Crabtree & Evelyn losses halve as stores closed and brand moves online

Beauty-products brand Crabtree & Evelyn halved its losses in the first half of the year as parent, Hong Kong-listed Nan Hai Corporation continued its transformation from offline to online. 

Since January, Crabtree & Evelyn has closed all of its 150 traditional retail stores across eight countries, shifted its manufacturing and distribution to third-party providers and sold its Australian warehouse. 

Nan Hai Corporation CEO Liu Rong said that while traditional retail companies continue to struggle or close, “Crabtree & Evelyn is now ahead of the market in meeting the challenges of the current and future business environment”.

Crabtree & Evelyn is the only retail activity business by Nan Hai Corporation, whose principal areas of focus are cinemas, news media and property investment. 

The brand’s sales for the six months to June 30 reached HK$166.5 million (US$21.2 million), down from $288.5 million during the same period last year. The brand lost $185.1 million, down from $363.5 million. 

Liu said the decrease in revenue but lower loss were due to the effective execution of the innovative business restructuring initiated last November. 

Crabtree & Evelyn’s new focus on direct e-commerce drove online revenue to approximately $64 million, an increase of 69 per cent compared to the corresponding period last year.

Sales in Mainland China increased to approximately $8.2 million, up 93 per cent year on year. 

Liu says Crabtree & Evelyn’s new strategy is to transform its business from one of traditional retailing to an “OMO operating model”, (which we believe refers to Open Market Operations), starting from e-commerce. 

In the current half year, Crabtree & Evelyn is rolling out its new branding and business modelinternationally which comes off the back of two years’ research and development. 

“All of these products have been manufactured by third-party partnerships, the first result of a faster, more flexible, and lower cost global supply chain,” said Liu in Nan Hai’s half-yearly results analysis.

“A new global digital platform with full e-commerce and social functionality will be introduced in 35 markets, with corresponding investment in internal teams and capabilities. The new products will also be launched on online shopping malls via exclusive arrangements with Tmall global, Amazon, and Feelunique. Initial feedback from both the new millennial consumer and retail partners has been extremely positive.”

Liu said he expects the relaunch of Crabtree & Evelyn will inject new vitality into the brand. “We have prepared for this relaunch with the brand communication, product portfolio, digital communication and distribution model, and the transformation of the operating model along with business restructuring required to attract more users to become loyal customers.”

Previously, the company had said it planned flagship stores in major cities in the future, but this was not referenced in the half-year results summary.


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