Observer Network News (Wen/Hu Yujing Editor/Zhuang Yi) A few months after the introduction of state-owned assets and high-level changes, Suning Tesco is still mired in losses.
On the evening of October 14, Suning Tesco released a third-quarter performance forecast, expecting a loss of 3.9 billion yuan to 4.3 billion yuan in the third quarter of this year, a profit of 714 million yuan in the same period last year, Suning Tesco is expected to lose 7.352 billion yuan to 7.752 billion yuan in the first three quarters, and a profit of 547 million yuan in the same period last year.
Source: Suning Tesco's performance forecast for the first three quarters of 2021
For the performance changes, Suning Tesco explained that in June and July, the company encountered serious liquidity pressure, resulting in a serious shortage of commodity supply, and at the end of July, the inventory commodity scale of the core electrical appliance 3C business was only about 30% of the normal operating period.
In addition, the sharp compression of corporate operating expenses has seriously affected the sales realization of terminal channels, and overall, the company's operating income in the third quarter is expected to decline sharply year-on-year, resulting in a sharp decline in gross profit year-on-year.
Observer Network previously reported that Suning Tesco introduced new strategic investors in July this year with the support of industrial capital such as Jiangsu, Nanjing government and Taobao, Ali became the largest shareholder of Suning Tesco, Huang Mingduan, who represented Taobao China and had many years of retail management experience, became the chairman of the company, and Ren Jun from within suning became the president.
With the introduction of new shareholders, Suning Tesco's liquidity pressure and inventory levels have eased. Suning Tesco said that in August, Bank of Jiangsu, Bank of Nanjing and other incremental credit, liquidity pressure and inventory level improved, the company's sales revenue increased in late August and September, of which the company's commodity sales scale in September GMV increased by 24% compared with August, and the core electrical appliance 3C business commodity sales scale increased by 30% compared with August.
On the other hand, Suning Tesco is still throttling by cutting costs. According to the announcement, Suning Tesco's expenses in the third quarter fell by about 10% further from the second quarter and by about 37% compared with the same period last year.
Among them, personnel expenses fell by about 35% and about 37% year-on-year in the second quarter; by accelerating the adjustment of loss-making stores and the work of store lease reduction and sublease investment, leasing expenses fell by about 13.5% month-on-month and about 18% year-on-year; marketing expenses fell by about 70% month-on-month and about 80% year-on-year.
In the loss to be solved, Suning Tesco is still rolling out the scale of retail cloud franchise stores. The announcement said that Suning Tesco Retail Cloud opened 2,085 new franchise stores in the first three quarters, and it is expected to maintain a relatively fast speed in the fourth quarter. Suning Tesco admits that Suning is still in a difficult stage, and the goal is to turn positive EBITDA (EBITDA and pre-amortization profit) of the core electrical appliance 3C business in the fourth quarter.
The fourth quarter is the peak season for e-commerce, Suning Tesco has also launched the merchant conference on October 12 to prepare for the "double 11", but compared with Taobao, JD.com, Douyin and Kuaishou and other platforms, the action is slightly lagging behind, due to marketing cost cuts, the volume is also small. At present, Suning still regards the opening of retail cloud stores as a phased goal, and the results are difficult to show in the short term, and it will take time for the performance to turn positive.
This article is an exclusive manuscript of the Observer Network and may not be reproduced without authorization.