#精品长文创作季#
Due to the track outlet, the revenue has skyrocketed, but it has also continued to fall into a state of "increasing revenue but not increasing profits" due to lack of experience and burning money to expand.
Author: Zhang Yunqing, Lin Ziqun Editor: He Xiang
出品：零售商业财经 ID：Retail-Finance
Wanchen Group (300972. SZ) released its 2023 performance report and 2024 first quarter performance forecast on April 15.
According to the data, Wanchen Group's revenue in 2023 will be 9.294 billion yuan, a sharp increase of 1592.03% compared with 2023, but the net profit attributable to shareholders of the parent company will be -82.9265 million yuan, a decrease of 273.72%, the first loss since 2014. The total revenue in the first quarter of 2024 is expected to be 4.7 billion yuan to 5.1 billion yuan, but the net profit attributable to shareholders of listed companies in the reporting period is 5.5 million yuan to 7.1 million yuan, and the net profit is expected to decrease by 86.51%-89.55% year-on-year.
As a cross-border player who has shifted from edible fungus processing to the field of mass sales snacks, Wanchen Group has achieved a sharp increase in revenue due to the track outlet, and at the same time, it has continued to fall into a state of "increasing income but not increasing profits" due to lack of experience and burning money to expand, and this bubble growth also seems to indicate the short-term highlight period of Wanchen Group.
01 Revenue rose sharply, profit doubled and declined
The mass snack industry continues to be "hot and hot", and under the Matthew effect, a pattern of "two supers and many strong" has been formed.
Wanchen Group, which is facing growth difficulties in the field of edible fungi, quickly entered the mass sales snack track through acquisitions and other means, and thus transformed and upgraded into the dual main business of "edible fungi + mass retail". It is foreseeable that in 2024, Wanchen will face greater challenges and more fierce market competition.
According to the 2023 performance report, Wanchen Group's operating income in 2023 will be 9.294 billion yuan, an increase of 1592.03% over the same period of the previous year, and the total profit will be -84.7187 million yuan, a year-on-year decrease of 303.76%, and the net profit attributable to the parent company will be -82.9265 million yuan, a sharp decrease of 273.72% year-on-year.
Source: Wanchen Group's 2023 performance report
The performance forecast for the first quarter of 2024 shows that Wanchen Group's revenue continues to rise sharply, and profits fall further. During the reporting period, the company's total operating income is expected to be 4.7 billion yuan to 5.1 billion yuan, a year-on-year increase of 516.91%-569.42%, and the net profit attributable to the parent company is expected to be 5.5 million yuan to 7.1 million yuan, a year-on-year decrease of 89.55%-86.51%.
Regarding the current situation of increasing revenue but not increasing profits, Wanchen Group said in its report that on the one hand, the rapid development of the snack business and the substantial increase in revenue brought by accumulation and development have been greatly increased, but on the other hand, the fluctuations in the market environment and the rapid expansion of the industry have brought necessary expenditures to the company, which has also brought short-term losses to the company.
In the 2023 annual performance forecast, Wanchen summarized the reasons for the loss into two points:
First, the edible fungus business is affected by factors such as industry competition and changes in market supply and demand, and the gross profit margin of the main business of edible fungi has declined as a whole; second, the mass snack business is still in the stage of rapid expansion, and it is necessary to invest more costs in market development, brand marketing, supply chain optimization, stimulate team enthusiasm and consolidate competitive advantages.
Wanchen Group has been involved in the mass sales snack chain business since 2022, and invested in the establishment of a holding subsidiary, Nanjing Wanxing, during the reporting period of 2022, the business is in the early stage of development, and the profit is negative;In 2023, the business will continue to develop, with a revenue of 8.5 billion yuan to 9 billion yuan, and a profit of 32.86 million yuan 300783. SZ), BESTORE (603719. SH) and other snack companies in 2023 The latest financial report of the net profit margin level (around 3%).
