Article produced by Radar Finance | Edited by Mo Enmeng | Deep Sea
"At the moment, what is before us is not only the problem of difficulty in living, but also the problem of whether we can live or not." In order to survive better, Bestore, which was listed on the market in February 2020 with the halo of being "the first high-end snack stock", has now decided to "lower its value."
Focusing on the theme of "strengthening business innovation and comprehensively improving operating efficiency", the 17-year-old Bestore launched a new round of reform. Reflected in specific measures, BESTORE will implement the largest price reduction in 17 years. The price of BESTORE's 300 products will be reduced by an average of 22%, with a maximum reduction of 45%.
The reason behind this "lowering down" may be related to the current performance difficulties faced by Bestore. In the third quarter report released not long ago, BESTORE delivered an answer that was not satisfactory to the outside world. In the third quarter of this year, BESTORE recorded revenue of 2.013 billion yuan, a year-on-year decrease of 4.53%. During the same period, BESTORE's net profit attributable to shareholders of listed companies decreased by 97.88% year-on-year to 1.9984 million yuan, which can be called a "cliff-fall" decline".
It is worth mentioning that the leader who raised the banner of price reduction for BESTORE this time was Yang Yinfen, who had just taken over from the previous chairman Yang Hongchun. As the company's new talker, Yang Yinfen, one of the "three key things for new officials to take office", mercilessly pointed out in a letter to all employees the many problems currently existing in the company, such as bloated institutions, overstaffing, sluggish development, scale, and profitability. Decline etc.
In order to help the company reverse its predicament, Yang Yinfen decided to initiate drastic reforms, aiming to rejuvenate BESTORE by adhering to the development route of high-quality snacks, insisting on innovation by all employees, improving efficiency, and strengthening execution.
In order to "survive", Bestore decided to "lower its value"
"I once said in August this year that the 17-year-old Bestore is facing the most difficult challenge since its establishment. At present, this challenge is still intensifying. To stand out, In the face of heavy siege, BESTORE must shed its aging and regain its new life like a soaring eagle," Yang Yinfen, chairman of BESTORE, said sincerely in an all-staff letter released on November 29.
With the release of this open letter, Bestore announced a major decision, that is, the business side will implement the largest price reduction in 17 years. The average price reduction of 300 products is 22%, with a maximum reduction of 45%. It mainly focuses on cost optimization but does not affect Snacks with high quality and high repurchase rate.
In the words of Yang Yinfen, the new direction means that BESTORE will return to its neighborhood image and move towards a route of good quality and affordable prices. "The price war will not kill us, it will only make us stronger." The range of products offered by Bestore at this price reduction include nuts such as macadamia nuts, pine nuts, pistachios, and cashew nuts, meat snacks such as pork breasts, duck necks, and grilled sausages, as well as complex products such as spicy strips, dried tofu, bread cakes, and melon seeds. Popular items with high purchase rates.
Taking the nut category as an example, the membership price of large-opening macadamia nuts (400g) has been reduced to 29.9 yuan/can, and the membership price of roasted purple cashew nuts (500g) has been reduced to 49.9 yuan/can; after price adjustment, macadamia nuts, pine nuts, and almonds are on sale. The price of wood and other nut products has been reduced by up to 40%; pork jerky, which has the highest order rate, is the key product of this price adjustment. The classic pork jerky sells for 65 yuan/jin; a 60-gram bag of hand-shredded pork jerky costs 5.9 for members. yuan, down 40%.
It is understood that the price reduction reform launched by Bestore is still in the first stage. It will start with the supply chain. As the reform deepens in the later period, the price reduction will be extended to more categories. This price reduction has been piloted in some stores since November, and will be gradually implemented in stores across the country.
Radar Finance learned from the official website that as early as 2019, Bestore had established “high-end snacks” as its strategic development direction. In this open letter, Yang Yinfen also bluntly mentioned the practical problem of the outside world thinking that BESTORE is "expensive".
According to data from the Zhaimen Dinyan platform, the current per capita consumption of Bestore is 54.24 yuan. As a reference, the per capita consumption of Three Squirrels in the same track is 59.92 yuan, and the per capita consumption of Baicaowei is 48.75 yuan (the aforementioned data are all for stores, not e-commerce channels).
Although Bestore’s price reduction has been ridiculed by the outside world as “a knife attack” on itself, Yang Yinfen firmly stated that the company must adhere to the development path of high-quality snacks. “If you don’t follow this path, it will be a dead end.” In Yang Yinfen's view, BESTORE is following a differentiated path, which is essentially a different development path from mass-selling snacks.
Yang Yinfen believes that the path taken by BESTORE is more difficult to walk, the challenge is greater, and at the same time, the value is greater. Therefore, Yang Yinfen firmly believes that for a business that costs tens of yuan per customer and for food that goes into people's bodies, people will definitely choose a brand with better quality, and at the same time, it will be better for themselves. The current difficulty of Bestore is not that consumers don’t need it, but because it has failed to create differentiation and a sense of value.
