Suning Tesco: Revenue in the first three quarters was 115.574 billion yuan

"The third quarter of 2021 is the most difficult period in Suning Tesco's three decades of development, and we have encountered unprecedented difficulties." On the evening of October 29, Suning Tesco (002024) said in the third quarter performance report released on the same day.

According to the data, in the third quarter of this year, Suning Tesco's revenue was about 21.968 billion yuan, down 64.82% year-on-year, and the loss was 4.116 billion yuan, down 676.73% year-on-year. Based on the first three quarters, the revenue was 115.57 billion yuan, down 36.1% year-on-year, and the loss was 7.568 billion yuan, down 1483.29% year-on-year.

Since the beginning of this year, Suning Tesco's stock price has fallen by more than 40%, and the sales scale has also fallen sharply, after the restructuring in July, Ali is at the helm of Suning Tesco, and the new management has also said that it will strive to get out of the darkest moment at the end of this year.

Strive to get out of the darkest hour at the end of the year

In the third quarter, it was increased by northbound funds

Suning Tesco said that since June this year, the continuous lack of liquidity has made the inventory commodity scale of the company's core electrical appliance 3C business hit a record, and the sales scale fell sharply, bringing a large loss in operating performance and a sharp decline in gross profit. According to the financial report, the net cash flow generated by Suning Tesco's operating activities in the first three quarters was -4.456 billion yuan.

At the beginning of July this year, with the support of the Governments of Jiangsu Province and Nanjing Municipality, Suning Tesco introduced new strategic investors, and on July 29, the company completed the election of a new board of directors and strived to resume normal production and operation.

Suning Tesco pointed out that in August, the company's joint credit committee was established, the banks stabilized the scale of stock credit, and promoted the bank of Jiangsu, Bank of Nanjing and other incremental credit, since the end of August liquidity gradually recovered, the inventory scale slowly increased, late August, September sales revenue increased month-on-month, of which September commodity sales scale GMV increased by 24% month-on-month, core electrical appliances 3C business commodity sales scale increased by 30% compared with August.

In addition, Suning Tesco has also vigorously promoted the adjustment and optimization of business and organization, accelerated the adjustment of loss-making stores and the work of store lease reduction and sublease investment. Overall, the expenses in the third quarter further decreased by about 10.63% compared with the second quarter, and decreased by about 26.73% compared with the same period last year.

In terms of retail cloud business, Suning Tesco continued to maintain rapid development, continued to expand the home, fast repair track, has opened 78 fast repair stores, expanded 547 home format stores, the first three quarters of the new opening of 2085 franchise stores, the third quarter of retail cloud goods sales scale GMV increased by 33.38% month-on-month.

Suning Tesco said that Suning Tesco is still in a difficult stage, but it is expected that the operating loss in the fourth quarter will be significantly narrower than the third quarter, and strive to achieve a monthly EBITDA (profit before tax, interest and depreciation and amortization) before the end of the year, so that Suning Tesco will come out of the darkest moment and usher in a new stage of development.

The financial report pointed out that during the reporting period, the decline in the scale of Suning Tesco's inventory brought about a decrease in the provision for inventory price decline, resulting in a decrease of 67.01% year-on-year in asset impairment losses; the impairment loss of receivables increased, resulting in a 141.31% year-on-year increase in credit impairment losses; and the decrease in government subsidies brought about other income by 48.98% year-on-year. On the bright side, Suning Tesco's fair value change income increased by 52.55% year-on-year during the reporting period, and income tax expense fell by 2189.27% year-on-year due to profit losses.

In addition, the impact of Suning Tesco's non-operating profit and loss items in the first three quarters was 1.647 billion yuan, mainly including the impact of Zhuhai Puyi Logistics Industry Investor Partnership (Limited Partnership)'s acquisition of the company's logistics asset company and the second bond repurchase of 18 Suning Bonds.

It is worth noting that in the third quarter, Suning Tesco received northbound funds to increase its holdings, and in the change of the shareholding of the top ten shareholders of Suning Tesco, Hong Kong Securities Clearing Co., Ltd. held 177 million shares, and increased its holdings by about 6.21 million shares in the third quarter. As of the close of trading on the 29th, Suning Tesco's stock price rose 3% to 4.47 yuan / share, down 42.02% during the year.