It can be seen that the business conditions of Wanchen Group's focus on mass selling snacks have not been truly improved, the layout is still not mature enough, the efficiency is low, and the profitability has not yet been released.
Although the business has brought a sharp increase in revenue to the group company in the short term, it is accompanied by rising costs, large inventory costs, expensive leasing expenses, and high marketing expenses, which are all heavy burdens on Wanchen.
The competition in the field of mass snacks is particularly a test of the company's cash flow ability, but Wanchen, which continues to burn money and invest and lose profits, is obviously a little "sluggish" in terms of cash flow.
Since Wanchen Group developed the mass snack sector, from the end of 2022 to the third quarter of 2023, in only three quarters, its short-term borrowings have soared from 148 million yuan to 470 million yuan, the asset-liability ratio has doubled from 43.56% to 74.86%, and the operating cash flow has plummeted to -61 million yuan, making ends meet.
Source: Baidu Stock Market
Crazy "burning money" in new business, Wanchen was eager to chase the outlet and find increments, but did not take into account the risk of resource misallocation.
Wanchen's tight cash flow in the short term may further affect its solvency and business continuity, while the high debt ratio may also have a negative impact on the company's credit rating and financing costs.
According to the report, Wanchen is still in a period of rapid expansion, and has made a lot of preliminary investment in supply chain capabilities, warehousing and logistics capabilities, brand building, organizational fine management, and digitalization. However, time waits for no one, and in the rapid changes of the market, the "amateur" Wanchen needs to continuously improve its operating efficiency and management level to achieve high-quality development in the field of mass sales snacks.
02 A flash in the pan or a "crape myrtle star from the sky"?
Wanchen, who is throwing money around, relies on acquisitions to become the largest store scale collector second only to the snack group, but the amateur players who are halfway home, can the patchwork "I want to come" really continue to occupy a place in the mass snack track?
Mass selling snacks is a discount format that improves channel efficiency and achieves high quality and low price. The industry seems to have a low threshold, but it is not easy to do a good job in store management, achieve standardized operations, and improve the supply chain system.
As a newcomer to the industry from scratch, Wanchen has insufficient experience in channel resources, supply chain construction and operation management innovation, especially in the face of multi-brand "collaboration" management, how to give full play to the "1+1>2" benefits is a great challenge for Wanchen today.
In September last year, Wanchen Group merged its Laiyoupin, Lu Xiaoyu, Yidi and Haoxianglai into "Haoxianglai Brand Snacks", and acquired his wife, ranking among the first echelon of the industry with a scale of more than 6,000 stores in the industry.
But "quantity" is not equal to "quality", the milk spoiled, the jelly moldy was not removed from the shelves in time, the beetle appeared in the bread, the after-sales attitude was cold, and the wife who sold miscellaneous brands constituted a new "good idea".
Even if these brands are "co-opted", the problems of eating foreign objects and insects have not decreased, whether it is on the black cat complaint platform or social media, there are only a lot of complaints and posts about eating foreign objects in snacks that you want to buy. Among them, there are many complaints about service attitude, after-sales quality and other issues.
Source: Black Cat Complaint
Several brands under Wanchen have had food safety problems many times, and consumers' perception of its brand only stays at "cheap and low price", and the image of "quality snacks" cannot be deeply rooted in the hearts of the people, and the unprofessional after-sales service has further reduced consumers' love for the brand, and the brand image has been greatly reduced.
If you want to hit 10,000 stores, you must be inseparable from the support and trust of franchisees.
However, despite the fact that many subsidy clauses have been added to the new franchise policy announced at the beginning of this year, such as 0 franchise fee, 0 service fee, 0 management fee, 0 delivery fee and "competition subsidy", the franchisee is easy to lose, the business is not good, and the return on investment is slow, and a large number of newcomers who want to enter the game are still dissuaded.
High-quality and low-cost products and efficient store operations require strong supply chain strength to support, and efficiency has become a key factor in competition.
However, Wanchen's original main business (edible mushrooms) and mass sales snacks spanned too much, and after hastily acquiring several brands, it needed to re-run and collaborate in the supply chain structure.
