Three squirrels fell

Revenue is declining, and the three squirrels can't run!

On March 26, Three Squirrels (300783), the "first share of snack e-commerce", released its 2023 annual performance report.

In terms of revenue: In 2023, the company will achieve operating income of 7.115 billion yuan, a year-on-year decrease of 2.45%.

Profit: During the financial reporting period, the company achieved a net profit of 220 million yuan, a year-on-year increase of 69.85%, and earnings per share of about 0.55 yuan.

Among the two main data indicators of revenue and profit, many people must be more concerned about revenue data, because revenue data is the dynamic data that can best reflect the real development status of a listed company. Although the revenue of the three squirrels fell by 29.67% year-on-year in the first half of the year, they relied on the brave performance in the second half of the year (mainly the New Year's season) to catch up, and the final revenue performance only decreased by 2.45% year-on-year. But if 2023 is divided into two stages, in the first half of 2023, the performance of the three squirrels will decline a little fast, and the counterattack in the second half of the year will not be as sharp as imagined.

Source: Three Squirrels Video Account

Judging from other data, during the financial reporting period, the company's total assets at the end of the period were 5.543 billion yuan, accounts receivable were 594 million yuan, and the asset quality was not high; in addition, the net cash flow generated by operating activities was 334 million yuan, and the cash received from the sale of goods and labor services was 7.850 billion yuan, and the overall situation can only be said to be average.

In the annual financial report of the three squirrels in 2023, a rare highlight is the net profit of 220 million yuan, a year-on-year increase of 69.85%.

However, objectively speaking, as a large company that once had an annual revenue of 10 billion, as long as all aspects of the operation are properly controlled, for example, optimizing the supply chain, saving online operating costs, etc., it is not difficult to cut out a net profit of more than 200 million a year.

Therefore, we can't say that the "high-end cost-effective" strategy proposed by the three squirrels in 2023 has achieved results just because the net profit of the three squirrels in 2023 has increased significantly. After all, judging from the comprehensive data performance, the three squirrels are still a certain gap from returning to the top.

can't run, is the most real state of the three squirrels at present.

Is the model of high reliance on e-commerce traffic coming to an end?

Three squirrels can be said to be a company that "has carried e-commerce genes since the mother's womb".

Founded in 2012, Three Squirrels has a lot to do with the development and growth of the domestic leisure snack market over the years, and the founder Zhang Liaoyuan keenly stepped on the first wave of e-commerce dividends.

When talking about why he founded an Internet food brand like Three Squirrels, Zhang Liaoyuan said with certainty, "E-commerce snacks have a five-year outbreak period, and a number of Internet snack brands will be born."

Because from the beginning, all the belongings were bet on the e-commerce channel, and this crazy gambling investment soon paid off amazingly: less than a year after its establishment, Three Squirrels became an instant hit on Double 11 in 2012, winning the sales championship of Tmall nut snacks with nearly 8 million sales.

As soon as he debuted, it was the peak, and the three squirrels did it!

Subsequently, as a well-known "Tao brand", the three squirrels started a dazzling run all the way. In less than 7 years, it has successfully left behind a number of well-known brands in the industry, such as BESTORE and Baicaowei, and has become the first leisure snack brand in China with a revenue of more than 10 billion yuan.

It is precisely because of the rapid growth momentum of the three squirrels in those years that top venture capital, including IDG Capital and Today Capital, have come to the door and carried out multiple rounds of large-scale investment in the period, and the subtext behind it is also very clear: according to this development momentum, the listing of the three squirrels is only a matter of time.

Sure enough, in July 2019, the three squirrels were successfully listed on the GEM with the halo of "the first stock of national snacks", and once won 10 consecutive daily limits, with a maximum market value of more than 36 billion, and Zhang Liaoyuan became the richest man in Anhui that year.

However, the so-called success is also e-commerce, and failure is also e-commerce.

With the peak of online traffic, the growth of the three squirrels over the years has become more and more uncertain.

