Author | Yin Taibai, Editor | Lin Zhong, cover from Oriental IC
Financial data does not reflect the real situation
On October 31, Suning Tesco released its third quarter earnings report. On the surface, this financial report is indeed bright enough.
According to financial report data, from January to September this year, the total revenue of Suning Tesco was RMB 2010.09 billion, a year-on-year increase of 16.21%, and the net profit attributable to shareholders of listed companies was 11.903 billion yuan, a year-on-year increase of 94.28. %.
What is more eye-catching is that Suning Tesco’s merchandise sales volume reached 275.901 billion yuan, of which the online platform commodity transaction scale was 171.437 billion yuan, an increase of 24.27%.
(Source: Suning Tesco)
Specific to the third quarter, the data performance is even more gratifying. According to financial report data, from July to September this year, Suning Tesco’s revenue was RMB 65.437 billion, a year-on-year increase of 5.05%. The net profit attributable to shareholders of listed companies was 9.764 billion yuan, an increase of 7795.91%.
Behind this gorgeous set of data, the real situation of Suning Tesco may not be optimistic.
The first is revenue.
In contrast, Suning Tesco’s revenue growth in the first two quarters of 2019 was 25.44% and 21.63%, respectively, and in 2018 this growth rate was 30.35%.
It is not difficult to see that the year-on-year growth rate of Suning Tesco’s revenue has been in a state of continuous decline until 5.05% in the third quarter of 2019.serious.
Second is the net profit aspect.
On the evening of September 27, Suning Tesco issued a notice stating that Suning Jinshun, a subsidiary of Suning Tesco, completed the capital increase and share expansion, with a total fundraising of 10 billion yuan and a post-investment valuation of 56 billion yuan.
After the capital increase and share expansion, Suning Tesco held 41.15% of the shares of Suning Jinfu, from the original controlling shareholder to the second largest shareholder, and Suning Jinkong under Suning Tesco became the holding of Suning Jinfu. shareholder.
Suning Tesco explained in the third quarter earnings report that it will not be reflected in the consolidated statement of Suning Tesco after the third quarter.
In short, it is the 10 billion yuan of capital increase and expansion of Suning Jinfu, which directly leads to the soaring net profit of Suning Tesco, but this part of the profit is not the profit generated by the daily operation of the enterprise. Persistent.
Compared with the 6.117 billion yuan in the same period last year, although the net profit of this quarter has increased a lot, it is actually expanding the losses if the profits generated by this part of non-business operations are removed.
However, this is not Suning Tesco’s first beautification report data.
According to the 2018 annual report data, Suning Tesco’s total revenue was RMB 244.957 billion, a year-on-year increase of 30.53%. The net profit attributable to shareholders of listed companies was 13.328 billion yuan, an increase of 216.38%.
The performance is so good, but the actual situation is not the case.
In 2018, Suning Tesco purchased the shares of Ali, and after deducting the initial equity capital and the cost related to the issuance of shares, a total net profit of 11.012 billion yuan was realized, and only this part of the profits accounted for the total amount of the year. 82.63% of net profit.
As a listed company, Suning Tesco faces great pressure. This pressure comes from the performance level, and more from investors.
Under the weight, the beautification of financial report data is a relatively common thing, but it still can’t escape the eyes of investors. Suning Tesco has also been questioned whether there are any bullets in the gun.
The marketer has to retail in the new world
The performance of Suning Tesco is good or bad, and it is not unrelated to a series of actions that fully deploy smart retail.
From the end of 2017, Zhang Jindong, the helm of Suning Tesco, proposed the “smart class retail” strategy (can be understood as “new retail” another , and announced the “two big” – Suning Plaza, Suning Tesco Plaza, “two small” – Suning store, Suning Tesco county town store, “multi-special” – Suning Yi Buy Yundian, Red Kids, Su Xiansheng, Suning Sports, Suning Studios, Suning Essence, Suning Tesco Auto Supermarket’s smart retail product group.
This strategy has also been regarded as the second-level rocket that continues to sink into the sinking market after Suning Appliance transformed Suning.
At the same time, the e-commerce giants who once believed that “the entity is dead” suddenly woke up after splitting the traffic on the line and began to counterattack. Online and offline are no longer opposites, and the two-line integration has become a unified consensus.
This is not without foundation. Statistics from the E-Commerce Research Center show that the overall growth rate of e-commerce in China has dropped from 40% in 2010 to 17.5% in 2017, and the growth rate has slowed down noticeably.
Today, the proportion of e-commerce in the total retail sales of social goods is still unable to break through 20%, that is to say, 80% of consumer behavior still occurs online.
The battle of smart retail, to put it plainly is the battle of offline stores.
The Internet dividends have been exhausted, resulting in rising traffic costs, so e-commerce platforms are looking for cheaper traffic, and offline stores have become an important source of traffic.
At the beginning of 2018, Suning Tesco opened 8122 new stores, and opened more than 1,600 new stores in just one month in December. In order to lay a good job in smart retail, Zhang Jindong did not hesitate to clear the Ali stock held three times and raised more than 14 billion yuan to subsidize the offline.
Suning Tesco believes that for Jingdong and Tmall, doing offline stores will be more difficult than imagined, whether it is store location, decoration, merchandise storage, display, logistics, and supply chain. In the key link, if you want to open up offline stores, the progress will not be too fast.
