Suning.com Third Quarter Net Losses Reach $ 642 Million Amidst Liquidity Crunch
On October 29, Suning.com released its performance report for the first three quarters of 2021, showing that the company’s third-quarter operating profit was 21.968 billion yuan ($ 3.4 billion), in 64.82% year-on-year decrease. Net loss attributable to shareholders amounted to 4.116 billion yuan, down 676.73% year-on-year.
Since last year, Suning.com has been deeply in the grip of a liquidity crisis. The retail platform said in its financial report that the third quarter of 2021 is the most difficult period in its 30-year development. Since June, the company’s liquidity has been seriously lacking, causing the inventory scale of the company’s main electrical appliance business to hit its lowest level in history, and the sales scale has fallen sharply, causing a significant loss in business performance.
In order to resolve the crisis, Suning.com sought help from various sources of capital. In early July, Suning.com transferred 16.96% of the company’s shares to the second phase of Jiangsu Xinxin Retail Innovation Fund. Huang Mingduan replaced Zhang Jindong to become chairman of Suning.com the same month. Suning.com has now completed the internal management adjustment.
In August, Suning.com set up a joint credit committee, and six banks added 10 billion credits to Suning.com. Since the end of August, the company’s liquidity has gradually recovered and the inventory scale has slowly increased. In September, the company’s gross cargo volume (GMV) increased 24% month-on-month, while basic electrical appliances GMV increased 30% month-on-month.
Within the company, Suning.com actively promotes cost reduction, efficiency improvement and revenue increase, including accelerating the adjustment of loss-making stores.
In the first three quarters, Suning’s selling, management and R&D expenses decreased by 19.16%, 3.67% and 12.97% respectively, but its financial expenses increased by 16. , 58%. Suning explained in its financial report that optimizing staff time and paying allowances are conducive to continued decline in expenses.
Suning predicted in its second quarter report that its personnel costs would decline 37% year over year. According to industry analysts, it is evident that Suning.com initiated large-scale layoffs and pay cuts in the third quarter. According to the drop in personnel costs, Suning.com laid off about 30% of its employees in the third quarter.
In terms of business, during the reporting period, Suning.com’s retail cloud business continued to grow rapidly. It opened 78 quick repair shops and expanded 547 experience stores and opened 2,085 new franchise stores in the first three quarters. In the third quarter, the GMV of retail cloud products increased 33.38% month-on-month.
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Suning.com pointed out that the company is still in a difficult phase, but with the active support of local governments and investors from various industries, operating losses in the fourth quarter are expected to be significantly reduced compared to the third. quarter, and the company will strive to achieve positive earnings before interest, taxes, depreciation and amortization by the end of the year.