The attractiveness of large home furnishing stores is declining, and the logic of the so-called "hypermarket, large customer flow, and large orders" seems to be out of work.
Recently, the second largest shareholder of Red Star Macalline applied for reorganization.
At present, public information shows that Red Star Macalline has a debt of 10 billion yuan and is temporarily unable to repay.
With a sharp drop in foot traffic and business difficulties, are the dealers stationed in Red Star Macalline stores okay?
01
Red Star Macalline is facing a crisis
According to the annual report of Red Star Macalline, revenue and net profit will both decline in 2023. During the reporting period, the company achieved revenue of 11.515 billion yuan, a year-on-year decrease of 18.55%; The net profit attributable to the parent company was -2.216 billion yuan, a year-on-year decrease of 496.78%.
Recently, a blockbuster news has attracted the attention of industry insiders: Red Star Holdings, the second largest shareholder of Red Star Macalline, applied for reorganization. It is reported that Red Star Holdings announced that it had applied to the Shanghai Pudong New Area People's Court for reorganization on June 7 due to its own debt repayment difficulties.
In particular, it is emphasized that the object of this reorganization is only Red Star Holdings' own legal entity, excluding the subsidiaries and shareholding companies of Red Star Holdings. In order to prevent its own debt crisis from affecting its subsidiary, that is, the domestic furniture retail giant Red Star Macalline.
However, the news of Red Star Holdings' application for reorganization still triggered turmoil in Red Star Macalline's stock price.
As of press time, Red Star Macalline Hong Kong shares have fallen to HK$1.37 per share.
Macalline, which is listed on the A-share market, was also hit hard one after another, reaching 2.57 yuan per share, a drop of 1.15%.
Red Star Macalline said: At present, the company is facing the dilemma of debt repayment, and there may be a situation where it may not be able to pay off the due debts.
If a debt triggers a substantial default, there will be a chain reaction, resulting in cross-default and accelerated maturity of other debts, and the rapid realization value of the current assets of Red Star Holdings is difficult to pay off all debts, and Red Star Holdings will eventually be forced to go bankrupt and liquidate, at which time the core assets of Red Star Holdings will either have been enforced, or the value will be seriously depreciated due to the negative impact of the bankruptcy of Red Star Holdings, and the overall repayment interests and fair repayment interests of the company's creditors will be seriously damaged.
02
Self-help measures are frequent
In recent years, the home furnishing store industry has also shown a strong willingness to "save itself" when facing business challenges, and has sought breakthroughs through the introduction of strategic investors.
On January 13, 2023, a piece of news attracted widespread attention in the business community. Red Star Holdings transferred its 29.95% stake in Macalline to C&D Co., Ltd., although this transfer involved a huge volume, but the final total transaction did not reach 6.3 billion yuan. However, even though about 14 billion yuan was cashed out through this transaction, Che Jianxin still failed to fully repay the debt.
According to the 2023 audit report of Red Star Holdings, the total amount of loan principal and overdue interest due within one year of the company exceeds 6 billion yuan, while the liquidity on the account is only 110 million yuan. In August of the same year, Che Jianxin resigned as chairman, marking the end of a new era of Che Jianxin of Red Star Macalline.
At present, the largest shareholder and controlling shareholder of Red Star Macalline is C&D Co., Ltd., and its actual controller is the State-owned Assets Supervision and Administration Commission of Xiamen Municipal People's Government. The addition of this state-owned background undoubtedly provides strong support for Red Star Macalline in terms of security and development prospects.
However, despite the strong support of shareholders, Macalline's operational prospects still face many challenges.
Through bankruptcy reorganization, Red Star Holdings coordinates the interests of all stakeholders, such as giving the remaining shares to creditors, carrying out equity, business, asset restructuring and debt liquidation, in order to avoid bankruptcy and seek rebirth for the enterprise. Red Star Holdings hopes for the restructuring, believing that this move can curb the further deterioration of the company's debt risk and operating risk, and better protect the rights and interests of creditors and investors.
It is worth noting that after Red Star Macalline introduced C&D shares, another giant in the home furnishing store industry, Actually Home, also followed suit and introduced a strategic investor, Jinyu Group. Cross-border restructuring and mergers seem to be the right and difficult path.
From the perspective of performance, the self-help of the home furnishing store industry still needs to be further increased. The data for the first quarter of this year shows that the above two companies are still facing operating pressure, and the situation is not optimistic.
According to the observation of the finishing business, Red Star Macalline has many stores, a huge business volume, and high operating costs. With the addition of new capital and teams, team running-in, strategic positioning, resource integration and other aspects will bring challenges to the entire enterprise operation for a certain period of time, and it is difficult to see significant results in the short term.
In addition to relying on external forces, the home furnishing store industry is also actively exploring the road of transformation and "self-help", expanding its business scope to home appliances, catering, design, home decoration, automobiles and other fields. For example, we will create a new "people, car, home" consumer experience space, and launch a "caramel box" self-operated retail business for young people to meet their one-stop needs for home, soft decoration and design.
03
Where does the future hold?
After Red Star Macalline broke away from the state-owned background, it does not mean that the predicament has been completely lifted, in fact, the debt problem is still unresolved.
How far can Red Star Macalline go in the market competition?
According to the on-site visits and statistics of the finishing business, the surrender rate of Guangzhou Red Star Macalline has reached the range of 20% to 30%, and some merchants are still holding on, but they also admit that if the market does not improve significantly in the second half of the year, they may have to make the difficult decision to withdraw stores.
With the macroeconomic downturn and the decline of the vitality of the real estate market, the home furnishing industry, as the downstream industrial chain of real estate, has inevitably been impacted.
However, in addition to the impact of macro environmental factors, the change of consumer shopping habits is the biggest dilemma faced by traditional home retail stores.
Due to the popularity of online shopping, the traffic of traditional home retail brick-and-mortar stores has generally declined, resulting in a decrease in store sales, inventory backlog, and increased operating pressure.
And now the recession of the industry is affecting the entire home furnishing store, and the shareholders behind it are also cutting this "hot potato" at the speed of light.
The market is unpredictable, and Red Star Holdings may not have expected the cooling of the real estate market and the company's current predicament.
As for the future transformation direction and development trend of Red Star Macalline, you are welcome to leave a message in the comment area and share your insights and views.