01
Countdown to 2023, data signals from the third quarter
In recent days, major home furnishing listed companies have successively released their financial reports for the third quarter of 2023, and there are only 2 months left in 2023, and it has reached the stage of sprint. Judging from the data performance of the past three quarters, it is not easy for companies overall.
The information disclosed in the quarterly report is relatively limited, and "Sloth" takes listed companies as a sample, compares them horizontally and their previous financial reports, and tries to analyze the market change signals behind the data, which is for reference only.
The entire market is experiencing difficulties in expanding and even reducing volume. This feature is not only manifested in the field of custom home furnishings, but also includes several major fields such as upholstered furniture, main and auxiliary materials, home textiles, kitchen appliances, etc., which is generally this trend. The market share of the top companies is stable at a certain level, and it is unlikely that there will be major ups and downs.
Taking the first three quarters of 2023 as an example, the total revenue of 9 customized listed companies was 39.455 billion yuan, an increase of only 1.17% from 38.999 billion yuan in the same period of the previous year. The total revenue of the five listed companies in the software/bedding industry (excluding Minhua Holdings) was 32.111 billion yuan, an increase of only 0.87% from 31.834 billion yuan in the same period of the previous year.
This year is probably another difficult year, last year or early in the beginning of many companies in the 2023 target is too optimistic, however, the market performance is less than expected, which also shows that the home improvement industry is difficult to really decouple from upstream real estate in the short term. In terms of the completion of revenue and profit targets, most enterprises give priority to maintaining profits, so most enterprises have a phenomenon that the increase in profits is much greater than the growth rate of revenue.
In the first three quarters, Oppai's revenue increased by 1.82% and net profit increased by 16.02%; Sophia's revenue increased by 3.36% and net profit increased by 18.54%; In the customization industry, only Zhibang maintained a double-digit growth rate in revenue and net profit, achieving growth of 11.71% and 10.92% respectively. The revenue of Shangpin Home Delivery in the first three quarters fell by 6.59%, with a net profit of 4.07 million yuan and a non-net profit (loss) of 20.92 million yuan, which is also the only company that is still losing money after deducting non-net profit.
For the 2023 annual business performance forecast of listed companies in the customization industry, "Sloth" adheres to the previous judgment, and there will be a slight increase compared with 2022, with revenue up 3% and net profit up 6%, and it is expected that the total revenue of 9 companies will reach 56.481 billion yuan and net profit of 5.707 billion yuan.
02
The performance of customized enterprise cabinets has declined, and wardrobes have become a new force point
The category changes in the customization industry, and the revenue of the cabinet business has declined significantly. In the first three quarters, compared with the same period last year, Opai cabinets fell by 5.24%, gold cabinets fell by 5.54%, the kitchen cabinet revenue of my music fell by 1.46%, and Zhibang cabinets rose slightly by 0.04%. (Simi's revenue in the first half of 2023 was 272 million yuan, a year-on-year decrease of 31.14%, and the net profit (loss) was 8.22 million yuan)
According to the previous statistics of "Sloth", from 2017 to 2022, the total cabinet performance of 9 customized companies increased from 10.4 billion yuan to 15.199 billion yuan, with a compound annual growth rate of 7.88%, which is less than the compound annual growth rate of 15.49% for wardrobes (whole house customization). Next, the revenue of the cabinet business may shrink, and the companies that originally took the cabinet as the core category are increasing the transformation of wardrobes (whole house customization).
From the perspective of the revenue ratio of cabinet and wardrobe business, Oppai has achieved 1:1.7, Zhibang has basically achieved 1:1, and the proportion of my home furnishing has reached 1:2.2, and the wardrobe (whole house customization) has continued to expand its proportion, and even grown into the largest category. Although the ratio of gold medals is still 2:1, the wardrobe business will also enter the threshold of 1 billion.
This trend can also be seen in the number of stores. As of the end of the third quarter, the total number of Opai Home Furnishing stores was 7,376, a net decrease of 239 from the end of 2022, of which 139 were in the cabinet category. The total number of Sophia stores was 3,794, a decrease of 306 stores from the end of 2022, of which Sophia decreased by 56 stores and the Simi brand decreased by 362 stores.
The number of stores of other companies (increase or decrease from the beginning of the year), Zhibang 4638 (+407), Gold 4076 (+347), I Le 1699 (+42). In this environment, closing a store is not necessarily a bad thing, it does not mean decay.
The serious involution of the customization industry is the consensus. However, judging from the data performance of listed companies in the first three quarters, the revenue scale of each company did not fluctuate significantly compared with the same period last year, and the head companies did not have much impact on the enterprises behind them for the time being. In the fourth quarter, the market competition intensified, and we expect that the 699 price war set off by companies represented by Oppai may have some impact on the company's annual profits, but the overall profit growth is still considerable.
The operation logic of customized enterprises has gradually stabilized, which is reflected in several indicators: the median gross profit of the enterprise is about 35%, the sales expenses are about 12%, the management expenses are 6%, the research and development expenses are 4.5%, and then a little financial expenses are removed, and the remaining net profit is about 10%. In the past two or three years, although the industry has intensified involution, it is still controllable from the perspective of financial indicators.
03
Upholstered furniture companies are moving towards one-stop solutions
The gross profit of the upholstered furniture industry is stable at 35%, and the net profit is about 10%, but there is a big difference in the cost structure. Judging from the data of several listed companies, the sales expenses are generally around 19%, the management expenses are relatively low, stable at about 4%-5%, and the R&D expenses are 2%. Judging from the degree of volume, the software industry does not seem to be inferior to the customization industry.
