In the face of severe market challenges, the once famous supermarket group has also begun to struggle to survive.
On December 2, *ST Renle and Chengdu Huishunduo Trading Co., Ltd. agreed to sign an equity transfer-related contract.This includes the transfer of 100% equity of 13 subsidiary companies with operating stores at a price of RMB 13.
On December 3, the company held the twelfth (temporary) meeting of the sixth board of directors and unanimously approved the “Proposal on the Progress of the Listing and Transfer of 100% Equity and Corresponding Claims of 14 Subsidiary (Grandson) Companies and the Signing of Equity Transfer Contracts” , the relevant contract officially comes into effect.
This is a 13+1 transfer agreement. Among them, 13 companies with operating stores were sold for 13 yuan, which was really a helpless choice. This behavior of selling off the company’s assets at “cabbage prices” has also made the outside world worried about Renrenle’s prospects.
Public information shows that although these stores are located in many important cities such as Tianjin, Guangzhou, Chongqing, Chengdu, and Xiamen, they all have serious insolvency problems. From the perspective of financial data, as of April 30, 2024, the simulated total assets of the 13 target companies with operating stores were 1.022 billion yuan, the simulated total liabilities were as high as 3.147 billion yuan, and the simulated net assets were – 2.125 billion yuan.
In addition to the 13 seriously insolvent stores, there is also Tianjin Renrenle Commodity Distribution Co., Ltd. (referred to as Tianjin Distribution) worth 239 million yuan. In the contract that took effect this time, Renrenle transferred Tianjin Distribution to Tianjin Youda Group at a price of 239 million yuan. It seems to prove that the company still has some valuable assets.
However, Tianjin Distribution also faces serious losses. In 2023 and the first four months of 2024, Tianjin Distribution’s net profits will be -13.0613 million yuan and -4.261 million yuan respectively. After the completion of this sale, Renrenle will only have one of its three self-owned logistics centers left.
Shrink the front line in loss-making areas, concentrate resources to develop advantageous areas, reduce business risks, reduce losses, and then improve financial and operating conditions… Get rid of loss-making businesses and withdraw 239 million yuan of funds. For Renrenle, such a big deal is not just for The greater significance of reducing losses is to preserve the “stamina” for blood recovery. After all, if Renrenle cannot achieve positive net assets by the end of 2024, it will face the risk of forced delisting.
From being high-spirited to surviving with a broken arm, everyone’s happy situation has almost become a portrayal of the current difficult survival in the supermarket and retail industry.
12.9 billion to 2.8 billion
Although it has shed a large amount of loss-making assets, Renrenle still faces considerable challenges.
Judging from past performance data, Renrenle has suffered cumulative losses of more than 2 billion yuan in the past three and a half years, and its asset and liability problems have become increasingly serious. For example, as of the end of the third quarter of 2023, its asset-liability ratio has further climbed to 108.70% from 97.72% in 2022, and it is already in an insolvent situation.
It has fought against Carrefour and attacked Wal-Mart. As an old company founded in 1996, Renrenle once shared the title of “Guangdong Supermarket Big Three” with China Resources Vanguard and Xinyijia. The brilliant performance in the early years also pushed the founder He Jinming to the pinnacle of wealth. Since 2005, He Jinming has been on the “Hurun Rich List” and has been there for more than ten years.
Among them, 2010 is a very important year for Renrenle and He Jinming. This year, Renrenle not only successfully listed on the Small and Medium-sized Board of the Shenzhen Stock Exchange, but its sales also exceeded 10 billion. This also pushed He Jinming’s family wealth to 8.5 billion yuan, setting his highest record on the “Hurun Rich List”.
In 2012, Renrenle’s annual revenue reached 12.913 billion yuan, an increase of 6.79%.
But this spectacle could not last. Since 2013, Renrenle’s revenue has begun to decline year by year. Since 2014, Renrenle’s net profit after non-recurring gains and losses attributed to shareholders of listed companies has begun a long career of losses.
In this process, Renrenle has made various attempts. In terms of stores, it has launched self-operated hypermarkets, boutique supermarkets Le super, community living supermarkets Le life, community fresh food supermarkets Le fresh, upgraded versions of Renrenle, department stores and shopping malls, and also independently It has developed online sales platforms, Renren Tesco Business Platform, Renren Paradise APP, Renren Lepintuan, etc.
However, various measures did not seem to bring actual improvement to performance. Ten years later, in 2023, Renrenle’s annual revenue dropped to 2.853 billion yuan. In the first three quarters of 2024, revenue dropped to 1.227 billion yuan, a decrease of 44.84% from the previous year.
The shrinking performance year by year has also seriously affected He Jinming’s wealth. In 2021, the wealth of He Jinming and Song Qi on the Hurun Rich List has shrunk to 2.6 billion yuan.
In the process of the wealth ranking gradually declining and gradually disappearing from the list, it is not only due to the decline in Renrenle’s revenue level, but also due to the gradual reduction of He Jinming’s voice.
On July 23, 2019, Renrenle stated in an announcement that the company’s controlling shareholder Shenzhen Haoming Investment Management Co., Ltd. (“Haoming Investment”) signed an agreement with Xi’an Qujiang Cultural Industry Investment (Group) Co., Ltd. (“Qujiang Culture”) The “Share Transfer Agreement” and the “Voting Rights Entrustment Agreement” were drafted. Shenzhen Haoming plans to transfer its 20% equity in Renrenle to Qujiang Culture. The remaining 22.86% equity of Renrenle held by Shenzhen Haoming will correspond to voting rights, nomination proposal rights, meeting participation rights, supervision and suggestion rights, as well as income rights and share transfer rights, etc. Rights other than property rights are entrusted to Qujiang Culture.
After this equity change, He Jinming, Song Qi, and He Hao reduced their direct and indirect holdings of 69.11% of the shares of the listed company to a total of 26.25% of the voting rights of the listed company, and no longer have control over the listed company.
The presence of Xi’an Qujiang Cultural Industry Investment (Group) Co., Ltd. has also made Xi’an one of the most important markets for Renrenle. According to the 2024 semi-annual report, 7 of its top ten stores in terms of revenue are located in Xi’an, and the store’s square footage performance is outstanding in various regions.
However, in the face of changes and challenges in the entire retail industry and the completely different needs of a new generation of consumers, this resource-based cooperation between local cultural tourism and retail brands cannot fundamentally reverse the decline of Renrenle.
In the face of multi-party competition online and offline, there are still many variables whether Renrenle can truly improve its financial situation and win a chance for future reforms and adjustments in this “shell preservation” operation.(This article was first published on Titanium Media APP, author｜Xie Xuan, editor｜Fang Yu)
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