Sales scale increased by more than 25% month-on-month, and Suning Tesco continued to "return blood"

Wang Hai/Wen

After several months of liquidity pressure, Suning Tesco ushered in the dawn.

On January 28, Suning Tesco released its 2021 annual performance forecast, saying that the company's sales scale in the fourth quarter is expected to increase by 25.48% compared with the third quarter, and the EBITDA in November was 0.8 billion yuan, which was positive and continued to be positive in December. The Company expects EBITDA to remain positive in the first quarter of 2022.

Suning Tesco said that under the leadership of the new board of directors, the company implements the three major strategies of "doing a good job as a retail service provider, strengthening the supply chain, and optimizing the quality of operation", and the company will continue to promote revenue growth, reduce costs and improve efficiency, and revitalize assets.

Fourth quarter commodity sales revenue increased by 25.48% sequentially

The announcement shows that in late August 2021, with the stability of bank-enterprise cooperation and the incremental credit granting of Bank of Jiangsu and Bank of Nanjing, with the support of major brand owners, liquidity gradually recovered and sales revenue gradually increased. From September to November of that year, the company's sales increased month-on-month, sales stabilized, and the scale of commodity sales revenue in the fourth quarter is expected to increase by 25.48% compared with the third quarter.

The digital service network built by Suning Tesco that integrates online and offline, as well as its ability to accurately reach users in various scenarios, and provide effective brand promotion premiums and product conversion with full-scenario service and marketing capabilities, are the key to its endogenous hematopoiesis and sustainable business development.

During the 2021 Double 11 Shopping Festival, Suning Tesco focused on the home advantage of home improvement, accelerated the integration of online and offline, and comprehensively improved the service experience, with remarkable results in the differentiation of Double Eleven. According to the data, 30 minutes before November 11, Suning Tesco's high-end home appliances became popular, with sales increasing by 43% year-on-year, and Haier, Midea and Hisense became the TOP3 brands of major appliance sales. On the day of Double 11, the number of people who arrived at the store experience increased by 137% year-on-year. During the Double Eleven period, the number of high-end home appliance purchase orders of more than 10,000 yuan on the platform increased by 152% year-on-year, the number of old-for-new people in omni-channel increased by 157% year-on-year, energy-saving home appliances accounted for 68%, and the sales of smart home products increased by 168%.

In terms of logistics services, during the "Double 11" promotion, the overall performance rate of Suning Easy Shopping Flow was 99.8%, the shipment volume of home improvement increased by 3 times compared with the same period last year, and the daily peak of after-sales service users exceeded 200,000. Especially in counties and towns, orders for service products such as home appliance maintenance and cleaning increased by 32% year-on-year.

During this year's New Year Festival, Suning Tesco joined hands with Lin's Wood, Gujia Home, Four Seasons Muge, Xilinmen, Hengjie, Taitaile, Wrigley and other head home improvement home furnishing brands, focusing on five major home scenes such as living room, kitchen, bathroom, balcony and bedroom, and fully launched the "New Year New Home" plan. In terms of services, Suning Tesco upgraded the three major services of "free furniture delivery", "smart bathroom replacement" and "one-stop kitchen reform" to meet the needs of family New Year's "bureau reform and renewal".

Suning Tesco New Year Festival consumption data shows that high-end furniture, children's home and winter essential home products are hot. Since the launch of the 20:00 New Year Festival on January 9, high-end furniture sales have increased by 32% year-on-year, of which the 25-40 age group has a greater demand for high-end products in the eastern region. As the winter holidays approached, sales of children's study desks increased by 42%, eye lamps by 26%, and beds/mattresses by 27%. Continuous cooling led to a new round of warm winter home product sales boom, Suning Tesco instant hot smart toilet / toilet lid sales increased by 49% year-on-year, touch multi-function wind and heat bath master, constant temperature shower, electric towel rack increased by 51%, 47%, 63% respectively.

The first round of the New Year Goods Festival broke out, and the head home improvement brand ushered in high growth in Suning Tesco. The data shows that since the start of the New Year Festival, Lin's wood industry as a whole has increased by 180%, Gujia Home has increased by 158%, and Xilinmen, NVC and TCL have increased by 28%, 30% and 190% respectively.

