Xcel Brands (NasdaqCM:XELB) Q3 2025 Earnings Call November 19, 2025 05:00 PM ET Company ParticipantsMichael Kupinski - Director of Research and Managing Director for Media and EntertainmentJim Haran - CFOSeth Burroughs - Executive Vice President of Business Development and Treasury and DirectorHoward Brous - Vice President & Wealth AdvisorWalter Schenker - Principal and FounderRobert D'Loren - Founder, Chairman, and CEOConference Call ParticipantsThomas Forte - Managing Director and Senior Consumer Internet ...

Core Insights - The brand the Roll'ING is attempting a comeback by merging with its sibling brand KUMO KUMO at the Heshenghui shopping center, following a decline in popularity and a significant reduction in store numbers in Beijing [1][5][12] Company Overview - The Roll'ING initially gained immense popularity in Beijing, with long queues and high demand, but now only has two stores left in the city, indicating a sharp decline in customer interest [1][5] - The brand's pricing strategy included selling handmade Swiss rolls for around 40-50 yuan, which at times surged to 120 yuan due to high demand [5][10] - The company has shifted its strategy to include more takeout options and promotional sampling to attract customers [5][10] Franchise and Operational Challenges - Franchisees have reported insufficient support from the brand's headquarters, leading to difficulties in maintaining profitability [11][12] - The investment required to open a franchise store is approximately 100 million yuan, with a return on investment expected in 12-14 months, heavily dependent on location [10][11] - Many franchisees are experiencing losses, with some suggesting that only well-located stores can sustain operations in the long term [11][12] Market Dynamics - The bakery industry is undergoing rapid changes, with increased competition and a trend of popular brands facing declines after initial success [12][15] - The merger of KUMO KUMO and the Roll'ING is seen as a strategy to enhance product offerings, reduce costs, and improve operational efficiency [12][14] - The overall bakery market is projected to grow, with an expected market size of 1,160 billion yuan by 2025, driven by consumer demand for emotional and experiential products [14][15] Strategic Recommendations - Experts suggest that the brands need to invest in product innovation and enhance support for franchisees to improve operational success and customer loyalty [14][15] - The focus should be on maintaining a balance between trendy offerings and consistent quality to avoid the pitfalls of becoming a fleeting trend [15]

Group 1 - The core viewpoint of the articles highlights the steady growth of consumer spending in China, with a 3.4% year-on-year increase in retail sales in August and a 9.6% increase in online retail sales from January to August [1][2] - The retail channel landscape is undergoing significant restructuring, with a tighter integration of online and offline channels, and the emergence of new retail formats such as "flash sales" and "interest e-commerce" [2][6] - New consumer brands are increasingly focusing on long-term brand building rather than short-term sales spikes driven by "internet celebrity" marketing strategies, as the initial flow of traffic begins to wane [3][4] Group 2 - Key challenges faced by small and medium-sized enterprises (SMEs) include channel transformation (42% of surveyed SMEs), building consumer loyalty (30%), and attracting first-time consumers (28%) [5] - The importance of understanding consumer needs and adapting product strategies is emphasized, as consumer preferences continue to evolve [4][5] - Companies are advised to balance long-term trends, such as technological advancements and demographic shifts, with short-term trends that reflect immediate consumer desires [7][8][9]

Core Insights - TWOI, a designer women's clothing brand, opened its first store in Shanghai in mid-August, generating significant customer interest and long queues on opening day [1][3] - The brand's popular product, the "werwer hairpin," has seen its resale price on second-hand platforms soar to 1.9 to 5.8 times its original price [7][8] - Following safety concerns and a temporary closure, the store implemented a reservation system for customers to manage foot traffic [1][5] Company Overview - TWOI Design Lab, founded in 2018 by Bing Xiong Xiao Ying, targets young women aged 18-28 and focuses on their diverse needs [8] - The brand entered the e-commerce market in 2022 and opened its first permanent offline store in Beijing in May 2024 [8] - TWOI's sales performance during the "6.18" shopping festival exceeded expectations, achieving a GMV of 200 million yuan [8] Store Operations - On August 22, the reopened TWOI store in Shanghai saw minimal customer traffic, with staff outnumbering shoppers [5][6] - The store has adopted a QR code reservation system to control the number of customers entering, gradually increasing the hourly capacity from 30 to 100 [5][6] - Despite the initial hype, the actual customer turnout has been less than 30% of the reserved slots [5][6]

