"Children from rich families are called rich second generation, and those with factories at home are called factory second generation. My father's company has a debt of 4.8 billion, what kind of second generation am I?"
Recently, Zhao Zelong, son of Zhao Ruihai, chairman of Qumei Home , posted a short message The video "crying poverty" bluntly stated that his father's company had a debt of 4.8 billion yuan, and he would inherit the debt just after graduation and returned home. He staged a "True Return". The likes of this video reached 547,000.
's personalized and down-to-earth style "Zelong Debt Repayment Diary" has made Qumei Home Furnishing popular. However, as the "No. 1 home furnishing stock in Beijing", Qumei Home Furnishing's "heart problems" have also been brought to the forefront - its stock price has plummeted 90%, it lost more than 300 million yuan last year, and its debts are as high as 4.91 billion yuan.
Zhao Zelong short video account @zelongz. Picture/short video platform screenshot
As a home furnishing brand that ranks among the top domestic furniture brands, how can Qumei Home Furnishing get out of the predicament? After the "Second Generation Enterprise" has a certain amount of traffic, can the company's development problems be solved? Why did the stock price of
drop by 90%?
According to information, Qumei Home Furnishing was founded in 1993. Chairman Zhao Ruihai brought the "Qumei" technology to China for the first time, and "Qumei" came into being. At present, the company is mainly engaged in the research and development, design, production and sales of mid-to-high-end furniture and supporting home products.
But as an old home furnishing company, Qumei Home Furnishing’s stock price is not very good. The company was listed on the Shanghai Stock Exchange in 2015 with an issue price of 8.98 yuan. The current stock price is floating around 3 yuan, with a market value of less than 2 billion yuan, a break of nearly 70%.
On June 24 this year, Qumei Home Furnishing’s share price hit a historical low of 2.72 yuan. Compared with the high share price of 33.43 yuan in April 2017, the decline was more than 90%.
"Isn't there anyone in charge of your stocks? The Nine Yin Scriptures will be wiped out soon." Some investors even shouted this in Zhao Zelong's comment area. Zhao Zelong, who has a strong Internet sense, responded jokingly that in a short video, his face was illuminated with a green light by his own stock price.
What's more difficult than facing the problem head-on is solving it. The continuously falling stock price not only hurts investors, but also reflects the development confusion of Qumei Home Furnishings in its 30s.
Vice Chairman of the China Enterprise Capital Alliance, Bai Wenxi, bluntly stated that Qumei's poor stock price was because the company's performance losses and revenue decline directly affected investor confidence.
Qumei Home Furnishing's 2023 annual report shows that the company's total operating income in 2023 was 4.028 billion yuan, a year-on-year decrease of 17.00%; the net loss was 304 million yuan, a year-on-year decrease of 923.06%.
Looking over a long period of time, 2023 is the worst year for Qumei Home Furnishing in the past five years. In this year, it almost lost the company's total net profit for the three years from 2020 to 2022.
Qumei Home Furnishing explained in its 2023 annual report that in 2023, the domestic real estate market will decline, demand in the furniture industry will be weak, and overseas markets will still be affected by the Federal Reserve's interest rate hikes, etc., and demand will show a weak trend. Overseas financing costs continue to rise, which has an impact on the company's profitability.
Behind the decline in Qumei Home Furnishing's performance, there is also the phenomenon of "both volume and price falling". The annual report shows that in 2023, the company's customized furniture sales fell by 4.25%, finished furniture sales fell by 17.42%, stressless brand furniture product sales fell by 12.76%, img brand furniture product sales fell by 26.90%, and svane brand furniture product sales fell by 20.00%.
In terms of sales price, the average sales price of the company's domestic custom-made furniture and finished furniture decreased by 2.10% and 4.17% year-on-year respectively, and the average sales price of overseas stressless brand furniture decreased by 5.64%.
Entering 2024, the situation still has not improved. In the first quarter of this year, Qumei Home Furnishing achieved operating income of 887 million yuan, a year-on-year decrease of 8.27%; a net loss of 79 million yuan, a year-on-year decrease of 17.36%.
