In 2020, Gome’s retail operating income further narrowed to 44.119 billion yuan, a year-on-year decrease of 25.83%; the net loss attributable to the parent increased by 170.05% year-on-year, and the loss expanded from 2.59 billion yuan in the same period of the previous year to 6.994 billion yuan.
“Investment Times” researcher Lu Gong
Founder Huang Guangyu returns. Can Gome Retail Holdings Limited (00493.HK, hereinafter referred to as Gome Retail) return to its original market position?
On the evening of April 7, 2021, Gome Retail held a global investor conference call. The founder Huang Guangyu, who has been silent for 12 years, made his public debut for the first time and attended the meeting. On the same day, the Gome stocks went viral, and Gome retail rose more than 10%.
However, starting from the next day, Gome’s retail stock price has fallen all the way down. As of the close on April 13, the stock closed at HK$1.31, a 21.6% drop from the closing price on April 7.
It is worth noting that a few days before the conference call, Gome Retail just disclosed its 2020 annual performance report. According to the report, Gome Retail’s full-year operating income in 2020 further narrowed to 44.119 billion yuan, a decrease of more than 15 billion yuan compared with the same period of the previous year; the net loss attributable to the parent also expanded to 69.94 billion yuan from 2.59 billion yuan in the same period of the previous year. 100 million yuan.
The former Gome retail has long occupied the top position of home appliance chain stores, until 2008, its performance plummeted. Suning.com (002024.SZ), the emerging e-commerce platform Tmall, Jingdong (JD.O), and Pinduoduo (PDD.O) continue to expand. After entering 2017, Gome Retail, which relied on offline and continued to shrink revenue, also fell into a loss situation, and lost nearly 15 billion yuan in just four years.
Whether Huang Guangyu’s return will lead Gome retail to turn losses into profits and restore its original market position is still unknown. In response to the relevant situation, the “Investment Times” researcher e-mailed the outline to Gome Retail, but as of press time, no response has been received.
Loss of nearly 15 billion in four years
As a giant of China’s home appliance retail chain, Gome Holding Group owns 5 listed companies. Among them, Gome Retail is expanded on the basis of Gome Electric, and it is also the company with the earliest listing time and the largest volume among the Gome listed companies.
It is worth noting that the special circumstances of the founders in 2008 caused a major blow to the Gome Holding Group and its subsidiaries. Since then, Gome retail has gradually fallen into a downturn. Coupled with the impact of the epidemic in early 2020, Gome’s retail performance continued to decline.
According to the company’s 2020 performance report data recently disclosed, its 2020 revenue has further narrowed to 44.119 billion yuan, a decrease of 25.83% from the same period of the previous year; the net loss attributable to the parent has increased by 170.05% year-on-year, from the previous year. The 2.59 billion yuan in the same period expanded to 6.994 billion yuan.
It is worth noting that this is the fourth consecutive year that Gome Retail has lost money.
“Investment Times” researcher combed the company’s financial report data in recent years and noticed that from 2017 to 2019, Gome retail lost 450 million yuan, 4.887 billion yuan and 2.59 billion yuan respectively. In addition, in 2020, it lost nearly 14.921 billion yuan in four years. At the same time, the company’s revenue scale has also narrowed from 71.575 billion yuan in 2017 to 44.119 billion yuan in 2020.
In addition, although Gome Retail’s marketing expenses and administrative expenses will decrease in 2020, the year-on-year decrease is 24.28% and 14.91% respectively, but since the decrease is not as fast as the company’s revenue in the same period, the company’s sales cost in the same year accounted for the company’s total revenue. The proportion of the same period last year increased by 5.01 percentage points from 84.68%, reaching 89.69%.
The comprehensive gross profit margin of Gome Retail also fell by 5.01 percentage points from 15.32% in the same period last year to 10.31%. Regarding the decline in gross profit margin, Gome Retail explained in its financial report that it was mainly due to the company’s large-scale promotion through different online and offline channels and live broadcasts during the epidemic. He said that in the second half of 2020, the company’s gross profit margin has gradually picked up.
