On March 28, Bubble Mart released its 2021 full-year financial report, and in 2021, Bubble Mart achieved revenue of RMB4.49 billion, an increase of 78.7% year-on-year; adjusted net profit of 1.002 billion yuan, an increase of 69.6% year-on-year, and the gross profit margin narrowed to 61.4%. In addition, the number of registered members reached 19.58 million, the sales contributed by members accounted for 92.2%, and the member repurchase rate was 56.5%. Online channel revenue increased by 97.4% year-on-year, surpassing retail store revenue for the first time. In the conference call after the earnings report, Wang Ning, CEO of Bubble Mart, said that supply chain optimization, exploring live e-commerce platforms such as Douyin, and expanding overseas channels will be the direction of work this year.
Membership growth, narrowing gross margins, and supply chain optimization remain the focus this year
According to the financial report, in 2021, Bubble Mart achieved revenue of RMB4.49 billion, an increase of 78.7% year-on-year, and adjusted net profit of RMB1.002 billion, an increase of 69.6% year-on-year. Bubble Mart's cash and cash equivalents in 2021 amounted to $5.265 billion.
In terms of revenue structure, the proportion of Bubble Mart's own products has increased, rising from 85% in 2020 to 88.6% to 3.978 billion yuan; the proportion of revenue from external procurement and other products has dropped to 11.4%.
In terms of membership, as of December 31, 2021, the number of newly registered members of Bubble Mart reached 12.18 million, and the cumulative number of registered members reached 19.58 million, an increase of 164% year-on-year. Among them, members contributed 92.2% of the revenue, and the annual repurchase rate of members reached 56.5%.
It is worth noting that the gross profit of Bubble Mart increased from 1.594 billion yuan in 2020 to 2.759 billion yuan in 2021, an increase of 73.1%, but the gross profit margin decreased from 63.4% to 61.4%. Regarding the decline in gross profit margin, Bubble Mart executives explained that it was mainly due to the improvement of product process quality, more refined design, and more complex process. At the same time, the price of raw materials will increase by 15% in 2021, and the labor cost of factories will rise by about 10%. Bubble Mart aims to keep gross margins at 61% to 63% this year.
In terms of supply chain, Bubble Mart has been optimized, the average manufacturing cycle is about 3 months, and there was basically no large-scale shortage of goods last year. As of December 31, 2021, the book inventory value of Bubble Mart amounted to $788 million. In response to the problem of higher inventory amounts, Bubble Mart executives said that mainly because of the natural increase in demand for goods last year, and because of the shortage of inventory in April and May last year, Bubble Mart increased production and shipments in the fourth quarter of last year. The age of the warehouse is basically around 0 to 3 months, accounting for about 60% of the overall inventory amount. Wang Ning also said that the optimization of the entire supply chain this year is still the focus of Bubble Mart.
For the first time, online channels surpass retail stores and will explore live e-commerce and overseas channels
According to the financial report, Bubble Mart's revenue mainly comes from retail stores, robot stores, online channels, wholesale channels and others. Nandu reporter noted that in fiscal 2021, the sales revenue of bubble mart online and offline channels has increased, and the sales revenue of online channels has exceeded that of retail stores for the first time.
As of December 31, 2021, the sales revenue of Bubble Mart retail stores reached 1.673 billion yuan, an increase of 67.0% year-on-year, and 108 new stores were added, totaling 295. The sales revenue of robot stores was 470 million yuan, an increase of 42.9% year-on-year, and the net increase was 519 robot stores, a total of 1870 units. Wang Ning revealed that the epidemic situation in early 2021 was serious, which had a greater impact on offline sales. Although the follow-up domestic epidemic situation has been repeated, it has been effectively controlled, and retail stores and robot stores are operating normally.
In terms of online channels, Bubble Mart's revenue rose from 952 million yuan in 2020 to 1.879 billion yuan in 2021, an increase of 97.4% year-on-year. According to the financial report, the revenue growth of Bubble Mart online channels mainly comes from Bubble Mart box pumping machine, Jingdong flagship store and Tmall flagship store. Among them, the Jingdong flagship store, which began to operate in April 2020, has a revenue of 143 million yuan in 2021, an increase of 296% year-on-year; and the revenue of the bubble mart box pumping machine in 2021 reached 898 million yuan, an increase of 92.6% year-on-year.
Wang Ning attributed the growth in online revenue to the growth of brand influence, the increase in the number of members, as well as the sales growth of box drawers and JD channels and the expansion of new channels. Wang Ning also revealed that online channel optimization will still focus on WeChat Mini Programs, Tmall and JD.com, but will also accelerate the development of live e-commerce platforms such as Douyin, explore live e-commerce models suitable for the tide play industry, and call the Douyin platform "very gratifying growth".