Wang Jianguo, an Internet strategy expert in China's home furnishing/design industry, told China News Weekly that in addition to the impact of the industry's general environment, poor performance also has some operating shortcomings. In recent years, large-scale home furnishing channels have seen a wave of store closures, and offline customer flow has performed poorly. Qumei Home Furnishing has not optimized its channel strategy in a timely manner, which has also directly affected the company's performance.
Qumei Home Furnishing’s online revenue indeed still needs to be improved. The company’s online sales revenue in 2023 will be 21.8837 million yuan, a year-on-year decrease of 38.82%. Online sales account for less than 0.55% of total revenue.
Bai Wenxi told China News Weekly that Qumei Home Furnishing Co., Ltd. is positioned as a high-end home furnishing brand, but it lacks in e-commerce transformation and lags in products and sales strategies, which has led to the loss of market share and a decline in profitability. On the other hand, the company has attached great importance to high-end customers in recent years, but its high-end consumption has not been as good as expected, and its brand image is relatively inconsistent with the needs of the Z-generation customer group.
A "chair" worth 4 billion yuan
Another question is, how did Qumei Home Furnishing, which has more than 200 large independent stores across the country, lead to high debts?
After all, this is not a small sum of money. As of the first quarter of 2024, Qumei Home Furnishing's liabilities reached 4.616 billion yuan, a decrease of 4.30% compared with the same period in 2023. Although it is lower than the 4.8 billion mentioned by Zhao Zelong, it is still a huge debt.
In fact, this debt mainly stems from Qumei Home’s acquisition of ekornes, a Norwegian national treasure company, in 2018. This transaction was valued at 4.063 billion yuan and still maintains the record as the largest overseas merger and acquisition in the Chinese furniture industry.
Qumei Furniture spent more than 4 billion yuan just for a "chair."
As the main revenue driver of ekornes, the stressless series is the sales champion of the global comfort chair category. Qumei Home Furnishing once mentioned in its performance announcement that stressless is a world-renowned comfort chair brand and is known as "the most comfortable chair in the world."
Picture/stressless official website
The problem is that at that time, the total assets of Qumei Home Furnishing were only 2.159 billion yuan, and most of the acquisition funds came from loans. Relying on the 1.5 billion yuan pledged by major shareholders, using the remaining 268 million yuan raised from the listing, and another 1.8 billion yuan in mortgage loans from banks, Qumei was able to gather funds.
This has also led to the company's high debt levels in recent years. After the acquisition was completed, Qumei Home Furnishing's asset-liability ratio soared from 22.48% at the end of 2017 to 77.73% at the end of 2018.
has gone through subsequent additional acquisitions and the introduction of strategic investments. As of the end of 2023, Qumei Home Furnishing indirectly holds 94.12% of the shares of ekornes through its holding subsidiaries.
This expensive chair with pure "Nordic origin" has indeed increased the size of Qumei Home Furnishing, but the sequelae of mergers and acquisitions have affected the company's profitability.
After acquiring ekornes, Qumei Home's revenue jumped from 2.892 billion yuan in 2018 to 4.853 billion yuan in 2022. However, the company's net profits attributable to the parent company from 2018 to 2022 were -59.06 million yuan and 82.16 million yuan respectively. , 104 million yuan, 178 million yuan, and 36.96 million yuan, all less than the net profit of 245.7 million yuan in 2017.
In 2023, Qumei Home Furnishing’s overseas business will continue to perform poorly. In overseas business, the stressless segment achieved revenue of 2.102 billion yuan in 2023, a year-on-year decrease of 17.68%; the img segment achieved operating income of 531 million yuan, a year-on-year decrease of 21.34%; the svane segment achieved operating income of 169 million yuan, a year-on-year decrease of 16.11%.
Qumei Home Furnishing said that overseas, affected by the Federal Reserve's interest rate hikes and high inflationary pressure in European and American countries, consumer demand in the European and North American markets has been greatly impacted since the second half of 2022, and offline channel traffic has been under pressure.