Gome Retail’s net profit attributable to its parent in the past two decades
Data source: Wind
Market share is less than 6%
“Investment Times” researcher noted that as early as 2010, Gome Retail tried to deploy the e-commerce field and launched its e-shopping website Gome Online Mall. Two years later (2012), it acquired the e-commerce site Couba.com.
However, since Gome Retail appeared on the market in 2012 and lost money for the first time, it chose to focus more on the offline home appliance business. Although in 2013 Gome Retail officially announced the integration of Gome’s online shopping mall and Cooper, and renamed it Gome Online, for a long time thereafter, the company still focused its main battlefield on offline sales and increased its expansion. The number and scale of stores. As for online sales, they only play a role in supplementing the company’s offline stores.
At the same time, the e-commerce track is getting crowded day by day. Alibaba (BABA) has successively deployed in retail, finance, logistics and other fields; JD.com focuses on building supply chain and logistics to prepare for subsequent e-commerce sales; Suning.com is also accelerating online and offline integration and mutual empowerment. Fully transform the online platform.
Gome Retail, which missed the opportunity to enter the e-commerce platform track, began to devote itself to new retail in 2017, and successively proposed the “6+1” new retail strategy and Gome’s “Home·Life”. In the first half of 2018, the “Shared Retail” strategy was launched.
However, traffic is not on the side of Gome retail. According to data from the China Electronics and Information Industry Development Research Institute, in the first three quarters of 2020, JD.com is still the leading retailer of household appliances in China, with a market share of 26.67%; Suning.com and Tmall have 20.98% and 15.40% of the market respectively. The proportion is closely behind; and Gome retail only gets 5.18% of the market share.
Today, Gome Retail’s revenue in 2020 is even less than 20% of Suning Tesco and less than 6% of JD.com. According to financial report data, Suning.com and JD.com achieved operating income of 259.459 billion yuan and 745.8 billion yuan respectively in 2020.
In addition, the market value of Gome Retail’s company has also been left behind by new and old competitors. As of the evening of April 13, 2021, the market values of JD.com, Pinduoduo and Suning Tesco were as high as US$123.314 billion, US$165.738 billion and US$64.146 billion respectively. At this time, the market value of Gome Retail was only HK$31.221 billion.
Can the original market position be restored?
In the context of market share being squeezed, Gome retail is back on the line of layout.
Entering 2020, Gome Retail first teamed up with Pinduoduo and JD.com to try to promote the online transformation of Gome Retail through their platform traffic advantages; later, they tested the “full-chain business model” and launched the “store” channel on the Gome APP. , Cooperate with CCTV, live broadcast the goods.
Under the influence of the epidemic in early 2020, the home appliance retail industry has been hit harder and its performance has slowed overall. According to the “Report on China’s Household Appliances Market in 2020”, the retail sales of the household appliance market in 2020 decreased by 6.5% year-on-year to 833.3 billion yuan. Among them, the sales of home appliances in offline channels dropped sharply by 21.13% year-on-year to 413.4 billion yuan; while the retail sales of online home appliances increased by 14.48% year-on-year.
At the same time, in 2020, the proportion of online retail in the retail sales of the overall home appliance market will increase from 41.17% in 2019 to 50.4%. This is the first time that the annual penetration rate of online retail has exceeded 50%, and it is evenly matched with offline home appliance retail channels. Therefore, it has also strengthened Gome’s determination to reorganize its retail online and transform and upgrade. The founder Huang Guangyu also proposed “strive to restore the original market position within the next 18 months.”
However, it should be noted that for the above-mentioned frequent online transformation of Gome Retail, industry analysts believe that the cooperation between Gome Retail, JD.com and Pinduoduo is likely to further segment the company’s online traffic. Coupled with the continuous mergers and acquisitions of offline channels by online retail giants in recent years, it may further erode the offline market share of Gome Retail. From this point of view, Gome still has a long way to go in reorganizing online, offline, and driving transformation and upgrading.
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