It is worth mentioning that Bestore has previously invested in mass snack player Zhao Yiming Snacks. However, just a few months after the investment, based on the company's own business development needs, BESTORE transferred its equity for a total price of approximately 105 million yuan. The announcement shows that through the sale of Zhao Yiming's equity, Bestore will receive an investment income of approximately 60 million yuan, which can be said to be a substantial gain. Although
has completely cleared out the equity of Zhao Yiming Snacks, it does not mean that Bestore has completely abandoned the track of mass-selling snacks. At present, Bestore also has its own snack mass-selling chain brand-Snacks Nianjia. According to the minutes of an interim results meeting disclosed online, BESTORE is only a minority shareholder of Snacks. The latter has not been incorporated into the listed company and "will consider putting it into the company after reaching breakeven in the future." However, BESTORE also admitted that the company was late in entering this business and currently has no scale advantage.
So while adhering to the development path of high-quality snacks, how will BESTORE take this path of affordable prices? Yang Yinfen revealed in a letter to all employees that the company will work with supply chain partners to improve efficiency, reduce costs, and achieve affordable prices through technological innovation and digital tools.
Perhaps affected by the news of this price reduction, Bestore’s stock price immediately rose. As of the close of trading on December 1, BESTORE's share price closed at 21.32 yuan per share, an increase of 10.01% from the previous trading day.
BESTORE, which has “lowered its price” this time, is not the only player in the industry to join the “price war”. Since the beginning of this year, Three Squirrels has proposed a "high-end cost-effectiveness" strategy. Through supply chain integration and strengthening internal management, it has improved quality and reduced prices, keeping terminal selling prices at a healthy level while ensuring basic profits. Three Squirrels also said that it will continue to do so in the future. advance this strategy.
Regarding Bestore’s price reduction, Zhu Danpeng, a Chinese food industry analyst, said that due to factors such as the macroeconomic environment and lack of consumer confidence, China’s snacks are currently entering a price parity cycle. This strategic adjustment of Bestore is relatively timely.
"As the prices of leading brands drop, the entire industry may be affected. In the future, everyone may compete to reduce costs and increase efficiency. As for how to better achieve cost reduction optimization, it is recommended to optimize the supply chain , store operation efficiency improvement, etc." Zhu Danpeng further added in the face of the pursuit of cost-effectiveness in the snack industry.
Net profit fell by more than 90% in a single quarter, and BESTORE faces its "darkest moment."
The reason behind BESTORE's high price reduction banner is the "high pressure" performance it is currently facing.
According to the latest financial report released by Bestore not long ago, in the third quarter of this year, Bestore recorded a total operating income of 2.013 billion yuan, a 4.53% decline compared with the same period last year. If the timeline is extended to the first three quarters, BESTORE's operating income of 5.999 billion yuan has declined by 14.33% compared with the same period last year.
According to different business formats, in the third quarter, BESTORE’s sales from e-commerce business, franchise business, direct retail business, and group buying business were 852 million yuan, 670 million yuan, 600 million yuan, and 123 million yuan respectively.Among them, sales from e-commerce business and franchise business decreased by 19.42% and 7.06% respectively compared with the same period last year; during the same period, sales from direct retail business and group purchasing business increased by 35.33% and 7.83% respectively compared with the same period last year.
However, the gross profit margins of the four aforementioned business formats of BESTORE in the third quarter were all declining without exception. In the third quarter, the gross profit margins of BESTORE’s e-commerce business, franchise business, direct retail business, and group buying business were 21.33%, 21.21%, 46.22%, and 19.63% respectively, representing a year-on-year decrease of 3.91, 3.01, 4.97, and 6.38 percentage points respectively.
Changjiang Securities research report believes that the company's online revenue will continue to be under pressure in 23Q3, which is expected to be mainly related to the decentralization of Taobao platform traffic and the company's own online traffic strategy adjustment, but the decline has slowed down significantly quarter-on-quarter.
While operating income in the third quarter was sluggish, Bestore's net profit indicator also turned red. The financial report shows that in the third quarter of this year, BESTORE's net profit attributable to shareholders of listed companies was 1.9984 million yuan, a "high dive" compared with the same period last year, a drop of 97.88%.
In the third quarter, BESTORE’s non-recurring profits and losses were 4.0772 million yuan, of which 2.8211 million yuan in government subsidies were included in the current profits and losses. If non-recurring gains and losses are deducted, BESTORE's non-net profit in the third quarter will directly turn into a loss, with a loss of 2.0788 million yuan, a year-on-year decrease of 102.31%.
