Increasing income does not increase profit! The number of closed stores is greater than the number of new stores, and the goal of "thousand stores" of good shops is suspected of cutting leeks!
Good shops have always regarded themselves as "high-end" snacks, but high-end in consumers’ minds means expensive.
Snacks should be able to taste a delicious and economical comfort when you are tired, and bring relief to your tired body. However, when consumers find that snacks have become a high-priced commodity and feel that the pain of wasting their wallets even exceeds the delicious enjoyment, snacks have also become a problem.
Therefore, despite the rapid rise of good shops, neither product breakthrough nor brand positioning has achieved good results.
Judging from the financial and operating data disclosed by good shops in recent years, the operating ability of good shops is lacking.
From a longer time dimension, in the past three complete years, there has been a situation of "increasing income without increasing profit" in good shops. In 2020, good shops achieved revenue of 7.894 billion yuan and net profit of 344 million yuan; However, by 2022, its revenue has increased to 9.44 billion yuan, but its net profit is only 334 million yuan.
At the same time, the online business growth of good shops is also weak. In 2022, the online main business income of Liangpin Shop was 4.698 billion yuan, down 3.29% year-on-year.
In this context, the company’s share price has also entered a downward trend. On July 15, 2020, the stock price soared to 86.52 yuan/share, with a market value of nearly 30 billion. In contrast, today’s share is 24.84 yuan, the total market value is less than 10 billion yuan, and the market value has evaporated by about 20 billion yuan.
For an enterprise that has been firmly established in the market for 16 years, the predicament of the good shop is undoubtedly the most difficult moment in its history.
First, the number of closed stores is greater than the number of new stores, and the goal of thousands of stores is suspected of "cutting leeks"
In addition, following the hot spots in the market, Liangpin Store began to sell Xiaoqing Lemon Juice, a very popular drink at present, and put this product in the most conspicuous position in the freezer of the store.
In recent investment activities, regarding issues related to store expansion, Liangpin Store said: "While polishing the model of big stores, the company opened 80 new stores in the first quarter. In the second and third quarters, the company will speed up the pace of opening offline stores and make efforts to achieve the goal of opening 1,000 new stores throughout the year. "
However, the goal of a thousand shops in a good shop seems as empty and empty as its "high-end" slogan.In the first quarter of this year, the number of newly opened stores in Liangpin shops was 80, while the number of closed stores reached 122, which was higher than the number of newly opened stores. According to the progress in the first quarter, only 320 good shops can be opened a year. At the same time, even if the accelerated process reaches 1,000 in the later period, the number of closed stores of good shops may far exceed the number of new stores according to the ratio of opening stores to closing stores in the first quarter.
At the same time, from the point of view of the number of stores in the past three years, the number of closed stores of good shops has also increased rapidly while the number of new stores has increased rapidly, which has led to the net growth of no more than 300 stores in 2020-2022. Taking 2022 as an example, the number of good shops increased by 720, but the number decreased by 468 in the current period.
As can be seen from the number of stores opened in the past, franchise stores are the main driving force for the growth of new stores in good shops. Behind the high rate of opening and closing stores is the high joining cost of good shops.
According to the official website data of good shops, the minimum joining cost of good shops is 475,000 yuan. Among them, the performance bond is 100,000-200,000 yuan, the brand use cost is 45,000 yuan /3 years, the store decoration cost is 180,000-220,000 yuan, and the shelf/electronic equipment is 150,000-250,000 yuan.
On the online platforms such as Xiaohongshu and Tik Tok, some users said that the joining cost of good shops is high, and it is difficult to make a profit when the daily operating income reaches 7,000 yuan. According to preliminary calculation, in the north, Guangzhou and Shenzhen, according to the monthly rent of 25,000 yuan plus 14,000 labor and miscellaneous expenses, the annual cost of good shops will be 468,000 yuan. Even if it is estimated by the lowest joining cost and 30% gross profit margin, it will take two years to return to the capital, and the daily break-even will reach 6000 yuan in operating income.
In the stock bar, the joining of good shops has triggered a discussion. Some investors’ views are very sharp, and they compare the existing joining mode of good shops to "cutting leeks". According to these viewpoints, this model is more like opening a new branch with the funds of franchisees, but it fails to give them corresponding support and profit return. Therefore, franchisees have suffered great risks and pressures, and good shops have benefited from this. In the eyes of investors, this model is no different from "cutting leeks", that is, it constantly attracts new franchisees to invest, but fails to give them due returns and makes them suffer losses in investment.
