What is the future of Gome under the crisis of store closures and serious losses?
Recently, a piece of news that “all Gome stores in Guangdong have been closed” attracted market attention. On October 18, the Gome Retail Board of Directors announced that as of the end of last month, there were still 2 self-operated stores and 107 franchise stores in Guangdong Province. Compared with the first half of the year, there were 12 fewer self-operated stores and 74 franchise stores. At the same time, the announcement stated that due to adjustments in business strategies, the number of stores may change again in the future. On October 19, Gome Electrical Appliances was sued by Changhong Meiling Co., Ltd. for defaulting on payment. The accumulation of many messages has made everyone worried about the future of Gome. What is the current situation of Gome in Sichuan? What are the problems? In this regard, the reporter visited many Gome stores in Chengdu.
Business has been sluggish and stores have closed.
Gome Electric’s Chengdu Chengren Road flagship store located in Jinjiang District has no customers in the store except for four or five staff members during business hours. The reporter observed that the store has many types of home appliances, but items are arranged out of order in some areas. In areas such as refrigerators and washing machines, most home appliances have eye-catching “prototype price” labels on them. The clerk told reporters that “what you see is what you get.” The prototype is the home appliance displayed in the store, and its price will be much cheaper than the original price. The reporter found that the price of most “prototype price” home appliances is generally 30%-50% cheaper than the original price. When the reporter asked about delivery and after-sales, the store clerk said that all ready-made products would be shipped and installed as soon as possible, and there would also be a later warranty.
At the Gome Electrical Appliances Chengdu Tianfu Overpass Store, the huge and eye-catching “Gome Life Experience Center” signboard is still hanging, but the door is locked, and the glass window next to it is posted with “Business Promotion”. Through the door, the reporter saw that the store had long been deserted, leaving only an idle counter. A citizen passing by said: “It has been closed for a while. I went shopping in the first half of the year and the business inside was not very good.”
A staff member of a small Gome Electrical Appliances store in Wuhou District told reporters that the store is operating normally and the goods can be shipped normally. The home appliances sold in the store have a three-year warranty commitment, and the home appliance brand will provide installation and after-sales maintenance. When asked about the closure of Gome stores in Chengdu, the clerk said it was because the rent was too expensive and the lease was not renewed. He did not reveal much about the other circumstances. Until the reporter left, no consumers were seen entering the store.
Closed stores
Consumers with unpaid wages and debts encounter after-sales problems
After visiting many Gome stores in Chengdu, most of the store clerks were tight-lipped about the current situation of Gome Electrical Appliances. After learning from many sources, the reporter contacted Xiao Li, an employee of Gome Electrical Appliances Store, “Currently, we are basically selling previous inventory, but very few transactions can be made.” He said that although his store is still open for business, there is only a handful of customers, and several stores in Chengdu have been closed. “We haven’t been paid for several months,” Xiao Li said helplessly to reporters. “I don’t know when they will be paid. We don’t have much motivation right now.”
An employee of a certain brand who has had business cooperation with Chengdu Gome Electric told reporters that Chengdu Gome has long been in arrears with cooperation payments and has failed to collect collections. The Gome staff who contacted him directly told him, “Don’t cooperate with us anymore. No money comes out.”
At the same time, some netizens also posted on social platforms saying that after purchasing home appliances at a Gome Electrical Appliances store in the High-tech Zone, they discovered that the refrigerator they purchased had quality problems, and the store staff delayed issuing invoices after receiving the payment they made. A netizen responded and said that he also purchased home appliances, but did not receive the goods, and the merchant did not refund the money. He just said that he would be notified when there is news. On the 24th, the reporter tried to contact the official customer service through the Gome APP, but as of press time, the reporter had not received any reply.
Few consumers are interested in the store
Stock prices plummet, headcount drops sharply
According to trading data, Gome Retail (00493.HK) closed at only HK$0.040 per share as of the closing of the Hong Kong stock market on October 24. Since the beginning of this year, its range has fallen by 63.64%.
This month, Gome Retail issued an announcement to supplement the 2022 annual report with further materials. In May 2022, 1.9625 billion ordinary shares were placed to no less than six independent placees at a placement price of HK$0.40 per share, and the net proceeds from the placement were approximately HK$776.4 million. It was originally planned to use 60% of the proceeds from the placement to expand online and offline platform business, 10% to repay debt and 30% to general capital. However, due to the liquidity problem of Gome Retail, it has further deteriorated since the second half of 2022. , the proceeds were not used as originally planned, and as of December 31, 2022, all the proceeds had been used to repay debts.
Judging from the 2023 interim report, in the first half of the year, Gome’s retail sales revenue dropped from 12.109 billion yuan (RMB) in the same period of 2022 to 415 million yuan, a decrease of 96.57%; the loss attributable to the owners of the parent company was 3.539 billion yuan, Compared with the same period last year, the loss was 2.966 billion yuan, an increase of 19.32% year-on-year. Employee-related expenses decreased from 827 million yuan in the same period last year to 275 million yuan. As of June 30 this year, Gome Group had only 3,609 employees. At the end of 2021, Gome Group had 32,278 employees, a decrease of 88%. Around %, it can be seen that its scale has shrunk dramatically.
“In the second half of the year, we will continue to focus on the main business of home appliance retail, using a vertical model to focus on retailing home appliances and consumer electronics products. At the same time, we will continue to strengthen new operating methods such as live streaming online to open up new growth opportunities.” Although the interim report has this However, judging from the actual effects of reform methods such as Gome entering Douyin Kuaishou through some directly-operated stores and expanding live broadcast from the Gome App to foreign short video platforms, it has not effectively changed the operating difficulties faced by Gome. Relevant online platform operations have not found any obvious changes for the better. On the contrary, some functions of the APP have been offline recently due to the pop-up window salary request incident in the APP.
Some insiders believe that Gome is currently facing multiple difficulties such as insolvency and lawsuits, and its operating capabilities and reputation have been damaged. In addition, major shareholders frequently reduce their holdings, which makes it even more difficult for the market and investors to regain their understanding. Gome’s confidence.
Public information indicates that Gome is reorganizing accounts payable, selling properties, negotiating balances with suppliers, etc. to reduce financial pressure and solve problems, and is taking a series of measures to save itself. Since the beginning of this year, various departments across my country have successively introduced a series of policies to promote consumption in the fields of home furnishings, automobiles, electronic products, etc., creating favorable conditions for expanding consumption. So, through transformation and policy promotion, can Gome bring an opportunity for reversal? As a former leader in China’s home appliance retail market, Gome’s future destiny will inevitably attract the public’s attention, and reporters will continue to pay attention.
