers still crave snacks, but the way they eat them has changed, such as the taste has become healthier.
In response to this change, Mars acquired Binshan chocolate bars in 2017 and now has a presence in 30 markets around the world. This product is made from nuts and grains mixed with nut butter, topped with chocolate chips and sometimes topped with a layer of dark chocolate. Binshan chocolate bars taste like candy, but they're actually high-protein energy bars. The annual revenue of this product has also exceeded $1 billion. In addition, Dove's sugar-free products are particularly popular in China, with sales reaching $140 billion in 10 months, and 80% of buyers are first-time buyers.
The Treats & Pets business remains the most important growth driver for Mars. For example, in addition to the well-performing Binshan, Mars' snack division includes popular products such as Skittles, Starburst Candy, Yida Chewing Gum, Green Arrow Chewing Gum, Altoids Mints and Dove Chocolate, most of which have entered the $1 billion annual revenue club. The division aims to double annual revenue from $18 billion today to $36 billion over the next decade, which will take Mars' annual revenue to the next level.
Mars $1 Billion Club products, Binshan Energy Bar, Dove Chocolate, Snickers, Yida Chewing Gum, Fun Chocolate Bar and M&M, image from the brand's website
Mars' pet business is another major source of revenue. Today, the overall scale reaches $19.5 billion, with nearly 50 pet food brands, including five $1 billion brands. Mars Pets also has a line of care, such as BluePearl, a specialty veterinary clinic, and VCA Animal Hospital. In 2022, Mars Pet Care products already had a 17% market share in the U.S. market.
In recent years, with the increasing number of "shovelers" who have cats and dogs, and the increasing popularity of pet food feeding, this track has become a new growth point for many large food companies, and they have entered the pet food market or increased investment in related businesses in China, such as Nestle, Bonding, General Mills, etc. Mars is also accelerating the layout of its pet business in China in order to quickly respond to fierce competition.
what's more
JPMorgan downgrades LVMH
Inventories have surged and luxury growth has slowed. JPMorgan analysts wrote in a note to clients that the industry's supercycle has begun to fade after a surge in demand for luxury goods during the pandemic, leading to a correction in stock prices and weakening gains in the second half of the year. Analysts said that despite the high quality of the luxury sector in the medium to long term, there are still short-term pressures, so they downgraded LVMH to neutral from overweight and believe that Kering and Ferragamo will continue to face downside risks. （LADYMAX）
"Northeast McDonald's" Bibimbap opened its first store in Shanghai
Chinese fast-food chains have risen. After "Micun Bibimbap" entered Beijing, it opened a store in Shanghai, another first-tier city. This Micun bibimbap in CapitaLand Crystal Plaza in Shanghai is also its 1,000th store in China. This is another Chinese chain fast food brand that has reached the scale of 1,000 stores after Lao Xiang Chicken. (Interface)
Uniqlo's sister brand, GU, plans to double its operating income in five years
In the era of parity, the Uniqlo sub-brand is sought after. GU, a brand of the Fast Retailing Group, plans to double its operating income to 600 billion yen in five years. In addition to continuing to expand into the Chinese market, the brand also plans to open a store in New York, USA, and build a product development base to recruit local professionals. At the same time, GU will expand into the European and Southeast Asian markets.
Swire Coca-Cola continues to build a green supply chain
Foreign brands have not given up on ESG. Recently, three factories of Swire Coca-Cola, namely Hubei Swire Coca-Cola Beverage Co., Ltd., Hefei Swire Coca-Cola Beverage Co., Ltd., and Xiamen Green Spring Co., Ltd., have entered the public list of "National Green Factories".