2023 is a turbulent year for the home furnishing industry.
In this year, among the three giants of building materials and home furnishing, Red Star Macalline and Actually Home have introduced state-owned foreign aid, and only Fusenmei, which is "in a corner", can still maintain "being alone".
With the recent disclosure of its 2023 results, the pattern of the Big Three has also changed, from the "red wealth" that has lasted for many years to "the red wealth".
On March 28, Red Star Macalline and Fusenmei successively released their 2023 financial reports, achieving annual revenues of 11.515 billion yuan and 1.524 billion yuan respectively.
On April 26, the home also handed over the report card, achieving a revenue of 13.512 billion yuan during the period, surpassing Red Star Macalline and Fusenmei, becoming a new generation of home furnishing big brother.
According to the company's annual report, in 2023, the company will vigorously promote digital intelligence, drive sales growth through its platforms and external e-commerce platforms, and finally achieve a year-on-year increase of 4.08% in annual revenue.
However, the industry as a whole has not yet fully recovered, even if it eats the traffic dividend, the home furnishing business is still in the dilemma of increasing income but not increasing profits.
The "first brother" in the industry
As a downstream real estate industry, the home furnishing industry will also experience setbacks in 2023, and the eldest and second will invariably introduce state-owned foreign aid in this year, and they are both real estate companies.
On January 13, 2023, C&D Co., Ltd. and Red Star Macalline jointly announced that the former will acquire 29.95% of the latter's shares at a price of no more than 6.3 billion yuan. On June 26, the transfer of the above-mentioned transferred shares was completed, and C&D Co., Ltd. has since become the largest shareholder of Red Star Macalline. This move is also considered by the market to be Red Star Macalline's "selling its body to continue its life".
Coincidentally, the home furnishing giant, which is also a home furnishing giant, also transferred part of its shares this year. On November 17, BBMG Group announced the acquisition of 10% of the shares of the house for 2.232 billion yuan, and the transfer of shares was completed on December 29, more than a month later, and BBMG officially became the third largest shareholder of the house.
For a long time, among the three listed building materials and home furnishing companies, Fusenmei has been deeply cultivated in the Chengdu area, and the overall revenue and scale are not as good as that of Red Star Macalline and Actually Home, so the latter two are competing for the position of "first brother".
After the introduction of state-owned assets, the performance of Red Star Macalline has not been improved, and the company's net profit has turned into a loss. In 2023, Red Star Macalline achieved a revenue of 11.515 billion yuan, a loss of 2.570 billion yuan for the year, and a profit of 817 million yuan in the same period last year, and a net loss attributable to the parent company of 2.413 billion yuan, compared with a profit of 679 million yuan in the same period last year.
In addition to the inability to stop the decline in performance, the company's "top leader" also announced a replacement. After C&D became the owner, Che Jianxing, the founder of Red Star Macalline, retired as chairman, although he is still the director and general manager of Macalline, but his right to speak has been "greatly reduced", and the new chairman is concurrently served by Zheng Yongda, chairman of the new owner C&D Co., Ltd. At the same time, the company's executives also underwent a major reshuffle.
In terms of the home, in 2023, it will achieve a revenue of 13.512 billion yuan, a net profit of 1.340 billion yuan, and a net profit attributable to the parent company of 1.300 billion yuan.
From the perspective of revenue composition, the income of the house can be divided into leasing and franchise management business, decoration services, commodity sales, loan factoring interest, and other businesses, with revenues of 6.937 billion yuan, 408 million yuan, 5.556 billion yuan, 64 million yuan, and 546 million yuan respectively in 2023, accounting for 51.34%, 3.02%, 41.12%, 0.48%, and 4.04% of the total revenue. Home furnishing stores are still the majority of the company's revenue, and the shopping center format is also continuing to exert force as the second growth curve.
It is worth noting that although the company's revenue increased by 4.08% year-on-year, its net profit recorded a year-on-year decrease of 22.11%, falling into a situation of increasing revenue but not increasing profits. The reason given in the annual report is that part of the rent and management fees have been reduced or exempted for qualified merchants, resulting in a phased decline in rental income and management fee income with high gross profit levels.
In terms of gross profit margin, the leasing and franchise management business recorded a gross profit margin of 48.76% in 2023, a decrease of 11.43% over the same period of last year, and the gross profit margin of the merchandise sales business was 9.88%, a decrease of 3.42% over the same period of last year.
