Nai Snow, can not bear loss

2022-09-15 0 By

To use the “double down” beat “frost” author | Gao Xuyang source cover | nai snow tea official weibo listed nine months, share prices dropped nearly eighty percent after suddenly expanded losses “nai snow tea”.On March 29, Nai Xue tea (hereinafter referred to as nai Xue) released its full-year financial results for 2021.The report, the first of its kind since Nai Xue went public, showed that in 2021, the company posted revenue of 4.296 billion yuan, up 40.5 percent year on year.But the profit turned from a slight surplus of 16.64 million yuan in 2020 to an adjusted net loss of 145 million yuan, the biggest loss since 2018.By sector, freshly made tea is still the main component of Nai Xue’s revenue, with the revenue of 3.187 billion yuan in 2021, accounting for 74.2% of the total revenue, and the revenue of baking products is 940 million yuan, accounting for 21.9% of the total revenue.Losses suddenly magnify, nai Snow because of trapped?And how to break through?As can be seen from the financial report, nai Snow is trying to find certainty in the uncertainty when the epidemic affects the macro economy, new tea rolls and coffee brands cross the boundary.In 2021, Nai Xue net added 326 stores, up 66.4% year on year, still maintaining high growth rate.But operating margins per store have fallen from a peak of 18.9 per cent to 14.5 per cent, failing to increase significantly as the number of stores has expanded.For the new tea industry, the number of stores is one of the company’s most important growth indicators.Nai Xue has said in earnings reports that it tends to attract better “opening customer traffic” when it enters a city from outside the surrounding community, thanks to its brand power.But until the number of stores reaches a reasonable level, consumers cannot form consumption habits, leading to a gradual decline in daily sales per store.In order to seize the market, the pace of nai Xue expansion can not stop.According to the 2021 financial results, 70% of the HK $4.84bn raised in nai Xue’s IPO will be used for store expansion within three years.350-400 stores are expected to open in 2022.Focusing on the construction of the “third space” is one of the main characteristics that distinguishes Nai Xue from other new tea brands.In terms of store area, nai Snow’s standard store area is about 200 square meters, while the lightweight “PRO store”, despite the removal of on-site baking facilities, still generally covers 130-150 square meters.In contrast, HEYTEA’s standard store is 150 square meters and its lightweight HEYTEA GO is 60 to 70 square meters.The focus on the third space makes nai Xue more expensive to rent.Northeast Securities estimated in its research report that Nai Xue rental accounted for 15 percent to 17 percent of total revenue, while Xi Cha accounted for 7 percent to 9 percent.In 2021, Nai Xuejing added 326 stores, much higher than the 186 stores of Xi Cha in the same period.However, rapid expansion and high investment in the third space did not translate into higher market share and higher annual turnover per square meter.Based on the retail sales in 2020, Nai Xue’s market share in high-end freshly made tea industry is 18.9%, ranking the second in the industry, still lagging behind the market share of the first Xicha (27.7%).According to northeast Securities research report, the annual ping efficiency of Nai Xue standard store and PRO store is 51,000 yuan/square meter and 58,000 yuan/square meter, respectively.By comparison, the annual ping efficiency of The Standard And GO stores is 94,000 and 122,000 yuan per square meter, respectively.If the unit price is calculated according to the customer, the “third space” has not been changed for a higher customer unit price.According to Nai Xue’s prospectus, its customer unit is 43 yuan, only 3 yuan higher than The 40 yuan price of Xi Cha.But in 2021, the figure dropped to 41.5 yuan.In addition, with the rapid expansion of new stores, nai Xue labor costs are also high.In 2021, nai Xue’s total employee cost was 1.42 billion yuan, up 54.3% year on year.This is mainly due to nai Snow single shop more than peers.Sinolink Securities research shows that The number of employees in a single store is 18-20, while Nai Xue has 25.Can “Double fall” save Nai Xue?After years of losses and a stock price drop of more than 80% since its listing, Nai Xue has also embarked on the road of “double decline” of cost reduction and price reduction.In response to the pain point of high cost per store, Nai Xue turned to PRO stores with lower cost and lighter operating model.The prospectus of Nai Xue once disclosed that nai Xue PRO stores will be the main force of store expansion in the future, and the company plans to increase the proportion of PRO stores to 70% in the new stores in 2021 and 2022.If the store opening plan is carried out smoothly, nai Xue PRO stores will account for 28% and 41% of the total number of nai Xue stores in 2021 and 2022 respectively.But judging from the latest financial results, Nai Xue’s acceleration of “PRO” is more aggressive than originally expected.In 2021, Nai Xue PRO stores added 365 net stores, which is even higher than the total net stores added (nai Xue standard stores decreased by 39 stores in 2021), indicating that PRO stores contributed almost all of the new stores added in 2021.In terms of proportion, by the end of 2021, PRO stores accounted for more than 45% of the total stores, achieving the 2022 target ahead of schedule.Nai Snow’s focus on PRO stores is largely due to lower investment and labor costs.Nai Xue said in the prospectus that the average investment cost for opening a PRO store was about 1 million yuan, compared with 1.8 million yuan for opening a standard store during the same period.Due to the reduction of baking facilities, the PRO store simplified store layout and operation process, and also brought about the possibility of overall labor cost reduction: the average number of shop assistants in nai Snow PRO stores was about 13, compared with 21 in standard stores during the same period.Strict control of labor costs has also become an important goal for Nai Xue in 2022.In addition to accelerating the proformization of stores and directly cutting labor costs, Nai Xue is also exploring automated processes.Ten per cent of the HK $4.84bn IPO proceeds will be spent on research and development, 10 times the amount disclosed in 2021.The shift to automation has given Nai Xue the leverage to cut costs.Nai Xue said in the announcement that the self-developed automated tea making equipment has begun to select manufacturers and trial production at the end of the fourth quarter of 2021, and has been used in some stores, and is expected to be formally applied in stores nationwide before the third quarter of 2022.In addition to automation transformation, Nai Xue is also in the way of investment layout of the supply chain, the transfer of human costs.In November 2021, Nai Xue invested 38.64 million yuan in The field Of fruit Standardization Company, which is mainly engaged in the processing of tropical fruits and vegetables.In March this year, Nai Xue established Beautiful own power Investment Co., LTD., referring to the investment route of Xicha, nai Xue is expected to vertically layout the supply chain and horizontally expand categories by way of investment.In addition to further cutting costs, Nai Xue is also part of the recent trend of cutting prices on new teas.In January, when Xi Cha announced a price cut of 1-7 yuan, Nai Xue was ready to help consumers “relax” by launching a “Relaxed series” with a maximum price of 19 yuan. In March, nai Xue officially announced that at least one new relaxed series tea under 20 yuan would be offered every month.No matter Xi Tea or Nai Xue, the initiative to reduce prices is undoubtedly to expand user groups and seek greater market share and revenue after the ebb of the capital bonus period.According to the research Report on China’s New Tea Industry in 2021 by IResearch Consulting, middle and low-end brands with average product price below 20 yuan occupy 85.3% of the market share, while high-end tea brands represented by Xi Cha and Nai Xue only account for 14.7%.For the relatively high-end Naisue and Xi Tea, the middle and low-end market is becoming the “new” blue sea when the growth peaks.In the face of the market frost like cold, Nai Snow in the use of “double drop” to reduce costs and increase efficiency.But in any case, the first annual report after the listing is not enough to satisfy investors, this year the number of stores will break thousands of Nai Snow, can jump out of the more open more losses, the more open the cycle of loss?Welcome to xuebaocaijingshe (xuebaocaijingshe) on wechat to browse more good articles on finance and economics!