Suning.com’s Q3 Net Losses Reach $642 Million Amid Liquidity Crisis

On October 29, Suning.com released its performance report for the first three quarters of 2021, showing that the company’s operating income in the third quarter was 21.968 billion yuan ($3.4 billion), down 64.82% year-on-year. The net loss attributable to shareholders was 4.116 billion yuan, down 676.73% year-on-year.

Since last year, Suning.com has been deeply plagued by a liquidity crisis. The retail platform said in its financial report that the third quarter of 2021 is the most difficult period in its 30-year development. Since June, the firm’s liquidity has been seriously insufficient, which has made the inventory scale of the company’s core electrical appliance business reach its lowest level in history, and the sales scale has dropped sharply, resulting in a large loss in business performance.

In order to solve the crisis, Suning.com sought help from various sources of capital. At the beginning of July, Suning.com transferred 16.96% of the company’s shares to the second phase of Jiangsu Xinxin Retail Innovation Fund. Huang Mingduan replaced Zhang Jindong to become the Chairman of Suning.com in the same month. Suning.com has now completed the adjustment of internal management.

In August, Suning.com set up a joint credit committee, and six banks added 10 billion credits to Suning.com. Since late August, the company’s liquidity has gradually recovered, and the inventory scale has slowly increased. In September, the company’s gross merchandise volume (GMV) increased by 24% month-on-month, while the GMV of core electrical appliances increased by 30% month-on-month.

Within the company, Suning.com actively promotes cost reduction, efficiency improvement and income increases, such as speeding up the adjustment of loss-making stores.

In the first three quarters, Suning’s sales expenses, management expenses and R&D expenses decreased by 19.16%, 3.67% and 12.97%, respectively, but its financial expenses increased by 16.58%. Suning explained in its financial report that the optimization time of personnel and the payment of compensation are conducive to the continuous decline of expenses.

Suning had predicted in its Q2 report that its personnel expenses would decrease by 37% year-on-year. According to industry analysts, it is obvious that Suning.com has started large-scale layoffs and salary reductions in the third quarter. According to the decline in personnel costs, Suning.com laid off about 30% of its employees in the third quarter.

In terms of business, during the reporting period, Suning.com’s retail cloud business continued to develop rapidly. It has opened 78 fast repair shops and expanded 547 experience stores, and opened 2,085 new franchise stores in the first three quarters. In the third quarter, the GMV of retail cloud goods increased by 33.38% month-on-month.

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Suning.com stressed that the company is still in a difficult stage, but with the active support of local governments and investors from various industries, it is expected that the operating losses in the fourth quarter will be greatly narrowed compared with the third quarter, and the company will strive to achieve positive earnings before interest, taxes, depreciation and amortization before the end of the year.