Author: Wang Zhen
Shares of Gome Retail (00493.HK) plummeted 20% on August 22 when it resumed trading, and its strategic adjustment needs to give the outside world more confidence.
On the evening of August 19, Gome Retail announced that it planned to acquire two property assets and a controlling stake in Anxun Logistics from its major shareholder.
At the investor exchange meeting on August 22, Gome’s retail management, including Fang Wei, senior vice president of Gome Retail, and Zhang Jingxing, general manager of corporate development and investment relations, further revealed that they plan to close 30%-35% by October this year. The inefficient stores will reduce losses by 1 billion to 1.5 billion yuan.
Previously, since March this year, Gome has begun to streamline its structure, downsize its operations, and lay off its staff.
On the one hand, the management level of the region is cancelled; on the other hand, emerging businesses such as the Real Happy App, the Discount App, and the Dress Up App have also been streamlined.
Ding Wei, the executive vice president of Real Happy APP, which had high hopes in the transformation of Gome's Internet, has been dismissed, and the team has been greatly laid off.
This summer, Cui Jian, the founder, chairman and CEO of the Dressing Home app, which has just been launched for a year, has resigned, and the salary has been suspended for more than three months.
The discounted APP did not generate new traffic and value for Gome.
The repeated outbreak of the epidemic has also put Gome’s original offline stores under operating pressure.
According to the data of the AVC data compass obtained by the first financial reporter, in July 2022, among the sales of air conditioners in domestic offline channels, the sales of large chains including Gome dropped by 16.64% year-on-year, and department stores The sales of , supermarkets and other channels increased by 20.74%, 27.27% and 8.02% year-on-year respectively.
On August 22, the management of Gome Retail revealed at the investor communication meeting that, in addition to injecting the properties of Gome Shangdu, Xiangjiang Jiuhao and Anxun Logistics, Gome Retail will divest non-profit and negative cash flow businesses.
In the past 3-4 months, the businesses that have been unprofitable for a long time have been divested first, and then the businesses that have been unprofitable or have negative cash flow in the past year have been adjusted and divested. The losses of the above-mentioned businesses have reached the level of 2 billion yuan.
Next, Gome Retail plans to close about 30%-35% of its inefficient self-operated stores. This round of adjustment is expected to be completed by the end of September and October at the latest, and the amount of loss reduction is expected to be between 1 billion and 1.5 billion yuan. .
At the same time, it plans to renovate existing stores, open about 100 new urban exhibition halls, and expand franchise stores to maintain coverage of 770 cities across the country.
Gome plans to adopt two sets of supply chain models in the future, one is to strengthen the model of self-production and underwriting customization, and the other is to strengthen the model of sharing and platform.
The former model enhances the ability of differentiation and supply chain, and improves gross profit margin; the latter model maximizes the system of sharing manufacturers' inventory and socialized inventory, reducing inventory and capital consumption.
At present, Gome Retail is also conducting in-depth negotiations with JD.com, Pinduoduo, Douyin, Tencent, Ali, and Huawei to cooperate in the business field, hoping to deepen the digital transformation of stores.
Gome's management said that after this strategic focus, it is estimated that the comprehensive gross profit margin will increase by about 3%, and the floor efficiency and labor efficiency will increase by about 40%.
After this adjustment, Gome Retail will also bet against the management team.
Huang Guangyu, founder and major shareholder of Gome Retail, reflected in an open letter on the evening of August 19 that the difficulties encountered in the implementation of the goal of "restoring Gome's original status in 18 months" were not expected; now it is set for another three years Goal - to achieve higher profitability in 2023 and reach the highest level in the past, to reach the best level in history in 2024, and to significantly exceed the best level in history in 2025.
Data from the Hong Kong Stock Connect on August 22 showed that Gome Retail’s net purchases on the day ranked first among major Chinese-funded Hong Kong stocks, reaching HK$370 million; sales also reached HK$206 million.
On the same day, Gome Retail's share price fell 20% to HK$0.232 per share, hitting a new low in one and a half years.
On February 26, 2021, the highest share price of Gome Retail was HK$2.55 per share, which is currently less than a fraction.
"It's still quite difficult," a Gome retail insider told the First Financial Reporter that it is expected that about three-fifths of the Gome stores in the place where they are located will be retained after optimization.
"In recent years, we have been optimizing and adjusting. Now, on the one hand, the market environment (downturn) and on the other hand, the diversification of channels, so (transformation) is very difficult."
In May of this year, Gome Retail successively launched strategic cooperation with technology companies such as Tencent and Huawei to promote the digital operation management of new smart stores, omni-channel digital marketing, and a full range of intelligent terminal IoT.
On August 12, Gome Retail and Alibaba Cloud signed a strategic cooperation agreement. Gome will rely on AutoNavi’s map visualization and spatial computing capabilities to expand store locations and optimize “one store, one page” online and offline cross-scenario consumption. Experience, improve the new model store display experience function.
The management of Gome Retail stated at the investor exchange meeting on August 22 that Gome Retail is currently conducting in-depth cooperation with JD.com, Pinduoduo, Douyin, Tencent, Ali, Huawei, etc. In the future, we will continue to promote in-depth cooperation with these companies and upstream and downstream enterprises, and even some operations at the capital level to enhance the competitiveness and strategic implementation of Gome Retail.
After many trials and errors, whether Huang Guangyu's new three-year goal can be achieved, as he said, will be a matter of "survival."