Half of KFC's new stores will be handed over to franchisees; Ralph Lauren is "put together" to become the sales champion; Burberry's revenue in the Asia-Pacific market has dropped by 25% | Brand Weekly Report

Compiled by Zhong Yixuan

Big News

KFC to Hand Over Half of Its New Stores to Franchisees

Recently, Yum China's third-quarter 2024 financial report shows that Yum China's revenue increased by 2.63% year-on-year to $8.708 billion, and its net profit increased by 9.04% year-on-year to $796 million. In the third quarter, Yum China's revenue increased by 5.39% year-on-year to $3.071 billion, and its net profit increased by 21.72% year-on-year to $297 million.

The earnings call also released an important signal. In the next few years, the proportion of franchise stores in KFC's net new stores will gradually increase to 40% to 50%, and that of Pizza Hut will increase to 20% to 30%. As of 2024, 27% and 7% of the net new stores of KFC and Pizza Hut respectively are franchises.

At the investor conference in September last year, Yum China once mentioned that KFC provides four store models (standard store, Future store, Mini store and下沉市场餐厅) and multiple functional modules such as To Go, Side by Side, Coffee Truck, and Station. "The cost of opening a town mini store model is reduced to less than 500,000 yuan, which is about 1/3 of an ordinary KFC store," said Ding Xiao, Acting Chief Financial Officer of Yum China.

In the era of universal franchising, KFC pays more attention to the resources attached to the location and franchisees. Qu Cuirong, CEO of Yum China, said that the future franchise stores will focus on strategic points that were previously unreachable (such as expressway service areas), remote areas, and low-tier cities. Currently, franchisees in Tibet, China have opened 16 KFC restaurants.

In addition to accelerating franchising, Yum China is also innovating store models. The Pizza Hut WOW store model, which has recently been regarded by the outside world as targeting "Saizeriya", is one example. This store model offers a pizza as low as 19 yuan, pasta as low as 15 yuan, and the per capita consumption is around 40 yuan. As of early November, 150 Pizza Hut stores nationwide have been transformed into WOW stores, of which about 50 are located in Guangdong.

In addition, Yum China will continue to maintain its guidance for the 2024 fiscal year, with a net increase of approximately 1,500 to 1,700 stores throughout the year, and the goal of reaching 20,000 stores by 2026.

Burberry's Asia-Pacific Market Revenue Drops by 25%

The British luxury goods group Burberry released its half-yearly financial report as of the end of September. The group's revenue dropped by 22% to £1.09 billion in the first half of the year, with an adjusted operating loss of £41 million. In the same period of the previous year, it made a profit of £220 million, and same-store revenue dropped by 20%. By region, the Asia-Pacific market, including China, saw its revenue drop by 25%, making it the market with the largest decline. The EMEA market's revenue dropped by 13%, and the US market's revenue dropped by 21%.

From a product perspective, the outerwear category, mainly trench coats, recorded above-average growth in all key markets. The growth of men's and women's ready-to-wear was in line with the average, but the performance of leather goods and footwear was poor.

Burberry CEO Joshua Schulman said that the biggest problem in Burberry's transformation in the past few years is the excessive pursuit of seasonal fashion trends and excessive price increases, which not only narrowed the audience the brand can reach but also blurred its original image. Joshua Schulman is currently updating the company's strategy, will refocus on the two most important categories of outerwear and scarves, reduce the price of leather goods, and optimize wholesale and tighten the outlet channel.

In addition, Joshua Schulman is taking emergency measures to correct the direction, stabilize the business and restore sustainable profit growth. This strategy includes a £40 million cost-saving plan aimed at achieving an operating income of £3 billion in the future. He said that Burberry will manage the brand carefully and position it as an eternal British luxury brand.

Previously, there were rumors that the Italian luxury goods group Moncler was interested in acquiring Burberry. Due to the obvious differences in culture and market positioning between Moncler and Burberry, this acquisition is not favored by outsiders. Joshua Schulman did not respond to the rumors of the Moncler acquisition. Analysts quoted by the media said that the new strategy that Joshua Schulman is implementing may enhance Burberry's independence and thereby reduce the possibility of external capital intervention.

Ralph Lauren Accused of Being a Popular Tool for Order Padding

On November 10, "Ralph Lauren's Return Rate Reaches 95% and Becomes a Popular Tool for Order Padding" topped the trending list. It is said that the American luxury clothing brand Ralph Lauren's GMV on Taobao Tmall's Double 11 exceeded 1.6 billion yuan, but the return rate reached an astonishing 95%. Later, the PR director of Tmall refuted the rumors, stating that the so-called 'high return rate' figure is purely a rumor that has been exaggerated.