"The target of our acquisition is very good, but the timing of the acquisition is not good." Zhao Ruihai, chairman of Qumei Home Furnishings, said in a media interview in 2022.
Wang Jianguo analyzed that for home furnishing companies, huge cross-border mergers and acquisitions bring considerable challenges. Intervening in overseas stock markets requires paying a certain price, such as facing fluctuations in the international economic environment. Cross-border synergies also require collisions, and risks and benefits coexist.
The "Second Generation Enterprise" makes fancy moves
Although he is a "Second Generation Enterprise" from the industry, it is actually unrealistic to say that Zhao Zelong is repaying Qumei's debt. After all, the liabilities of a listed company and the personal property of shareholders are two different concepts.
Qumei Home Furnishing is a typical family business, but Zhao Ruihai is not the only major shareholder. Public information shows that Zhao Ruihai and his brother Zhao Ruibin are currently the actual controllers of Qumei Home Furnishing, directly holding 18.30% and 17.92% of the company's shares respectively. In addition, his brother Zhao Ruijie also directly holds 4.88% of the company's shares.
public information shows that Zhao Zelong currently serves as the "Strategic Advisor of Qumei Home Furnishing Group" in Qumei Home Furnishing, but "this person is not found" in the senior management team of Qumei Home Furnishing's annual report.
Zhao Zelong's statement of "paying off his father's debts" may be just a script.
It is worth noting that strengthening the promotion of new media channels is part of Qumei Home Furnishing’s plan. The first part of the company's 2023 annual report business plan states that it will "create the online content assets of the Qumei Home Furnishing brand, increase the brand's natural traffic, and empower omni-channel business."
In fact, Zhao Zelong is not the only "second generation enterprise" in the home furnishing industry who wants to get out of the industry. China News Weekly found that there have been many short videos of second-generation home furnishing companies. The more well-known ones include "Towel Master", Jie Liya Qi's third-generation Shi Zhancheng, Dibiao Home Furnishing's second-generation Zheng Andy, and Lanshe Diatom Mud's second-generation Zhang Xian...their narrative logic is very similar: their fathers had a glorious entrepreneurial history, and they thought they could inherit the family business, but in reality they encountered setbacks and had to work hard.
Picture/short video platform screenshot
Wang Jianguo believes that in the home furnishing industry, compared to the first generation who are more focused on industries and products, the second generation of enterprises, as young people, better understand the popular logic of emerging things and are good at taking advantage of the strong traffic of short videos. Increase the visibility of traditional home furnishing business. But it is not easy to make a good personal IP. The further challenge lies in telling the story of corporate development while improving the audience's overall perception of the brand.
Another question is how the second generation of home furnishing companies that are out of the short video industry can further convert online traffic into actual sales.
At present, in addition to Shi Zhancheng, who has a large number of fans, who sells live broadcasts, the short video content of the second generation of home furnishing manufacturers such as Zhao Zelong is still mainly about promoting the company and introducing daily business life. There are also fans who complain about the short videos of the second generation in the comment area. The idea of video editing is very similar.
"It is not simple to combine the traditional home furnishing industry with the Internet. From offline to online is not just a matter of traffic logic. If you want to achieve high conversion, it is more important to return to the essence and be meticulous in product quality, cost performance, delivery experience, etc. Polishing. Many home furnishing e-commerce brands that have thrived online have died. After the second generation of home furnishing companies gain traffic, it is not easy to inject online vitality into the original brand. Making short videos is just a way. Start." Wang Jianguo added.
Reference:
"Qumei Home Furnishings lost more than 300 million last year. The son of the founder wanted to pay off his father's debts, staged a "True Return"? ", 2024-06-27, Times Weekly
""Exclusive Interview" Qumei Home Furnishing Zhao Ruihai: Home furnishing companies should be more adaptable in overseas acquisitions and avoid collisions", 2022-03-21, Interface News
Author: Yu Shengmei