The facts are also true. Gome announced in February this year that its total number of stores reached 2,500; Yonghui Supermarket mentioned in the 2018 annual report that a total of 570 stores were opened last year; Jingdong also in the third quarter of last yearAccording to the financial report, the number of stores in Jingdong and Jingdong stores has exceeded 1,800.
In contrast, Suning Tesco, which has been under the ploughing line for many years, seems to be handy when it comes to opening stores.
According to the financial report for the third quarter of 2019, as of September 30, Suning Tesco has 8407 stores of various self-operated and franchise stores. According to the plan, Suning store will reach 10,000 at the end of this year.
It can be seen from the data comparison that the quick-moving Suning Tesco has taken the lead in the battle of the physical store under the line of the beach.
This does not mean that Suning Tesco has reached the top of the throne. On the contrary, Suning stores have long faced a dilemma of loss.
After Suning Tesco began to develop smart retail, it pushed the Suning store and Suning retail cloud to sink, and attempted to quickly realize the “all-category, omni-channel” smart retail layout.
“Let’s engage in chain-operated convenience stores for communities, CBDs, transportation sites, etc.” This is the beginning of the line, the expectations of Suning stores.
But the reality is always cruel. At the same time of the crazy expansion all the way, Suning store has always driven the loss of the haze.
The data released by Suning Tesco shows that from January to July 2018, Suning’s store revenue was only 143 million yuan, while the net profit loss reached 296 million yuan, which is in a state of being unable to make ends meet.
The loss of nearly 300 million yuan in 7 months is indeed a big burden for Suning Tesco, which is self-sufficient.
In June 2019, Suning Tesco finally decided to sell 100% of the shares of Suning Store for RMB 745 million.
After that, the business data of Suning Store will no longer be included in the consolidated statement of Suning Tesco, and Suning Tesco has also gained a breather.
Although the Suning store was divested, this does not mean that Suning Tesco has abandoned the layout of smart retail.
On the morning of September 27, Suning Tesco announced that it had bought 80% of Carrefour’s shares for 4.8 billion yuan, and the delivery procedures have been completed.
Shareholdings reached 80%, Suning Tesco became a controlling shareholder of Carrefour China, and Carrefour China was officially included in the Suning system.
This business is undoubtedly worth a draw. As of the end of the first quarter of 2019, Carrefour China has 210 hypermarkets, 24 convenience stores, 6 large warehouse distribution centers and 30 million members in China. Carrefour China has a store floor area of more than 4 million square meters, covering 22 provinces. 51 large and medium-sized cities.
The acquisition of Carrefour China will help Suning Tesco to accelerate the development of the fast-moving consumer goods category and the infrastructure construction of the national warehousing supply chain for the fast-moving consumer goods category.
Since 2019, Suning Tesco has completed three major moves in the layout of smart retail, namely the completion of the acquisition of Wanda Department Store at the beginning of the year, the separation of Suning store in June and the Carrefour China in September.
At this point, the smart retail map of Suning Tesco has already taken shape.
Is there a bullet in Suning’s gun?
With Carrefour China being included in the bag, Suning Tesco’s offline channel layout has covered almost all offline stores such as Shangchao, department stores, shopping malls, convenience stores, etc., and formed with Ali and Jingdong. The three legs stand up.
However, the challenge of Suning Tesco has followed.
The layout of smart retail is inseparable from the support of logistics. According to the data of the third quarter financial report, from January to September 2019, Suning Logistics has a storage and related supporting area of 11.05 million square meters, 26,091 express delivery outlets, and has put into operation 50 logistics bases in 41 cities in 17 cities. There are 23 logistics bases under construction and expansion.
In addition, plus the newly integrated Carrefour China covers the country 53The eight central warehouses in a city may greatly enhance the competitiveness of Suning’s logistics supply chain.
In fact, the synergy effect between the layout of smart retail and the self-built logistics facilities network has also returned enough returns for Suning Tesco. The most intuitive is the number of members, activity and stickiness of Suning Tesco. Both have been significantly improved.
According to the third quarter financial report data, from January to September 2019, the number of registered members of the Suning Tesco retail system reached 470 million, an increase of 63 million from the beginning of the year.
In the meantime, Suning Tesco’s annual active users increased by 48.29% year-on-year, online physical goods orders (excluding Suning Tesco Tmall flagship store ) increased by 61.83% year-on-year.
From this perspective, Suning’s gun is not only full of bullets, but also ready to go.
With the ten-year transition of Suning’s e-commerce into the final stage, it also means that its cost-investment period is basically over.
China Everbright Securities pointed out in the research report that it is expected that Suning’s exploration in the sinking market and department stores and convenience stores will continue to advance, and the income side still has good growth performance, locking in the future profit potential.
Although the outside world is generally optimistic about the development of Suning Tesco, for the Suning Tesco, which currently relies mainly on external equity investment to obtain revenue, the continued loss of the main business is still a mountain that cannot be passed.
In addition to the loss problem, Suning is also facing threats from Jingdong and Ali.
According to a report released by the China E-Commerce Research Center, in the first half of 2018, Ali and JD.com swallowed more than 80% of the online market share of online retail sales, while Suning only accounted for 4.5%, and even better.
Zhang Jindong also admitted that Suning Tesco has not yet won this war. “This is a decathlon. We are all playing around the customer service. There is no end to the game around the user service. There may be winners in the stage. The overall winner has not seen it. This market is too big, a company. It is impossible to occupy all the entrances.”
There is a long way to go, and it’s just the beginning.
Central distribution map source: Suning Guanwei