Although the high return rate may be false, the fact that it is used for order padding does exist. On Xiaohongshu, there are many "strategy" posts about using Ralph Lauren for order padding. This Double 11, due to Taobao's high threshold for full discount offers, Ralph Lauren has become a brand that perfectly meets the order-padding conditions: it participates in the large consumption coupon full discount activity for 88VIP, but does not participate in the activity of 300 - 50. This makes it easier for consumers to calculate; and after the order is paid with the full amount, consumers can immediately apply for a refund, and the money will be returned instantly; and the unit price is often thousands of yuan, which is suitable for filling the order-padding gap.

Despite being caught in the whirlpool of being used for order padding, Ralph Lauren's performance has not been affected. In recent years, as one of the "Middle-Class Treasures" along with Arc'teryx and lululemon, Ralph Lauren has a good development momentum in the Chinese market. Ralph Lauren's financial report for the second quarter of fiscal year 2025 shows that its net revenue is $1.7 billion, an increase of 6% year-on-year. This is the 17th consecutive quarter of growth in the Chinese market. Previously, Ralph Lauren executives said in a conference call that China is one of the fastest-growing markets.

The "Global Luxury Market Research Report" jointly released by Bain & Company and the Italian Luxury Goods Manufacturers Association Altagamma shows that in a time of weak demand, the wealthy in China are avoiding showing off their wealth and turning to more low-key luxury brands. Ralph Lauren, which is positioned as "Old Money Style", has also successfully captured the young middle class who are sensitive to fashion trends.

Asics Predicts Nearly 80% Increase in Annual Profit Due to Strong Running Shoe Sales

The "Running Fever" has made Asics extremely profitable.

The Japanese sports giant Asics (Asics) has recently raised its full-year expectations, predicting that its consolidated net profit for the fiscal year 2024 (ending in December 2024) will increase by 79% year-on-year to 63 billion yen (approximately 2.95 billion yuan).

This is the second time this year that Asics has raised its full-year expectations. Previously in July this year, they raised their full-year net profit target from 36 billion yen to 58 billion yen. And the latter is already the highest level in history. In addition, the full-year sales have also been raised from the previously expected 660 billion yen to 680 billion yen, that is, the expected full-year sales will increase by 19% year-on-year.

The strong sales of running shoes are the core reason for the significant growth in performance. According to the financial report, the performance running shoe department, which contributes half of the sales, achieved sales of 258.28 billion yen in the first three quarters, an increase of 13.7% year-on-year. The SportStyle department and the Onitsuka Tiger department also performed well, with同期 growths of 63.4% and 52.7% respectively. Part of this growth is driven by consumers in the Greater China region. From January to September this year, the group's sales in the Greater China region increased by 27.5%, higher than the 21.8% increase in Japan during the same period. In terms of sales contribution, China is Asics' fourth-largest market.

It is not only Asics that is eyeing the Chinese running market. In order to compete for the largest running market, major running shoe brands are now fiercely competing in naming rights and technology. And Asics, known as the "King of Running Shoes", has been making great progress this year. From January to June, its net profit increased by as much as 70% year-on-year, setting a new historical record for two consecutive first half fiscal quarters. This may be another golden age for running shoe brands.

Marketing Matters

Daily Dark Chocolate Launches Special Flavor for Sam's Club

On November 14, Daily Dark Chocolate officially announced the launch of a new Sam's Club exclusive flavor, the Rich Hazelnut Flavor in the Freshly Extracted Dark Chocolate Series. According to the official introduction, this new product adds imported hazelnut paste with 100% hazelnuts. No less than 20% hazelnut paste is combined with dark chocolate with a total cocoa solid content of 48%, and it is rich in high dietary fiber. Each 2.5g piece has an energy of 14Kcal, contains 0 granulated sugar, 0 cocoa butter substitute, and 0 trans fatty acids. It has now been launched in the offline flagship store of Sam's Club at a price of 99.9 yuan per bag.

This year, more than 25 mainstream brands have launched new products in the Sam's Club channel, mainly featuring customized large packages and cost-effective items, including Nongfu Spring, Yili Dairy, Haitian Flavor Industry, Uni-President Noodles, Panpan Food, Qiaqia Food, etc.

Xiaohongshu's周边咖啡线下店「Red Corner」Opens Officially

Xiaohongshu has also opened a coffee shop.

On November 14, the first offline周边咖啡店「Red Corner」of Xiaohongshu in China officially opened in Fuxing Middle Road, Huangpu District, Shanghai. The interior of the store is divided into three areas: the coffee area, the peripheral product area, and the magazine reading area. The store has launched peripheral products of its original IP cartoon characters such as Captain Potato, Meina, and Little Black, such as clips, refrigerator magnets, airbag phone holders, bags, cups, tableware, and throw pillows.

Coffee is also a major feature of this store. It is said that the store uses coffee beans from the Chinese regional champion team of the World Barista Championship and offers Americanos, Flat Whites, Dirty, etc. In terms of price, an Americano is priced at 22 yuan, a Latte at 28 yuan, and the most expensive special coffee is 38 yuan. To accommodate consumers who are allergic to caffeine, the store also offers "焦" cocoa without caffeine, priced at 38 yuan.