Source: Little Red Book
Before the brand merger, Haoxianglai, as the leading snack brand in Jiangsu, had about 1,700 stores in 62 cities across the country. Laiyoupin is comparable, with about 1,000 stores in 68 cities across the country. It covers Jiangxi, Chongqing, Shaanxi, Fujian and Sichuan, with more than 400 stores. Lu Xiaotao covers Jiangsu, Shanghai, Fujian, Guangdong and other places, with about 230 stores.
After the merger, Wanchen's stores will operate under the "Hao Xiang Lai" brand, and by the beginning of 2024, the total number of stores will exceed 6,000.
Due to the strong regional characteristics of the mass snack industry, there are still hidden dangers behind Wanchen's "unified brand" staking stake: first, the original consumers need to be refamiliar with the "good want to come"; second, can the one-size-fits-all same product and culture really serve the user group with differentiated consumption characteristics?
In addition, the centralized operation of different regions needs to ensure not only the unity of brands and products, but also the guarantee of logistics and warehousing, the lean management of each store, and the support of the supply chain to build a low-cost core.
However, when it comes to the good idea of transformation and scale, cost reduction and efficiency improvement are far from expectations.
The gross profit margin of Wanchen Group's wholesale snack business in the first half of 2023 is only 7.87%, which is lower than the industry average (28.95% for BESTORE and 24.97% for Three Squirrels in the same period), and the overall gross profit margin of the company in the third quarter is only 8.32%, far lower than the gross profit margin of 15.97% in 2022 when it did not set foot in the wholesale snack sector.
The gross profit margin level is one of the important indicators reflecting the sustainable development ability of the enterprise, and the gross profit margin performance of Wanchen is lower than the industry average, reflecting the urgent need to optimize the potential energy of its integrated supply chain.
It is difficult to get rid of the old disease before the acquisition, and it is difficult to build the supply chain and brand synergy after the acquisition.
03 The next stop in mass selling snacks is innovation
As one of the tracks with the most potential to achieve "10,000 stores", the market is becoming more and more volatile. If you want to successfully break through the "10,000 stores" mark, the key lies in whether you can find the logical lifeblood of the industry.
Therefore, what the professional players really compete for is: model innovation, product innovation, and high-quality scale expansion under the brand mind.
How to polish the business model that satisfies consumers and allows franchisees, upstream manufacturers and brands to make money, in line with the interests of multiple parties, is a special test of the internal strength of enterprises.
On the franchise side, a successful single-store model is the primary condition, and standardization is the basic premise for realistic expansion.
Wan Chenming, who was acquired in a hurry, obviously lacked the patience and energy to polish a single store.
First, the scale of its brands is different, the operation mode is different, and the quality of the products and services provided is also difficult to standardize.
Second, Wanchen also lacks effective management and supervision methods, which leads to the larger the scale, the greater the chance of problems and reputation.
In order to continue to win the trust of consumers and franchisees, in addition to scale, Wanchen needs to transform into a production-oriented enterprise in the snack sector.
According to iiMedia Research, from 2010 to 2022, the market size of China's snack food industry continued to grow, from 410 billion yuan to 1.165 trillion yuan. It is estimated that the market size of China's snack food industry will reach 1.238 trillion yuan in 2027, and the snack snack market will shift from a rapid incremental market to a slightly increased market. Obviously, the snack market will be more competitive in the future, and innovative products will replace conservative products.
At the same time, snack brands such as Three Squirrels, BESTORE and Laiyifen have also tapped channel reform dividends and used the mass sales route as a way to break through.
The independent production and R&D advantages of the above-mentioned brands will become the biggest hole card, but if you carefully explore Wanchen's supply chain strength, food quality, store operation and brand mentality, you will find that it still has a long way to go if it wants to achieve a gorgeous turnaround.
Seeing it rise up Zhu Lou and seeing it feasting guests, I only hope that Wanchen will not fulfill the next sentence.