On October 29, Suning Tesco said through the investor interaction platform that at present, the management and all employees work together to promote the recovery of production and operation and business development, under the active support of the provincial and municipal governments and investors in various industries, the cooperation between the company and financial institutions has been resumed and carried out in an orderly manner, and in August, Suning Tesco Joint Credit Committee was established, and the banks stabilized the scale of credit granting, and actively promoted the incremental credit of Bank of Jiangsu, Bank of Nanjing, etc., the liquidity of enterprises gradually recovered, and the inventory scale slowly climbed. With the increase in sales revenue in late August and September, the company will continue to promote liquidity improvement, inventory level recovery, and further enhance the core capacity building of each channel in the direction of value sales recovery and sustainable growth.

Re-election of the Board of Directors

Suning Tesco has entered a new era

In recent years, Suning Tesco has made mistakes and aggressive investments in a number of innovative businesses, and has fallen into the quagmire of a large number of losses.

In July this year, Suning Tesco introduced state-owned assets to invest in the war and completed the re-election of the board of directors, and the company opened a new stage. On July 12, Suning Tesco issued an announcement that Zhang Jindong resigned as chairman of Suning Tesco and was hired as the honorary chairman of the company, and Zhang Jindong nominated his son Zhang Kangyang as a non-independent director candidate for the company's seventh board of directors. Taobao (China) Software Co., Ltd. nominated Huang Mingduan as a director candidate, and Jiangsu New Retail Innovation Fund Phase II (Limited Partnership) nominated Xian Handi and Cao Qun as non-independent director candidates.

On July 29, Huang Mingduan and Liu Peng, nominated by Ali, were elected as the chairman of the seventh board of directors and non-independent director candidates of the seventh board of directors of the company, and appointed Ren Jun as the president of Suning Tesco.

At the beginning of July 2021, Suning Tesco announced the introduction of war investment to achieve mixed reform and credit enhancement. At that time, Suning Tesco's announcement showed that Jiangsu and Nanjing state-owned assets, together with Ali, Xiaomi, Haier, Midea, TCL and other diversified capitals, jointly formed the second phase of the new new retail fund, at a price of 5.59 yuan per share, transferred a total of 16.96% of suning Tesco's equity of Zhang Jindong and other transferors, with a transfer price of 8.83 billion yuan. After the completion of the transfer, Zhang Jindong and his co-actors, Taobao China and New New Retail Fund Phase II are the top three shareholders of Suning Tesco, holding 20.35%, 19.99% and 16.96% respectively, with the same shareholding ratio of the three parties.

The new management has sent a full staff letter:

To get the company back to where it should be

For the future development strategy of Suning Tesco, on July 29 this year, the newly appointed chairman Huang Mingduan said that Suning Tesco has built the most complete online and offline retail service system in China, and the next step of development will clarify three strategic paths - to do a good job as a retail service provider, to strengthen the supply chain, and to optimize the quality of operation.

Under the strategic premise of focusing on retail, Ren Jun, the new president of Suning Tesco, said that it is necessary to do two things: one is to further consolidate and highlight the three core forces, supply chain, logistics services and scene experience; the other is to reconstruct the organization, technology and operation of retail service providers in a more open way, so as to better serve users and partners.

Since then, Suning Tesco has terminated the share repurchase program to protect the daily operating capital requirements. On July 29, Suning Tesco announced that in order to ensure the stable operation of the company and ensure that the funds are prioritized for the daily operation of the company, the board of directors of the company decided to terminate the repurchase of the company's shares after careful study. Previously, the Company intended to repurchase the Company's shares in a total amount of not less than RMB500 million (inclusive) and not more than RMB1 billion (inclusive) and a repurchase price not exceeding RMB11 per share (inclusive).

In addition, Suning Tesco said that in order to continuously improve the company's commodity richness and develop stable purchase channels, the company and its subsidiaries purchased goods from Wuhan Haochao E-commerce Co., Ltd., and the total amount of commodity procurement in 2021 is expected to not exceed 3.8 billion yuan.

On the evening of August 11, Huang Mingduan, chairman of Suning Tesco, and Ren Jun, president of Suning Tesco, sent a letter to all Suning Tesco employees. The letter mentioned that action is the best way to solve the problem, and suning Tesco should return to its market position.