The current dilemma faced by good shops is that it has become an inevitable choice to improve their performance by opening new stores. If we don’t continue to open new stores, the number of stores closed for various reasons will continue to increase every year. In 2022, for example, a total of 409 stores were closed, of which 235 were closed due to losses and 93 were closed after active optimization.
Therefore, if we do not continue to open new stores, the growth of operating income of good shops will be difficult to maintain. At the same time, the newly opened franchise stores can continue to promote the growth of operating income of good shops through procurement.
In confirming the income of franchise stores, the practice of good shops is to "confirm the income according to the expected amount of consideration when the control of related goods is transferred to franchise stores". Before the listing, the strategy adopted by good shops was "when the franchise stores sell goods to consumers, and confirm the income when the goods are delivered to the end consumers and get the right to collect money". The change of this policy has also attracted the attention and discussion of investors.
Second, major shareholders have repeatedly reduced their holdings, and the decline in stock prices has attracted market attention!
In the face of the gradual decline of e-commerce dividends, the growth momentum of good shops is facing major challenges. This anxiety is widely perceived by investors, and its major shareholders are constantly selling stocks. Recently, the early institutional investors of Liangpin Store, who have been with Liangpin Store for more than ten years, have also reduced their holdings on a large scale.
On June 9, 2023, Liangpin Store received the Notice on the Implementation of Reduction from shareholder Dayong Co., Ltd. From May 25, 2023 to June 8, 2023, Dayong Co., Ltd. reduced its shares by 4,647,000 shares through block trading, with a cumulative reduction ratio of 1.16%.
It is understood that Dayong Limited holds as much as 30.30% of the shares in good shops, making it the second largest shareholder of good shops. This time, Dayong Co., Ltd. plans to reduce the company’s shares by centralized bidding or block trading, with a total of no more than 24.06 million shares, that is, no more than 6% of the company’s total share capital.
The actual investor hidden behind Dayong Co., Ltd. is today’s capital, a well-known investment institution. As early as 2010, today’s capital saw the development potential of the good shop, invested in the company and became its early shareholder. Later, today Capital transferred its shares to Dayong Co., Ltd. as an indirect way to hold shares in Liangpin Store. In the recent reduction action, today’s capital may realize a gain of up to 700 million yuan through cash.
Xin Xu, the head of today’s capital, who is widely praised as the "Queen of Venture Capital", is a prestigious figure in the investment community. She has successfully invested in Wahaha, Yifeng Pharmacy and other well-known brands, and won wide acclaim in the industry by virtue of her profound insight into consumption trends in the primary market.
In the past ten years, today’s capital has consistently supported good shops. However, today’s substantial reduction and cash-out of capital undoubtedly reflects investors’ re-evaluation of the future development prospects of good shops.
What is even more worrying is that it is not the first time that a good shop has been reduced by a major shareholder. Starting from March 2021, Gaochun Capital began to reduce the number of good shops by clearance. On November 20, 2022, Liangpin Store announced that three investment companies under Gaochun Capital, namely Zhuhai Gaoyun, Hong Kong Gaoyun and Ningbo Gaoyun, announced that they planned to reduce their holdings by no more than 22.29 million shares (no more than 5.56% of the total share capital), which was only one step away from the clearance.
At present, Gaochun Capital has reduced its holdings of 2,240,021 shares through centralized bidding, accounting for 0.56% of the company’s current total share capital, and the remaining shareholding ratio is only 5%. At the same time, Gaochun Capital also plans to continue to reduce the shares of good shops through centralized bidding from June 28, 2023 to September 25, 2023.
In the face of the reduction of major shareholders and the continuous decline of stock prices, investors’ worries and dissatisfaction are gradually heating up. In an interactive session of investors, a question stands out, that is, whether the company has formulated an appropriate market value management strategy to deal with this situation, and whether the unilateral decline of the stock price has attracted the attention of the company management team.
What’s more interesting is that some investors have further questioned whether the company’s shares were shorted by large-scale securities lending, and whether an investor seminar should be organized immediately to answer all investors’ doubts. Investors also stressed that every minority shareholder is not only a consumer, but also a disseminator of the company’s brand. Therefore, excellent market value management will undoubtedly be the most substantial return to minority shareholders.
However, there are also views that the selling behavior of major shareholders to good shops is not unexpected. As a matter of fact, the challenge faced by good shops is not limited to finding new growth points. The more serious problem is that their competitive defense line in the old business field is not stable, and a large number of emerging consumer brands are eyeing the market share of good shops.
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