In the first three quarters, Gujia Home Flossing achieved revenue of 14.136 billion yuan, a year-on-year increase of 2.72%, a net profit of 1.501 billion yuan, a year-on-year increase of 6.98%, and non-net profit of 1.365 billion yuan, a year-on-year increase of 6.53%. In terms of expenses, sales expenses were 2.294 billion yuan, a year-on-year increase of 12.01%, accounting for 16.23% of revenue; management expenses were 308 million yuan, a year-on-year increase of 23.11%; R&D expenses were 196 million yuan, a year-on-year decrease of 13.66%.
In the first three quarters, Xilinmen's revenue was 6.069 billion yuan, a year-on-year increase of 5.71%, Dream Lily's revenue was 5.715 billion yuan, a year-on-year decrease of 5.81%, and Mousse's revenue was 3.805 billion yuan, a year-on-year decrease of 8.38%. The corresponding sales expenses of these three companies were 19.06%, 21.01% and 26.25% respectively.
In February this year, Gujia will comprehensively upgrade the whole house customization to an integrated whole home model, and in July, it officially released the strategy of "one body, two wings, dual-core development", with "one Gujia brand" as the main body, the two wings represent the integrated business breakthrough and software category operation innovation, and the dual-core development is based on the capabilities that the two wings need to have. The transformation of foreign trade to "multinational/localized value chain integration". At the same time, Gujia is deeply involved in the cooperation of the Asian Games project, and as the exclusive supplier of official mattresses for the Hangzhou Asian Games, Gujia Home Furnishing provides overall home furnishing services for Chinese homes.
Several other bedding companies are not limited to only making mattresses, almost all of them are expanding categories (such as sofas, beds, furniture), and have contributed to a certain amount of revenue, and the final direction of evolution is probably from a single product to a one-stop soft home solution provider, which may be a visible and relatively certain growth route at present.
04
Transition to "whole house customization".
After 30 years of development, the industry has grown up a large number of more mature dealer groups based on the previous operation, this group of dealers has accumulated the corresponding capabilities, the future for home furnishing enterprises, both to open up new channels to find incremental markets, but at the same time can not take care of the other, dealers are still very important, the more recession, but to put the maintenance of business in priority, which is still an important support for scarce resources and performance. In order for enterprises (platforms) to attract more new and better dealers, the weight of the brand and the value of the mechanism are more important than ever before.
For example, a few days ago, Oppai launched the 29800 full-case home package, integrating the four major products of cabinetry, clothing and woodwork, although it is also a drainage product, but it is also a lot of cost-effective. The whole customization can essentially be regarded as a transformation, since it is a transformation, it is not a short period of time to complete the complete completion, and it is related to the transformation, and in the end there are still a few successful enterprises. Next, enterprises may show some achievements in stages to prove that the direction of strategic transformation is correct.
Is there a possibility that the whole family customization is only a phased product, and whether it will continue to be called "whole family customization" in the future is not even so important, after all, this is not a language that consumers can understand in seconds. To solve this proposition, different companies participate in different ways of playing, and may explore a better solution.
No matter how the concept is switched, the core competition between enterprises will not change, cost, efficiency, and consumer experience. These must be put into practice. The premise of being able to achieve these must be the improvement of the overall business ability brought about by the more and more solid basic skills of the enterprise. Enterprises that have the opportunity to break the situation in the future must have made different changes from the present.
05
The conundrum for home improvement companies
Compared with the problem of less income and slowing growth of home furnishing companies, home improvement companies are facing how to turn losses into profits, on the one hand, the problem of whether they can live better, and on the other hand, the problem of how to survive. Dongyi Risheng's revenue in the first three quarters was 2.099 billion yuan, a year-on-year increase of 20.44%, with a net profit (loss) of 196 million yuan and a non-net profit (loss) of 205 million yuan. In the performance structure, home improvement performance accounts for about 90% of the company's performance. In the first three quarters, the newly signed home improvement orders were 682 million yuan, 712 million yuan, and 588 million yuan respectively, with a total of 1.982 billion yuan. Compared with 2.253 billion yuan in the first three quarters of last year, it decreased by about 12.03%.
Mingdiao's revenue in the first three quarters was 518 million yuan, a year-on-year decrease of 4.71%, and the net profit was 14.95 million yuan. From the first to the third quarter, the amount of new orders signed was 115 million yuan, 133 million yuan and 101 million yuan respectively, totaling 349 million yuan. From the perspective of signing, it was slightly lower than the 357 million yuan in the first three quarters of last year.
From the data of the two home improvement listed companies, we can generally feel the warmth and coldness of the home improvement market this year. Next, the competition in the home improvement market is more intense, especially the shell continues to increase the size of the home furnishing business, relying on the innate traffic advantage, quickly seize the market, in early October announced the proposed acquisition of love space, the formation of the nest home decoration, love space, Shengdu decoration three direct brand matrix, for Beijing home decoration and even the national decoration market impact may have just begun, the time to engage in mentality.
For many enterprises, it used to be "if you don't advance, you will retreat", but now it is "if you don't retreat, you will advance". In 2024, it is difficult to say whether it will get better or worse, and it may not be that important. No matter what the general environment is, companies that dare to fight will not stop attacking.