In recent years, the offline retail industry in China has been under tremendous pressure due to the impact of e-commerce, compounded by factors such as three years of pandemic lockdowns. Some traditional large-scale supermarkets have been facing significant losses, with many domestic brands caught in a wave of closures. One of the “three giants of Guangdong supermarkets,” Renrenle Chain Supermarket, revealed in its latest annual financial report that the company has suffered huge losses for three consecutive years.
Renrenle Chain Commercial Group Co., Ltd., headquartered in Shenzhen, Guangdong Province, China, recently released its annual report for 2023.
According to the report, in 2023, the company achieved a revenue of 2.853 billion Chinese yuan (approximately 394 million US dollars), a decrease of 28.15% compared to the previous year. The net profit attributable to the shareholders of the listed company was -498 million yuan (approximately -68.78 million US dollars), with a negative per share earnings of -1.13 yuan (-0.16 US dollars).
As per the 2023 annual report, Renrenle’s audited net assets were in the negative at -387 million yuan (approximately -53.45 million US dollars).
Due to the continued decline in performance, the stock of Renrenle will receive delisting risk warnings from the Shenzhen Stock Exchange. Starting from April 22, the stock abbreviation for Renrenle will change to “ST Renle.”
If by the end of 2024, the net assets of Renrenle remain negative, the company’s stock will face mandatory delisting.
Founded in 1996, Renrenle is an old retail enterprise in Shenzhen. It emerged during the period when foreign supermarkets entered the Chinese market, gradually shaping the era of domestic supermarkets.
By 2009, Renrenle had consecutively made it into the ranks of the “Top 100 Chain Enterprises in China” for six years, alongside Huarun Wanjia and New Yi Jia Supermarket, known as the “three giants of Guangdong supermarkets.” The company’s main businesses include hypermarkets, Le Super high-end boutique supermarkets, Renrenle department stores, and online grocery shops.
Despite achieving a compound annual revenue growth rate of nearly 10% for four consecutive years, Renrenle went public on the Shenzhen Stock Exchange in 2010. The company initially flourished, with revenues exceeding 10 billion yuan (approximately 1.381 billion US dollars) in 2010. However, a few years later, Renrenle faced financial struggles, leading to consecutive years of losses.
In 2015, the founder of Renrenle, He Jinming, who had retired, re-entered the scene, claiming not to sell the company in the foreseeable future. However, in 2019, He Jinming transferred the controlling stake to Xi’an Qujiang Cultural Industry Investment (Group) Co., Ltd., resulting in a change in the actual controller of the company.
After the takeover by Xi’an Qujiang Cultural Industry Investment (Group) Co., Ltd., Renrenle continued to incur losses, with a substantial loss of 857 million yuan (approximately 118 million US dollars) in 2021.
As of December 31, 2023, the physical store count of Renrenle plummeted to 91 stores. During the reporting period, the company closed 22 stores due to prolonged operational losses or not meeting transformation requirements.
Apart from Renrenle, other traditional supermarkets in China have also been facing significant losses due to poor operations.
On April 26, the leading retail company in Hunan, Bubugao, announced its annual report for 2023, showing a drastic decline in revenue and consecutive years of losses. Bubugao cited severe market competition, liquidity crisis, increased expenses due to store closures, and declining performance as major reasons for its losses. The company even warned about the risk of bankruptcy due to unsuccessful restructuring.
Another supermarket, Yonghui Superstores, reported a decrease in revenue and continued losses in their 2023 annual report. Since 2018, Yonghui has been facing financial challenges, with consecutive years of losses due to various factors, including a decrease in fair value of investment properties.
In a similar situation, YH Middle Band, a joint venture between Yonghui and China Resources, has also faced multiple years of losses. China Resources announced its intention to sell its 45% stake in Hubei Yonghui YH Middle Band Supermarket Co., Ltd. due to continuous losses.
In summary, the challenges faced by Renrenle and other traditional supermarkets in China reflect a larger trend of operational difficulties in the retail industry, exacerbated by various economic and market factors.