At present, Wang Linpeng is still the chairman of the company, although there have been high-level changes, but still retains a controlling stake, so the market will also regard the entry of BBMG as a foreign aid to solve the dilemma.
Seek a way out
In 2023, there will be a lot of good news for the home furnishing industry at the policy level. In July, the Ministry of Commerce and 13 other departments jointly issued the Notice on Several Measures to Promote Household Consumption to unleash the potential of household consumption, and in September, the General Office of the Ministry of Commerce organized the "Home Renovation Consumption Season" to meet consumer demand online and offline.
However, home building materials, as a consumer product category with a relatively high unit price and a relatively long decision-making chain, is affected by changes in consumption habits, and the overall recovery of the industry is relatively slow.
In 2023, the sales volume of the home leasing and franchise management service industry will be about 6.937 billion yuan, a year-on-year decrease of 11.84%. In order to cope with the decline in the performance of the main business, the "toss" of the home decided to accelerate the digital and intelligent transformation. The company's R&D investment in 2023 increased by 46.85% compared with 2022 to 176 million yuan, accounting for 1.30% of total revenue.
Wang Linpeng once emphasized: "If you don't do digital transformation, you will definitely die." ”
It is understood that the home has three major digital and intelligent platforms for the home furnishing industry: "Dongwo", "Actually Designer" and "Actually Smart Home". Among them, "Dongwo" provides global solutions from infrastructure to scene applications for home furnishing stores, factories, dealers and shopping guides, "Actually Designer Home" is an AI home decoration design platform jointly built by the company and Alibaba, and "Actually Smart Home" is a smart life service platform built to adapt to the era of Internet of Everything.
According to the annual report data, as of December 31, 2023, a total of 934 online stores in Dongwo have been launched, a year-on-year increase of 173.1%. More than 100,000 merchants were settled, a year-on-year increase of 101.33%, and the platform transaction reached 97.4 billion yuan, a year-on-year increase of 173%.
In addition, the home is also eyeing the traffic of external e-commerce platforms. In 2023, the company planned and organized 13 group-level large-scale activities, driving sales of 79.07 billion yuan, a year-on-year increase of 16.7%. At the same time, it has also created a marketing matrix, and simultaneously created content and live broadcast on WeChat official account, video account, Douyin, Xiaohongshu and other platforms.
The company also carried out marketing IP activities such as "old houses for new looks" and "furniture and household appliances for new", achieving 207,000 customers and guiding sales of 650 million yuan throughout the year.
It can be said that the home is adapting to the changes in consumption habits through the development of digital intelligence, and is constantly expanding the traffic entrance to drive the growth of sales with traffic marketing.
With the help of digital and intelligent transformation, the company has achieved a significant increase in commodity sales revenue, with a year-on-year increase of 31.74% to 5.556 billion yuan in revenue in 2023, and the company's second growth curve has begun to show results.
As of the end of the reporting period, the company operated 414 home furnishing stores in 29 provinces, autonomous regions and municipalities in China, including 86 directly operated stores and 328 franchised stores. Of the 86 directly-operated stores, 17 are self-owned properties and 69 are rental properties.
During the same period, Red Star Macalline operated 87 self-operated shopping malls and 275 commissioned shopping malls, and operated 8 home furnishing shopping malls through strategic cooperation.
In terms of the investment model of the main home furnishing business, the home has also made changes, and launched the model of "sales sharing" and "one store, two systems" during the reporting period.
The so-called "sales share" means that a fixed rent is no longer charged, but a certain percentage of the sales commission. At a time when the industry is still uncertain, the sales sharing model is significantly more merchant-friendly, so it can also attract more merchants to settle in.
In February 2023, the company took the lead in piloting a new model with the Harbin Pioneer Store, and by the end of the year, the store's investment rate increased to 98%. In addition, the company's Sichuan Neijiang store held an investment conference on June 12, and the investment promotion rate on the official opening day reached 98% through the implementation of the new model.
Wang Linpeng is extremely optimistic about the new model, and pointed out that he will strive to complete the transformation of 80% of the directly operated branches from "fixed rent" to "sales sharing" model within three years.
Perhaps for the home, the digital and intelligent transformation and new investment model are the way out they are looking for.