Core Viewpoint - The downfall of Zhong Xue Gao, once a leading high-end ice cream brand, is attributed to its failure to maintain product quality and integrity, leading to a loss of consumer trust and market position [2][4][7] Group 1: Company Performance - Zhong Xue Gao initially achieved significant success, selling ice cream at high prices and generating over 1 billion yuan in sales within a year [2] - The brand's image was severely damaged due to false advertising claims, such as "no added water," which were later proven to be misleading [4] - A viral video showing the ice cream not melting when heated further tarnished the brand's reputation, leading to consumer backlash [4] Group 2: Marketing and Consumer Trust - The founder's focus on marketing over product quality resulted in a disconnect with consumer expectations, particularly regarding health and ingredient transparency [4][5] - The brand's pricing strategy, which placed high-end products alongside cheaper options without clear labeling, contributed to negative consumer experiences and perceptions [4] Group 3: Industry Trends - The challenges faced by Zhong Xue Gao reflect a broader trend in the market where once-prominent brands are struggling due to a lack of respect for consumer needs and market dynamics [5][6] - Other luxury brands, such as BMW, are also experiencing significant sales declines, indicating a shift in consumer preferences towards value and quality over brand prestige [5] - The failure of brands like Zhong Xue Gao serves as a cautionary tale for companies that prioritize short-term gains over long-term consumer trust and product integrity [6][7]

Core Viewpoint - The article discusses the decline of the tea brand Cha Yan Yue Se, which was once a top player in the tea beverage market, highlighting its struggles to maintain popularity and adapt to changing consumer preferences [1][3][36]. Group 1: Market Position and Competition - Cha Yan Yue Se was once a standout brand in the tea beverage market, known for its unique offerings and poetic branding, but has recently lost its competitive edge as new brands emerge [5][8][36]. - The brand's expansion efforts have been slow, with only a few new stores opened outside its home base, allowing competitors like Ba Wang Cha Ji to gain ground in key markets [21][25]. - Despite still being a part of local culture, the brand's popularity has waned, with many consumers no longer willing to wait in long lines for its products [14][40]. Group 2: Consumer Experience and Brand Perception - Consumers have expressed frustration with the lengthy ordering process and the brand's insistence on in-store experiences, which contrasts with the growing trend of online ordering and quick service [31][42]. - The brand's previous charm and novelty have diminished, leading to negative perceptions and complaints about its service and product offerings [19][28][36]. - Cha Yan Yue Se's attempts to innovate and expand its product line have not resonated well with loyal customers, who feel that the quality of beloved items has declined [19][36]. Group 3: Financial Performance and Growth Strategy - In 2023, Cha Yan Yue Se reported a net profit of approximately 5 billion yuan, which is competitive compared to other brands in the industry, despite its declining market presence [13]. - The company plans to open 268 new stores in 2024, marking a significant increase in its expansion efforts, particularly in new first-tier cities [25][27]. - The brand's recent foray into online sales of snacks and merchandise indicates a shift in strategy, but it has not generated the same buzz as its earlier initiatives [27][36].

Core Insights - The ice cream brand Zhong Xue Gao's parent company has filed for bankruptcy due to inability to repay debts and insufficient assets, marking a significant decline from its peak sales of over 1 billion yuan [1][2] - Analysts suggest that the current Chinese consumer market has shifted towards rational consumption, making it difficult for mass consumer goods to command premium pricing without tangible quality differences [2][5] Company Analysis - Zhong Xue Gao was launched in 2018 as a "high-end Chinese ice cream" brand, achieving sales of over 1 billion yuan in 2021, but faced a dramatic decline in sales due to food safety controversies in 2022 [1][2] - The brand's strategy of high pricing (60 yuan) compared to competitors like Haagen-Dazs lacked perceived quality differentiation, leading to a loss of core customers when it introduced a lower-priced product [2][4] - The reliance on financing for market expansion has proven risky, as the market has shifted towards valuing cash flow and profitability over growth through external funding [2][5] Industry Trends - Many popular brands are experiencing similar declines, indicating a broader trend in the industry where high pricing strategies without substantial value propositions are failing [2][3] - Common marketing strategies among these brands include high pricing supported by cultural narratives, immersive experiences, and social media-driven marketing [3][4] - The lack of innovation beyond packaging and marketing, coupled with frequent quality control issues, has led to a loss of consumer trust [4][5] Recommendations for Future Brands - Successful brands must focus on four foundational elements: complete supply chain integrity, consistent high-quality output, strict food safety controls, and an evolving service system to enhance customer loyalty [5] - New consumer brands should learn from both successful and failed cases in the market, shift from reliance on financing to operational cash flow, and prioritize supply chain management over marketing hype [5]