Radar Finance noticed that in fact, as early as the first half of this year, Bestore’s net profit indicators had already shown signs of weakness. The semi-annual report shows that BESTORE’s net profit attributable to shareholders of listed companies in the first half of the year was 189 million yuan, a slight decrease of 2.04% compared with 193 million yuan in the same period last year.
Expanding the scope to the first three quarters of this year, BESTORE’s net profit attributable to shareholders of listed companies was 191 million yuan. Although the decline in net profit attributable to shareholders of listed companies in the first three quarters was smaller than the single-quarter decline in the third quarter, due to the "drag" of the third quarter, Bestore's net profit attributable to shareholders of listed companies in the first three quarters compared with the same period last year The decline is still more than 30%.
Regarding the "poor" performance of the company's net profit indicators in the first three quarters, Bestore's explanation was that it was mainly affected by market and platform changes. The company's online channel operating income declined and the proportion of fixed expenses increased.
BESTORE also stated that the company's profit fluctuations in the third quarter were mainly caused by fluctuations in gross profit margin and sales expenses. Fluctuations in gross profit margin are affected by factors such as product structure adjustments; fluctuations in sales expenses are mainly due to increases in decoration and leasing expenses for newly opened directly operated stores.
Radar Finance learned through Bestore’s recent investor relations event that as of the end of September, the company had 3,344 offline stores. In the first three quarters, BESTORE opened a total of 522 new stores, with the new stores mainly located in advantageous areas such as Hubei, Guangdong, and Sichuan. In the future, BESTORE will continue to accelerate the pace of store openings, and in terms of store types, it will increase the number of franchise stores.
In the first three quarters of this year, BESTORE’s total operating costs were 5.824 billion yuan. Among them, operating costs were as high as 4.287 billion yuan. In terms of expenses, BESTORE’s sales expenses, management expenses, and R&D expenses in the first three quarters were 1.15 billion yuan, 325 million yuan, and 36.2047 million yuan respectively.
Although the scale of the above-mentioned expenses of Bestore has shown a downward trend year-on-year, its related rates have increased in the first three quarters. Among them, BESTORE's sales expense rate, administrative expense rate, and R&D expense rate increased by 0.78pct, 0.25pct, and 0.06pct respectively in the first three quarters. The company's sales expense rate and administrative expense rate in the third quarter increased by 2.3pct and 0.92pct respectively to 20.7% and 5.89%. However, BESTORE's R&D expense rate decreased by 0.06pct during the same period.
Facing the less than optimistic performance of Bestore, the title of Zhongtai Securities’ research report on Bestore was changed from “Performance under pressure, looking forward to improvement” in the semi-annual report to “E-commerce revenue declines, performance continues to be under pressure.”
Zhongtai Securities also stated in the latest research report that profitability is under pressure in the early stages of business transformation. In the third quarter of 2023, the company's gross profit margin was 27.74%, a year-on-year decrease of 2.06pct. It is expected that the gross profit margin will be mainly dragged down by products such as gift packages.In 2023Q3, the sales expense rate increased by 2.30pct to 20.70%; the administrative expense rate increased by 0.92pct to 5.89%, and expenses have increased. To sum up, the net profit margin attributable to the parent company in Q3 2023 was 0.1%, a decrease of 4.36pct.
Yang Yinfen's "new official appointment" has lit "three fires" for Bestore.
It is worth mentioning that Yang Yinfen, who issued an all-employee letter on behalf of Bestore, has actually just taken over the position of chairman of the company.
Just two days before Yang Yinfen released the letter to all employees, Bestore had just completed the reelection of its board of directors. After deliberation by the directors present at the meeting, Yang Yinfen succeeded Yang Hongchun and became the chairman of the company's third board of directors, with a term consistent with the company's third board of directors. At the same time, Yang Yinfen was also appointed as the general manager of the company.
It is understood that Yang Yinfen is one of the founders and actual controllers of Bestore. He previously worked for Guangdong Kelon Electric Co., Ltd. From 2017 to September 2022, Yang Yinfen began to serve as the general manager of the company at Bestore and was directly responsible for the company's overall operations. In September last year, due to work adjustments, Yang Yinfen applied to resign as general manager and was elected as vice chairman by the board of directors. The general manager position was concurrently held by Yang Hongchun, the then chairman. After
took office, Yang Yinfen paid tribute to the efforts and contributions made by the board of directors in the development of Bestore, and expressed his trust and support to all shareholders and directors of the company, especially Yang Hongchun, the founder and former chairman of the company. Express thankfulness.
According to Yang Yinfen, after leaving the position of chairman and general manager, Yang Hongchun will still be the company’s founder, actual controller, director, and member of the strategy committee. Yang Hongchun will continue to play an important role in the listed company’s governance structure, company strategy, company’s external government relations, It plays an important and irreplaceable role in cultivating senior management talents, tackling major company management projects, and corporate culture.
