The story of Rui Xing’s coffee tea has both joy and worry.
Losing money to sell coffee is no longer the “main theme” of Rui Xing.
On the evening of November 13, RX.US (LK.US) released its third quarter earnings report for the 2019 fiscal year before the US stock market. The financial report shows that revenue for the quarter was 1.54 billion yuan, up 539% year-on-year and 69% quarter-on-quarter, higher than Bloomberg expects. The net loss reached 531.9 million yuan, an increase of 9.6% year-on-year and a 22% quarter-on-quarter decrease, exceeding analysts’ estimates. The number of users increased to 30.7 million, and the number of new users reached 7.9 million, a year-on-year increase.
To hand over a good quarterly report, Ruisheng closed up 13.07% today.
It is worth noting that the release of the financial report is also the date when the Ruixin IPO lock-up period ends. This means that after the lifting of the ban, the circulation of stocks will increase significantly. Under normal circumstances, the lifting of the ban will bring a negative impact on the stock price. . However, looking at the data of the three-party platform such as financial report and wind, Ruisheng’s current original shareholder + institutional shareholder accounted for more than 80% of the shares, and the outstanding shares accounted for only about 15%, plus the performance of Ruixing in the quarter was good, and the lock-up period ended. It does not have a big impact on Ruisheng’s share price. Judging from the current stock price, the end of the lock-up period has not adversely affected Ruisheng’s share price.
Rui Xing’s shareholder structure, share capital structure, picture from financial report and wind
The total revenue surged five-fold year-on-year, doubling from the previous quarter, and users continue to grow at a high rate, which is good news. More importantly, although the loss is still not small, but has been controlled, Ruixing also achieved store profit this quarter.
The store starts to make money
Ri Xun Coffee CEO Qian Zhiya mentioned in the telephone conversation that with the company’s economies of scale, bargaining power and operational efficiency, the operating loss of Ruixing Coffee Store has been greatly reduced, and it is expected to be in the third quarter of 2019. There is a breakeven point in store operations.
Rui Xun Coffee has achieved this goal. In the quarter, Ruixing Coffee Store achieved profit for the first time (marketing expenses were not included), reaching 186 million yuan, a loss of 126 million in the same period last year, and a loss of 55.8 million in the previous quarter. In addition, the profit margin of store operations also reached 12.5%. . Based on this, the overall operating profit of Ruixing CoffeeThe rate has also continued to rise and the overall losses have been brought under control.
Rui Xun coffee operating profit margin and net loss, drawing:, data from Ruixing Financial News
The operation level of the store turned around, which was related to the sales of Ruixing Guangkai Store, the increase in product sales and the continuous improvement of product structure.
According to the financial report, Ruixing Coffee added 717 stores this quarter, and the total number of stores in the quarter reached 3,680. The continued expansion of stores has led to a large increase in new customers and revenue. In the quarter, the number of Ruixing coffee users increased to 30.7 million, an increase of 413% year-on-year, adding 7.9 million users; revenue also surged five times year-on-year, doubling from the previous month. Confirmed the expectations of the company’s CFO and chief strategy officer Reinout Schakel’s second-quarter earnings conference call.
As of the end of 2019, Ruixing’s store target is 4,500. Rui Xing may open 820 new stores in the fourth quarter. According to Ruisheng’s current store growth rate, this goal is not difficult to achieve. In fact, due to the substantial growth of new stores and the increase in personnel expenses, the department’s expenditure increased by 176.6% year-on-year, but the proportion of this expenditure to net product revenue has dropped to 32.0% compared with 76.0% in the same period last year. As a result, in the next quarter, as the store continues to expand significantly, Ruixing’s revenue will continue to grow at a high speed, and store operations will continue to improve.
Although the growth rate of stores is declining, based on the continuous improvement of product structure, the overall sales of products continue to climb, doubling the chain. Based on the continuous expansion of the category, the number of products sold by Ruixing every month has increased significantly. In the quarter, the number of items sold by Ruixing monthly increased by 470% year-on-year to 44 million.