Core Viewpoint - The article discusses the decline of the once-popular tea brand, Chayan Yuesheng, highlighting the challenges it faces in a competitive market where consumer preferences have shifted towards convenience and simplicity [5][15][27]. Group 1: Market Dynamics - The tea market has become increasingly competitive, with brands like Cha Bai Dao, Mi Xue Bing Cheng, and Gu Ming going public, while Chayan Yuesheng has lost its previous prominence [5][12]. - Consumers now prefer quick and easy access to beverages rather than the elaborate experiences that once characterized brands like Chayan Yuesheng [5][27]. - The brand's initial success was attributed to its unique offerings and reasonable pricing, but it has struggled to maintain this momentum as competition intensifies [7][12]. Group 2: Brand Challenges - Chayan Yuesheng has faced criticism for long wait times and a complicated ordering process, which has led to a decline in customer patience and loyalty [5][13][23]. - The brand's attempts to innovate and expand its product line have not resonated well with its loyal customer base, leading to dissatisfaction with changes in classic offerings [14][15]. - Despite achieving significant profits, the brand's visibility and consumer engagement have diminished, with fewer people aware of its new developments [18][20]. Group 3: Consumer Behavior - The article notes a shift in consumer behavior, where the novelty of waiting in line for a trendy drink has worn off, and customers are now more inclined to seek convenience [27][28]. - The brand's marketing strategies, which once attracted attention, are now perceived as outdated and cumbersome, leading to a loss of appeal among younger consumers [24][27]. - As competition grows, consumers are increasingly drawn to brands that offer faster service and better value, diminishing Chayan Yuesheng's market share [27][28].

Core Viewpoint - The article discusses the decline of the once-popular tea brand, Chayan Yuese, in the competitive tea beverage market, highlighting its struggles with customer retention and brand perception as consumer preferences shift towards convenience and simplicity [3][5][46]. Group 1: Brand History and Initial Success - Chayan Yuese opened its first store in Changsha in December 2013, gaining popularity with its unique branding and poetic drink names [6][8]. - The brand differentiated itself by using fresh milk and original tea, appealing to consumers with a relatively affordable average price of 15 yuan per cup compared to competitors [7][8]. - The brand's early success was bolstered by loyal fans and social media buzz, leading to significant foot traffic and national curiosity [9][12]. Group 2: Current Challenges - Chayan Yuese has faced increased competition from brands like Cha Bai Dao, Mi Xue Bing Cheng, and Gu Ming, which have expanded rapidly while Chayan Yuese has been slower to grow outside its home market [3][26]. - The brand's long wait times and complicated ordering process have frustrated consumers, leading to a decline in its once-loyal customer base [4][22][38]. - Recent product changes and the introduction of seasonal items have not resonated well with loyal customers, causing dissatisfaction [24][46]. Group 3: Market Position and Future Outlook - Despite still being profitable, with a reported net profit of approximately 500 million yuan from 732 stores in 2023, Chayan Yuese's market presence has diminished compared to its peak [18][30]. - The brand has begun to expand more aggressively, opening 266 new stores in 2024, primarily in new first-tier cities, but has yet to enter major markets like Beijing and Shanghai [30][31]. - The brand's recent marketing strategies and product offerings have not generated the same level of excitement as in the past, indicating a need for a renewed approach to attract consumers [32][52].

Core Viewpoint - The article discusses the decline of the ice cream brand Zhong Xue Gao, highlighting its bankruptcy news and the brand's struggle to maintain its market position amidst changing consumer preferences and criticisms of its pricing strategy [4][5][6]. Group 1: Brand Performance and Market Position - Zhong Xue Gao's subsidiary, Zhong Mao (Shanghai) Food Technology Co., Ltd., has been applied for bankruptcy due to its inability to pay debts and lack of solvency [5]. - The brand has faced significant challenges, including criticism for its high pricing of 66 yuan per ice cream, leading to a brand crisis and a loss of consumer trust [6][10]. - Despite a peak in sales, with over 1.52 billion ice creams sold from May 2021 to May 2022, the brand's reputation has deteriorated, resulting in a negative public perception [18][21]. Group 2: Consumer Sentiment and Brand Image - Consumer sentiment has shifted, with many expressing indifference to the brand's potential exit from the market, indicating a lack of emotional attachment [12][14]. - The brand's marketing strategies, which heavily relied on celebrity endorsements and social media hype, failed to translate into lasting consumer loyalty [37][40]. - The perception of Zhong Xue Gao as a "snow ice assassin" has contributed to its downfall, as consumers became increasingly critical of its value proposition [20][22]. Group 3: Market Trends and Future Outlook - The high-end ice cream market is not dead, with reports indicating that products priced above 20 yuan are expected to increase from 15% to 25% of the market share by 2024 [46]. - The growth of high-net-worth individuals and the emergence of ice cream as a "social currency" are driving factors for the premium segment [47]. - Despite challenges, the high-end ice cream market is returning to rationality, with consumers prioritizing ingredient quality over brand hype [57][58].