Xiaohongshu's cross-border opening of a coffee shop is a physical extension of the brand culture and also broadens another offline channel for the brand. In addition, Xiaohongshu has also opened a Taobao store online and simultaneously listed peripheral products.

New Arrivals, Brands

MAIA ACTIVE Opens Its First Yoga Theme Store

Recently, MAIA ACTIVE opened the first yoga theme store Yoga Studio in Shanghai Panlong Tiandi.

Yoga Studio is an exclusive space created by MAIA ACTIVE for yoga enthusiasts. In addition to selling yoga clothing, the movable design in the middle of the store can be switched to a yoga practice space with one click. MAIA FUN CLUB will hold yoga parties here from time to time. On the occasion of the new store opening, MAIA FUN CLUB will hold three yoga parties in Panlong Tiandi from November 2 to November 15.

MAIA ACTIVE was founded in 2016. In October 2023, the brand was acquired by Anta Group, which holds 75.13% of the equity interest, making it an indirectly non-wholly-owned subsidiary of Anta Group. Currently, the brand has about 40 directly operated stores and 5 outlet stores nationwide.

HEYTEA's "Liaoning Provincial Museum Store" Opens

On November 15, HEYTEA's "Liaoning Provincial Museum Store", a collaboration between HEYTEA and Liaoning Provincial Museum, officially opened.

In recent years, new tea drink brands have been opening stores in museums. For example, Chayan Yuese and Goodme have opened stores in Hunan Museum. In addition to opening stores, there are also many joint promotions. For example, BaWangChaJi once collaborated with the Palace Museum to promote Chinese tea culture, and Chabaidao once collaborated with Dunhuang Museum.

Museums are not only a landmark attraction, but their inherent historical sense of space and cultural experience can provide new ideas for the innovation of tea drink brands. In addition, the引流 ability of museums in recent years cannot be underestimated. According to the "2024 Summer Travel Market Report" released by Ctrip, the number of domestic museum visitors in the summer of 2024 increased by double digits year-on-year, and the reservation volume of museum tickets ranked first among all scenic spots. Since July, the search popularity of "museums" has increased by 61% month-on-month.

what's more

Proya Tops Tmall, JD.com, and Douyin in Multiple Platforms during Double 11

According to the Double 11 battle report, Proya ranked first in the成交金额 of domestic beauty products on Tmall & Douyin & JD.com. Among them, Tmall increased by 10% year-on-year, Douyin increased by 60% year-on-year, and JD.com increased by 30% year-on-year. In addition, Proya's sub-brands also have outstanding performances. The CaiTang brand ranked second in the Tmall cosmetics industry store, and its GMV increased by more than 30% compared to last year; it ranked second in the domestic cosmetics industry brand on JD.com, and its GMV increased by more than 190% compared to last year; and it ranked fourth in the domestic cosmetics industry on Douyin.

Uniqlo Will Replace Small Stores with Large Stores in Fiscal Year 2025

Recently, the relevant person in charge of Uniqlo said that in fiscal year 2025, Uniqlo will change its new store opening strategy, replacing small-scale and less profitable stores with large-scale and better-located stores. At the same time, Uniqlo will further integrate the operations of physical stores and e-commerce, and strengthen local store management by creating and cultivating human resources with management capabilities. Currently, Uniqlo has more than 920 stores in the Chinese market. During this year's Double 11 e-commerce promotion period, Uniqlo's official flagship store has become the first live-streaming room of the Tmall clothing brand to break the 100 million yuan mark.

The Former "First Share of Women's Clothing" La Chapelle Officially Delisted

On November 14, the former "First Share of Women's Clothing" in China, La Chapelle, officially bid farewell to the Hong Kong Stock Exchange. According to La Chapelle's announcement, the listing status of the company's H shares will be cancelled at 9:00 am on November 14, 2024. Currently, the number of La Chapelle's domestic business outlets has been reduced to 100, and its online stores such as the Tmall flagship store are still operating normally. Regarding this delisting, La Chapelle said that the cancellation of the listing status of H shares will not have a significant impact on the company's daily operations and reorganization work. La Chapelle was founded in 1998 and is the first clothing company listed on both the A-share and H-share markets in China. At its peak, it had more than 20 brands such as La Chapelle, Puella, and Candie’s, and the number of directly operated stores was nearly 10,000, and it was known as the "Chinese Version of ZARA".

Haidilao Enters the Barbecue Skewer Track

Recently, Haidilao's first barbecue skewer brand, Flame Official BarBecue, landed in Wuxi. According to the brand manager of Flame Official BarBecue, its main product is Australian M6-7 grade wagyu barbecue skewers. In addition, it also provides a variety of ingredients such as Hulun.