The decline in net profit, the more serious the internal volume! Customized home furnishing industry may usher in the third revolution

With the half of 2022, all the financial reports of listed home furnishing enterprises in 2021 were released. Represented by four listed companies, oupai home furnishing, Sofia, Shangpin home furnishing and Zhibang home furnishing, their revenue was 20.44 billion yuan, 10.407 billion yuan, 7.3 billion yuan and 5.153 billion yuan respectively, with year-on-year growth of 38.7%, 24.59%, 12.22% and 34.17% respectively.

The development of the industry has gradually entered the era of "Ossur Shangzhi" from the pattern of "Ossur Shangzhi". In the face of the more competitive home furnishing brand market, how can they hold on to the "land" they have worked hard to achieve and continue to show off?

1、 General increase in revenue, showing a situation of one super power and many strong powers

In the past 2021, affected by the repeated epidemic, the rising prices of raw materials and shipping, and the cold of the real estate industry, household enterprises generally fell into a dilemma.

However, with the release of all the annual financial reports of the nine listed customized home furnishing companies in 2021, the industry as a whole has achieved remarkable results. According to statistics, in 2021, the nine major home customization enterprises achieved a total operating revenue of about 54.976 billion yuan, an increase of about 12.757 billion yuan, or about 30%, compared with 42.219 billion yuan in 2020.

It is worth noting that oupai home has broken through the 20billion mark for the first time, and its leading position in the industry has been continuously consolidated; Sofia has followed closely, breaking the 10billion mark for the first time. At the same time, the gap with European home furnishings has expanded from 6.4 billion yuan in 2020 to 10billion yuan; Shangpin home furnishing and Zhibang home furnishing have also made remarkable achievements, breaking the threshold of 7billion and 5billion respectively.

The revenue gap of leading enterprises has widened, which reflects that the Matthew effect of the industry is more obvious, and the growth rate of leading enterprises is faster.

In addition, from the perspective of products, in 2021, oupai household wardrobe and supporting furniture products, cabinets, bathroom and wooden doors achieved revenue of RMB 7.529 billion, RMB 7.529 billion, RMB 989 million and RMB 1.236 billion respectively, with year-on-year growth of 49.53%, 24.22%, 33.72% and 60.36%, and business products blossomed in all directions.

Similar to the layout of European style home furnishings, there is Sophia. According to the financial report, Sofia's wardrobe and its supporting products, cabinets and wooden doors achieved a revenue of 8.269 billion yuan, 1.42 billion yuan and 458million yuan respectively, with a year-on-year increase of 23.38%, 17.25% and 56.68% respectively. In addition, the revenue from the packaging channel was 529million yuan, a three fold increase over 2020.

In the future, with the tightening of real estate regulation and the gradual weakening of demographic dividend, and the advent of the era of stock housing, single channels and products will certainly not be able to meet the needs of consumers. Leading enterprises, represented by Europa home furnishings and Sofia, have launched secondary businesses one after another to lay out the assembly track while strengthening the category extension of cabinets, wooden doors, windows and doors.

The battle of the industry is imminent.

2、 Profit is under pressure in many ways, and the enterprise increases income without increasing profit

According to the statistics of wind data, the average gross profit margin of household goods industry in 2021 is 27.8%; The average net interest rate is 3.7%; The average roe was 5.91%. For comparison, the average gross profit margin of household goods industry in 2020 is 32.3%; The average net interest rate is 10.12%; The average roe was 14.36%.

Looking back to 2021, although the revenue of each listed enterprise maintained a high growth rate, the gross profit margin, net profit and other indicators of most enterprises were in a downward trend.

Specifically, the net profits of europay home, Sofia, Shangpin home furnishing and Zhibang home furnishing in 2021 were 2.67 billion yuan, 123 million yuan, 90million yuan and 506million yuan respectively. In addition to the year-on-year growth of europay home furnishing and Zhibang home furnishing, Sofia monk home furnishing fell to varying degrees, of which Sofia fell sharply by 89.72% year-on-year, which is also the first decline in the annual parent net profit of Sofia in more than 10 years since its listing.

In terms of gross profit margin, the gross profit margin of the four enterprises generally declined in the second half of the year due to the rise in the price of raw materials and the increase in the proportion of supporting products with low gross profit. In 2021, the gross profit margin of europay home, Sofia, Shangpin home distribution and Zhibang home was 31.37%, 33.21%, 33.2% and 37.3% respectively, with a year-on-year decline of 3.31%, 3.35%, 0.06% and 1.58% respectively.

It is worth noting that the home furnishing industry, as a post cycle industry of real estate, has always been in good shape and bad shape with the development of the real estate industry. In 2021, dragged down by the real estate enterprises in danger, the debt default of large business customers, resulting in bad debts of accounts receivable, became the main reason for the sharp decline in the performance of customized home furnishing enterprises.

According to the financial report of the new home furnishing paradigm, the accounts receivable of europai home furnishing in 2021 were 1.01 billion yuan, a year-on-year increase of 68%, bearing the risk of impairment. Sofia directly disclosed in the announcement of withdrawing asset impairment in 2021 that the company withdrew various impairment losses totaling about RMB 927million, including notes receivable of about RMB 273million and accounts receivable of about RMB 428million; The provision for impairment of other non current assets is about 237million yuan.

The direct reason is that the due commercial acceptance bills of Evergrande group and its subsidiaries, the main customer of Sofia, suffered a large area of default, and the bills presented to the drawer for payment were refused, and the customer could not promise the specific payment time. Therefore, about 642million yuan was separately accrued for the receivables of Evergrande group and its subsidiaries.

The good news is that since the first half of this year, more than 120 provinces have issued optimization and adjustment of real estate policies nearly 300 times. The real estate market is expected to recover in the second half of this year. At that time, the household industry is also expected to succeed in reducing pressure.

3、 To fight for the country, we must guard the country well

With the increasing fragmentation of retail channel traffic, packaged home is expected to become a new traffic entrance. In 2021, many customized home enterprises began to flock to the packaged track.

According to incomplete statistics, as of December 2021, enterprises such as europai home furnishing, Sofia, Shangpin home furnishing, gold kitchen cabinet, haolaike, dinggu Jichuang, Qumei home furnishing, etc. have announced to enter the whole decoration business. At the end of the year, the head home furnishing brands successively launched the "whole home customization" strategy, and other major home furnishing brands followed suit.

Previously, in its annual report, europay home said that it would continue to work around the "three horse and one car" strategy in 2022, including information strategy, building a large home model, comprehensively optimizing terminals and brand building, and strive to achieve a year-on-year increase in operating revenue of 15%-20% and a year-on-year increase in net profit of 10%-15%.

On June 6, after acquiring formar, a famous Italian furniture brand, europay home launched the new Gaoding brand miform, laid out the Gaoding track, and practiced europay's core strategy of "taking design as the line, big home as the trend, and brand upgrading as the strategy" in the post real estate era.

Sophia is not willing to be outdone. On February 23, Sophia held an information conference to expose the whole customized package. With the configuration of "all major brands, all rigid needs and all categories" and the playing method of "using rigid needs as gifts and sending cabinets free of charge", it opened up new ideas for Sophia to build a diversified traffic entrance and upgrade the quality of the whole customized ecosystem on the enterprise side.

In short, the home furnishing industry has entered the assembly track, strengthening brand value, seizing customers' minds and serving customers in depth, which has become the place for customized home furnishings to settle down.

Custom home style is blowing, the brand is competing with the drum, counting the wind, and looking at the present.