Sophia Home Furnishing Co., Ltd. (hereinafter referred to as "Sophia" or "the Company") announced on April 13 that the company participated in the conference call organized by Shenwan Securities and Minsheng Securities on April 11 and 12. At the meeting, Sophia revealed that the company will accelerate the speed of store opening in 2024, quickly open stores through multi-brand and omni-channel, lay out blank markets, and store expansion will also become an important measure for the company's development in 2024.
Screenshot of Sophia's announcement
Sophia briefed investors on the company's operations in 2023. In 2023, the company continued to deepen the strategy of "multi-brand, all-category and omni-channel", achieving operating income of RMB11.666 billion, a year-on-year increase of 3.95%, net profit attributable to shareholders of listed companies of RMB1.261 billion, a year-on-year increase of 18.51%, and net operating cash flow of RMB2.654 billion, an increase of 94.69% year-on-year. Among them, the operating income in the fourth quarter was 3.465 billion yuan, a year-on-year increase of 5.37%, and the net profit attributable to shareholders of listed companies was 309 million yuan, a year-on-year increase of 18.40%. The company's profit distribution in 2023 plans to distribute cash dividends of 10 yuan for every 10 shares, with a total dividend of 952 million yuan.
In terms of brands, the Sophia brand has 1,812 dealers and 2,727 exclusive stores, and achieved operating income of 10.552 billion yuan, a year-on-year increase of 10.96%. During the reporting period, the average customer unit price of Sophia's factory was 19,619 yuan, a year-on-year increase of 6.30%. The Milana brand has 514 dealers and 514 stores, and the operating income is 472 million yuan, a year-on-year increase of 47.24%. During the reporting period, the average customer unit price of Milana factory was 13,934 yuan, a year-on-year increase of 6.57%. Simi brand has 222 dealers and 249 specialty stores, including 212 wardrobe sample stores. The overlap rate of Simi brand dealers and Sophia brand dealers has been further reduced, and terminal stores are gradually transforming into whole stores, and the whole strategy will promote the increase of customer unit value. Huahe brand has 276 dealers, 277 stores, and an operating income of 163 million yuan.
In terms of channels, dealer channels: operating income of 9.627 billion yuan, a year-on-year increase of 4.36%, complete assembly channels: direct sales + dealer assembly increased by 67.52% year-on-year, of which the number of directly operated complete assembly enterprises has been 221, covering 185 cities and regions across the country. Bulk channels: 1.451 billion yuan, down 4.86% year-on-year. Continued to optimize the customer structure of bulk business, consolidated and developed cooperation with high-quality real estate customers, and continued to maintain stable revenue contribution from high-quality customers.
In terms of expenses, sales expenses were 1.127 billion yuan, with a sales expense ratio of 9.66%, administrative expenses were 769 million yuan, with an administrative expense rate of 6.60%, financial expenses were 53 million yuan, a year-on-year decrease of 22.60%, and R&D expenses were 413 million yuan, a year-on-year increase of 15.40%.
Sophia revealed that the gross profit margin of the company's furniture manufacturing industry was 35.46%, an increase of 2.97% year-on-year. Among them, the gross profit margin of wardrobes and their supporting products was 37.75%, a year-on-year increase of 3.43%, the gross profit margin of cabinets and their accessories was 24.75%, a year-on-year decrease of 0.43%, and the gross profit margin of wooden door products was 29.77%, a year-on-year increase of 5.82%. Reasons for the change in gross profit margin: the company's "quality and efficiency improvement" effect is prominent, the utilization rate of plates has been improved, the human efficiency has been effectively improved year-on-year, the manufacturing expense rate has decreased year-on-year, and the overall cost rate has achieved refined management; the purchase price of major raw materials has decreased compared with the same period last year, the company's net profit has increased, and the overall gross profit margin has maintained a steady increase.
Talking about the macro analysis of the industry, Sophia said that the global home furnishing market still maintained a growth of 5% under short-term pressure, and is expected to maintain steady growth in the future. In China, while new home deliveries are likely to decline, the stock market remains large and will continue to grow in the coming years. Judging from the data, customer demand will not fall sharply in the next few years, and the real estate market will still maintain stable development. It takes 6-18 months for the customized demand at the completion end of the new house to be transmitted to the custom home furnishing industry, so the consumer demand at the completion end can still be continuously released. Despite the low market share, the market is still large enough and the company is confident that it will achieve a higher market share in the future.
Regarding the company's empowerment of dealers, Sophia said that the company has always attached importance to the help of dealers, such as helping dealers to do active marketing (bag, cross-industry alliances, promotions, etc.), through the market-oriented point will system to help dealers do a good job in marketing planning, activity plans, etc., the point team is also a professional team independently cultivated by the company, which can provide dealers with very professional empowerment support, this form of empowerment is very important for the long-term development of dealers.
Sophia said that in 2024, the company will still firmly promote the strategic layout of "multi-brand, omni-channel, and full-category" and seek more performance growth opportunities. Sophia brand: will further expand the category and continue to promote the growth of various categories such as cabinets, wooden doors, furniture and household products through the whole family marketing strategy. Milana brand: At present, there is still a lot of market space for attracting investment and building stores, and it is still necessary to continue to maintain the model of rapid store opening, accelerate the coverage of the sinking market, and gradually improve the whole strategy. Simi brand: This year, we will carry out the layout of terminal stores, develop new channels such as designer channels and decoration enterprise channels, and launch a full range of products. Huahe brand: speed up the progress of terminal investment and store construction, open up new channels, and accelerate the layout of the entire product and implement it simultaneously in the terminal. Integrated integration channels: add the layout of cabinet categories, promote the landing of cabinet products in the terminal, and strengthen the construction of channel stores and in-depth cooperation with head decoration enterprises. Bulk business channels: The company continued to carry out reasonable control and planning of the engineering channel business, optimized the channel structure, and further expanded overseas markets.
The company has now adjusted the structure of advertising and marketing, through big data analysis, customer interest portrait analysis and other data, accurately grasp the pace of advertising, and carry out advertising and marketing more accurately without reducing brand promotion, which will also help reduce sales expenses.
Sophia also said that the company always attaches importance to cash returns to investors, and the cash dividend ratio will reach 75% in 2023, and in the future, it will fully maintain communication with shareholders, respond to regulatory policies, continue to practice a stable cash dividend policy, and actively return shareholders.
In addition, Sophia also revealed that the stock housing market is still in the stage of gradual expansion, and the company is still in the exploration stage, and is piloting different business models to cultivate teams.
In 2024, the company will accelerate the speed of store opening, quickly open stores through multi-brand and omni-channel, lay out the blank market, and store expansion will also become an important measure for the company's development in 2024. Sophia brand stores will continue to supplement the terminal market, and the stores of Milana, Simi, Huahe brand and complete channels are mainly covering the blank market.
At present, the company's exploration of the expansion of the installation enterprise channel has been relatively successful, and the number of directly operated installation enterprises has been 221, covering 185 cities and regions across the country; At present, the whole assembly channel will continue to strengthen the business model of the synchronous development of dealer assembly + direct operation, and the whole assembly channel will be deployed through multiple brands and all categories in the future.
Since 2018, the company has continued to make professional adjustments to the organizational structure to maximize efficiency and stimulate team vitality, and the IPD management system reform is a very important strategic project in 2023. The IPD system mainly helps the company to carry out matrix organizational reform, focusing more on product planning and life cycle management, and improving product competitiveness with the value of user needs as the core. At present, it has been basically completed, and will continue to fine-tune it according to the business situation in the future.
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Review: Sun Shijian