Ruixing coffee shop growth rate and average product sales, drawing:, data from Ruixing Financial News
In fact, Rui Xing has been trying to expand its product boundaries. In addition to the coffee, light food and desserts that have been on the market long ago, Ruixing announced the independent new tea brand Xiaolu Tea this quarter and opened more than 20 subsidiaries across the country. Just last week, Rui Xing also launched a nut product. At the same time, Ruixing is also actively cooperating with upstream and downstream and cross-border. First, it signed an agreement with Louis Duffy to develop the NFC juice brand business, and then signed a cooperation framework agreement with Hals to develop Ruixing’s peripheral products. On the eve of the double eleventh this year, Ruixun Coffee also jointly developed the Xiaozan Cup with the traffic star Xiaozhan, the first batch of 30,000 seconds. Ruiyue Coffee CEO Qian Yazhi revealed at this quarter’s earnings conference that non-coffee accounts for 45% of the company’s revenue, and the proportion of Xiaolu tea has reached about 20%. Ruixing has formed a category structure of “coffee + light food + new tea + surrounding”.
Foreseeable,Resout CFO and Chief Strategy Officer Reinout Schakel revealed his goal in the second quarter of the earnings conference call: “To the end of this year, Rui Xing’s coffee and The proportion of revenue from other products will approach five to five, and will soon be realized.
The joy and worry of Xiaolu Tea
In the earnings conference call, Qian Zhiya admitted that although coffee products still maintain rapid growth, the growth rate has begun to be lower than tea and other products. Although less than a quarter after the launch, Xiaolu Tea has accounted for 20% of the product sales, which means that in the next few quarters, the new power of Ruixing Coffee will come from Xiaolu Tea. The following Shenshang-based Xiaolu Tea is helping Ruixing cover more areas and conduct coffee education in low-tier cities.
However, because Xiaolu Tea is still in the early stage of development, Ruisheng still needs to invest a lot of marketing expenses for a period of time. Although the customer acquisition rate has improved, the marketing expense rate that has been effectively controlled has also rebounded significantly in the two quarters after the launch of Xiaolu Tea, and the marketing cost in the second quarter was as high as 240 million. Yuan, and the marketing expenses of this quarter also reached 557 million yuan, of which advertising still accounts for the bulk.
Rui Xun coffee market marketing fee acquisition rate and marketing expense rate, drawing:, data from Ruixing Financial News
In order to save the expenses brought by Xiaolu tea, unlike the coffee business to open a direct store, Ruixing adopts a partner model for the operation of Xiaolu Tea. Partners are responsible for renting, renovating and operating the store, and Ruixing provides customers and supply chains. Xiaolu Tea adopts a revenue sharing model and does not charge a one-time franchise fee. After the partner reaches a certain scale of operation, the fee is charged proportionally.
Although the partner model may have certain operational and management risks, Qian Yazhi admits that Rui Xing ultimately hopes to compare In a light way, I hope not to burn money, but to export technical systems and methodologies. Expanding in other regions outside of China while ensuring profitability.
Although the revenue has increased significantly and the store operations are in good condition, Ruisheng’s net loss has been controlled, but it is still growing year on year. On the one hand, it is a small deer tea, a nut brand, etc. that requires a large amount of marketing investment. On the other hand, Ruixing continued to focus on the development of new stores in the third quarter, not only including the original coffee shop, but also added a large number of Xiaolu tea shop, even if Xiaolu tea does not bear the expenses of rent and store operation, but on the supply. Still increasing investment, these increase the operating costs of Ruixing. At present, Ruixun plans to reduce costs by reducing waste of raw materials, improving bargaining power, improving operational efficiency by technology, and increasing store throughput. However, it is difficult to achieve results in the short term, and losses will continue for some time.
Whether asked if he would copy the partner model of Xiaolu Tea to other categories to ease the burden, Qian Zhiya revealed that this model of Xiaolu Tea has also been promoted to some special coffee scenes, such as hospitals, etc. Place, but still not copied on a large scale. Ruisheng will still maintain a dual-brand development path for coffee and tea, making a distinction between the business models of the two categories.
Since the listing, the problem of Ruisheng’s loss has not been completely solved, and the “sacrifice of profit for scale” has not changed qualitatively. But the good news is that at the same time of rapid expansion, Ruisheng also controlled losses and achieved profit at the store level.