Since 2021, based on the advantages of home appliances, Suning Tesco has continued to cultivate the home improvement track with remarkable results. It is reported that in 2021, home improvement brands represented by Lin's Wood, Good Wife, Kohler, etc. will open up new growth space in Suning's Tesco channels, and the sales scale of stores will increase by 80%, 141% and 20% respectively throughout the year. In 2022, Suning Tesco will continue to invest resources to improve the power of brand goods and maintain growth.

EBITDA was positive for two consecutive months

While consolidating liquidity and resuming operations, Suning Tesco continued to increase the effectiveness of cost reduction.

With the coordination and assistance of internal and external multi-party resources, Suning Tesco's fourth quarter performance showed an inflection point. According to the announcement, the scale of commodity sales revenue in the fourth quarter of last year is expected to increase by 25.48% compared with the third quarter, the company's total expenses will drop by 13.6% month-on-month, and the net profit attributable to the shareholders of Suning Tesco's listed companies is expected to lose 1.2 billion yuan - 1.7 billion yuan, a loss of 59% - 71% in the third quarter of the previous quarter, and the loss is significantly narrowed. In November 2021, EBITDA was 0.8 billion yuan, which was positive and continued to be positive in December.

As an important indicator of the health of a company's cash flow, the positive EBITDA means that the company can form a "hematopoietic function". Once achieved, it means that cash flow will be relatively robust, which can bring continuous impetus to the development of its business. The warming of operating indicators means that cash flow will tend to be stable, which is not only the basis for Suning Tesco to steadily promote various businesses in the future, but also the beginning of its confidence in rebuilding.

As a new species with rapid development of Suning Tesco, retail cloud continues to maintain rapid development, continue to expand home furnishing, and quick repair track.

In 2021, Suning Tesco accelerated the transformation of retail service providers, and the retail cloud business continued to maintain rapid development, opening 2678 new franchise stores during the reporting period, expanding home furnishing and quick repair tracks, and as of the end of the reporting period, Suning Tesco retail cloud franchise stores were nearly 10,000. In the fourth quarter, retail cloud took the lead in resuming growth among various channels, reflecting strong competitiveness.

At present, retail cloud stores have been upgraded to the 3.0 model, creating a fusion store of home appliances and homes, and exerting force on the consumption scene of "guest meals and bedrooms, bathrooms and yangs" in counties and towns. Up to now, Retail Cloud has joined hands with Chivas, Xilinmen, Wrigley, Four Seasons Muge and other head home bathroom brands to enter the store, to achieve more complete coverage of "home as a scene", to create a one-stop home improvement shopping experience, to bring convenience to consumers, improve the purchase rate.

For the development plan for 2022, Suning Tesco said in the announcement that with the support of the provincial and municipal governments and under the leadership of the new board of directors, the company will implement the three major strategies of "doing a good job as a retail service provider, strengthening the supply chain, and optimizing the quality of operation", and continue to promote revenue growth, cost reduction and efficiency improvement, and asset revitalization.

At the level of revenue growth, focus on the core business of home appliance 3C, give full play to the company's online and offline integration capabilities in scene experience, strengthen supply chain integration capabilities, and highlight service performance capabilities in overall solutions; the channel side further taps the sinking market potential and continues to accelerate the development of retail cloud business and efficiency improvement. At the level of cost reduction and efficiency improvement, through the optimization of the store model, we will vigorously promote the decline in the rental level of the store and the improvement of the efficiency of the storefront; further improve the efficiency of the organization and the efficiency of the team output, reduce the level of various expenses; and further improve the accuracy and input-output level in terms of user acquisition and marketing.

At the level of asset revitalization, we will continue to promote the operation of funds for commercial properties and logistics assets, strengthen the withdrawal of foreign investment equity, accelerate the recovery of the company's cash flow, and promote the recovery of zero-supply relationships, income scale and operating performance. On this basis, the company expects EBITDA to turn positive in the first quarter of 2022.

Overall, after experiencing liquidity difficulties in 2021, Suning Tesco is gradually improving its operating conditions through strategic optimization, retail focus, and efficiency improvement.