According to the third quarterly report released by Bestore, as of the end of the third quarter of this year, Ningbo Hanyi Venture Capital Partnership (Limited Partnership) and Ningbo Bestore Investment Management Co., Ltd. held 35.38% and 2.99% of the company’s shares respectively, with the former being the same. Action man.
During the same period, Ningbo Hanliang Qihao Investment Management Partnership (Limited Partnership), Ningbo Hanlin Zhihao Investment Management Partnership (Limited Partnership), Ningbo Hanning Beihao Investment Management Partnership (Limited Partnership), Ningbo Hanliang Jihao Investment The management partnership (limited partnership) holds 0.74%, 0.75%, 0.76%, and 0.69% of the company's shares respectively, and the former is a person acting in concert.
It is understood that Yang Hongchun is the major shareholder of Ningbo Hanyi Venture Capital Partnership (Limited Partnership) and serves as the executive director and legal representative of Ningbo Liangpin Investment Management Co., Ltd. Yang Yinfen is one of the partners of Ningbo Hanyi Venture Capital Partnership (Limited Partnership), and he also serves as a supervisor of Ningbo Liangpin Investment Management Co., Ltd. Although Yang Yinfen does not directly hold shares in BESTORE, she indirectly holds shares in the company through Ningbo Hanyi Venture Capital Partnership (Limited Partnership) and other entities.
In the eyes of many employees within the company, Yang Yinfen can be regarded as a decisive and courageous executive. His nickname in the company "Yang Yidao" seems to fit his personal style. As for the candidates for the company's two former chairman of the board, some insiders commented that "Mr. Yang (Yang Hongchun) is more idealistic, while Mr. Fen (Yang Yinfen) is more pragmatic."
And Yang Yinfen, who is "the three most important things for new officials", has not yet When his butt was hot, he sharply pointed out the many problems existing within the company, "Look at yourself: With the company's development for 17 years, the organization has become bloated, the staff is overstaffed, and bureaucracy and localism have emerged. Externally, it means sluggish development. , scale and profitability have declined."
Yang Yinfen also pointed out in the all-member letter released this time that, like the growth path of all companies, a disregard for efficiency and innovation, an invisible big business disease, is spreading within the Bestore Group. In order to improve the current difficulties faced by the company, Yang Yinfen proposed that the company should improve efficiency and significantly reduce management expenses.
In Yang Yinfen’s view, “We are a retail company with slim profits, and what we earn is hard-earned money! Positions, processes, and even institutions need to be re-examined.Don’t do anything you can or can’t do in advance. Concentrate your limited forces to do urgent things, do things that affect the overall situation, and do things that really create value for users.”
In addition, Yang Yinfen also mentioned that everyone must strengthen execution. , in order to get the desired results. Some time ago, what was said within the organization was much better than what was done. There was too much talk but too little done. Many things seemed to have good ideas and resources and conditions. Unable to achieve the desired results. Many people do not have a strong sense of goal or the goal is not clear at all, and they do the same thing whether they are good or bad.
For this reason, Yang Yinfen calls on everyone to talk less and do more; stay less in the office and more on the front line. ; Hold fewer meetings, write less PPTs, experience more and do more. "When the pain hits everyone, it will be too late, so now I must use the most direct performance evaluation method to force everyone to seek change."
Based on the current background that consumer groups and consumption habits are changing, Yang Yinfen believes that BESTORE must insist on innovation by all employees and change for consumers. Specifically, the company must make breakthroughs in three aspects: business model, product development, and content. Sexual innovation. At the same time, the company must decentralize power and encourage people in every business system and position to innovate, forming a situation where thousands of horses are galloping. Through all-round innovation around consumers, companies can become more adaptable to competition.
Radar Finance has learned that BESTORE is currently continuing to experiment with category innovation and store innovation, relying on its brand and channel resource advantages to innovate in products, services, experiences and other aspects to continue to meet consumer needs.
For example, in terms of category innovation, BESTORE The store is piloting new businesses such as coffee, ice products, bulk goods, and freshly baked products in its stores, and continues to attract traffic to stores through seasonal high-frequency new products to create new sales growth points. In terms of store innovation, BESTORE has launched a new The Sixth Generation Store and the first "Snack Kingdom" store have a richer product category and comprehensively improve the user's store service experience to improve single store efficiency.
Some analysts believe that due to the relatively low entry barriers to the snack food industry, industry participants Numerous and new players are constantly emerging, so the current competition in the snack track is becoming increasingly fierce. Against this background, Yang Yinfen, who is vigorous and resolute, may inject new vitality into Bestore.
And whether Yang Yinfen, who is a "new official", can help Bestore Can the shop retain its qualification to stay on the poker table? Radar Finance will continue to pay attention.