The most intuitive data: since 2020, the revenue of the three squirrels has never returned to the 10 billion mark, of which the revenue in 2020 has shown negative growth for the first time.

If it is said that in 2020, the decline in the revenue of the three squirrels has a certain relationship with the bad environment at that time and the failure to open up the consumer market. Then, throughout 2023, the domestic consumer market has basically returned to normal, and the revenue of the three squirrels is still not transferred by human will, and there is a habitual decline, that is, there is a problem with itself.

Because in the first half of this year, when the revenue of the three squirrels fell by nearly 30%, other listed leisure snack companies, including BESTORE, Qiaqia Food, Laiyifen, Yanjin Shop, and Miss You, all had positive revenue growth!

Source: Qiaqia Food Official Account

Some people say that over-reliance on e-commerce is the "first sin" of the three squirrels' declining revenue, which is not a lie.

According to the prospectus of the three squirrels, in 2016~2018, 85% of the revenue of the three squirrels came from third-party e-commerce platforms such as Tmall, JD.com, and Vipshop.

In recent years, with the gradual decline of e-commerce dividends, the online traffic costs and marketing expenses of the three squirrels have increased significantly, and now, the growth rate of its platform operating expenses has long exceeded the growth rate of revenue.

Therefore, it is not so strange when we see the financial report of the three squirrels in 2021 mentioning that "the era of entrepreneurship with e-commerce as the core is over".

Old and new opponents take turns on the field,

Will Douyin be the last antidote for the three squirrels?

When they realized that walking on one leg of e-commerce might not work, the three squirrels also thought of countermeasures. For example, opening an offline store.

As early as 2016, Three Squirrels opened a number of offline stores in some cities in Anhui, including Zhang Liaoyuan's hometown, and in 2019, Three Squirrels also launched an ambitious "10,000 store plan": according to the plan, Three Squirrels will open 10,000 offline stores across the country in the next five years.

However, plans are easy to come out, and plans to be implemented are not so simple.

We have seen that in the past few years, not only has the "10,000 store plan" of Three Squirrels not made much progress, but some of its directly operated stores and franchise stores have also closed more than 500 stores in 2022 alone.

In the past few years, the three squirrels have also understood a truth: offline is more difficult to do than online!

Then go back online and continue to look for a breakthrough.

And where is the biggest opportunity online? Live streaming must be counted as one.

Source: Screenshot of the Three Squirrels video account

The three squirrels were able to get this realization, largely thanks to their other opponents.

Because just when the three squirrels couldn't find a sense of direction over the years, other casual snack brands caught up step by step through live broadcasts, and even overtook the three squirrels.

For example, Qiaqia laid out business lines on Douyin and Kuaishou very early, and has accumulated a large number of loyal fans through these years of operation. In 2023, Qiaqia's revenue will be 6.806 billion yuan and its net profit will be 805 million yuan.

In 2021, BESTORE's operating income on Douyin increased by 3.62 times year-on-year, winning the "Top 1 single-day sales in Douyin food industry" that year.

The better the opponent's performance on the live stream, the more it means that the three squirrels are not good enough in this area.

Entering the live broadcast and catching up may be the last chance for the three squirrels.

This opportunity point is not only seen by the three squirrels, but also by many consumers who care about the three squirrels.

At the beginning of this year, in an interaction between investors, brands and consumers, someone asked the three squirrels: Now that the live broadcast market is getting hotter and hotter, has the company thought about seizing the Spring Festival business opportunities to layout and win?

The response of the three squirrels is: The company is actively deploying short video e-commerce such as Douyin and Kuaishou, and building a sales matrix for self-broadcast and Dabo.

The latest financial report also shows that at present, the revenue of the three squirrels Douyin platform has surpassed the Jingdong platform, with a year-on-year increase of 118.51%.

For the three squirrels, this is clearly a positive sign. I still hope that the live broadcast will be the right antidote to the three squirrels!

Author | Charlie