In addition, in terms of offline channels, first- and second-tier cities are still the key layout direction. Wang Ning believes that the epidemic situation in China this year is still in a repetitive stage, and it is expected that the number of stores opened may be less than last year, and it will take a more rational rhythm, and does not want to drive growth by increasing stores in large quantities. In addition, "the number of overseas stores opened in 2022 will increase qualitatively." According to the financial report, the number of stores in Hong Kong, Macao and Taiwan and overseas in 2021 will reach 7, and the number of robot stores will reach 9.
Wang Ning said that in addition to the in-depth expansion of Eastern countries and regions this year, it also plans to expand the mainstream markets of Western countries such as the United States, Europe and Australia, hoping that overseas income can reach 50% of the overall income in the future. He found that more than 60% of non-Asian consumers in stores in Western markets are confident of reaching this goal. Nandu reporter noted that in 2021, the revenue of Bubble Mart Chinese mainland outside the market accounted for only 3.0% of the overall revenue.
MOLLY's vitality is still strong, accelerating the development of the non-blind box market
The IP business is the core of Bubble Mart, and it is worth noting that there are already more than 7 IPs with sales revenue of more than 100 million in 2021. The proportion of Revenue of Bubble Mart's own IP increased from 39.0% in 2020 to 57.6% in 2021; from 980 million yuan in 2020 to 2.589 billion yuan in 2021, an increase of 164%, and the revenue contribution increased significantly.
Nandu reporter noted that last year was just the 15th anniversary of the birth of MOLLY, as the head IP of Bubble Mart, MOLLY contributed 41.6% of revenue in 2018, and its revenue contribution increased from 357 million yuan in 2020 to 705 million yuan in 2020, an increase of 97.6%, accounting for 15.7% of revenue. Other head IPs such as DIMO and SKULLPANDA also contributed 12.6% and 13.3% of revenue, respectively. SKULLPANDA's performance last year was very impressive, from 0.39 billion yuan to 595 million yuan, an increase of 1423.8% year-on-year.
As the major head IP of the revenue, there has been a lot of controversy recently. Nandu previously reported that in January, Bubble Mart and KFC jointly launched the DIMO limited edition blind box package, which triggered some consumers to hire someone to "eat on behalf of" for "seeking a baby", which was pointed out by the China Consumer Association to easily lead to consumer impulse consumption, and caused unnecessary food waste due to over-purchase. In addition, recently some consumers applied for after-sales due to the defective blind box of the official SKULLPANDA hidden model in the lottery, but they were refused to exchange the goods on the grounds that they were "inconsistent with the genuine product".
The blind box has contributed more than 80% of the profits of bubble mart, helping it out of the loss, but since this year, the supervision of the blind box economy has become stricter. On January 14, the Shanghai Municipal Administration for Market Supervision and Administration issued the "Shanghai Blind Box Business Activity Compliance Guidelines", which clarifies the scope of application of the blind box business activities and puts forward 20 compliance business suggestions from the aspects of blind box price system, extraction rules, and guarantee mechanism. During the two sessions of the National People's Congress this year, a number of deputies and members paid attention to the blind box economy and put forward suggestions such as strengthening the supervision of the blind box market and standardizing management.
Bubble Mart has also accelerated the pace of "de-blind boxing" and strived to open up the non-blind box market. In June last year, Bubble Mart launched the MEGA Collection Series (Dawa), a high-end tide play product line, with a price of 4999 yuan, declaring it "the first collectible for young people". According to the financial report, the MEGA series products achieved a total revenue of 184 million yuan last year. Bubble Mart executives also revealed that MEGA will be the main product line this year, planning to launch 2 to 3 products per month.
Nandu also previously reported that in August 2021, Beijing Bubble Mart Park Management Co., Ltd. was established, and its business scope includes urban park management, amusement parks, ticketing agencies, etc. At the beginning of January 2022, Bubble Mart was exposed to have reached a cooperation with Beijing Chaoyang Park to create the first offline park using the "European Charm" project in the park and surrounding streets and forests. The project has completed concept setting and is in the programme design phase.
In response to the issue of industry supervision, Wang Ning said on the earnings conference call that Bubble Mart has communicated with multiple departments and very much hopes to introduce relevant industry regulatory policies to help the industry develop more healthily and rapidly.
Written by: Nandu reporter Fang Shiqi