Department Stores Or Usher In A New Round Of Mergers And Acquisitions

According to the financial report, the total sales volume in 2012 was 5 billion 419 million yuan, an increase of 12.7% over the same period last year, and its revenue rose slightly from 0.9% yuan to 1 billion 289 million 400 thousand yuan in 2011 from 1 billion 278 million 300 thousand yuan. However, its operating profit dropped by 18% yuan to 506 million 100 thousand yuan from 617 million 500 thousand yuan in 2011, and net profit dropped by 43.7% yuan to 187 million yuan from 331 million 900 thousand yuan in 2011, and the gross profit margin dropped from 18.1% in 2011 to 17%. The gross profit margin of department stores declined from 19.7% in 2011 to 18.6%.

This sales growth and profitability decline has been going on for several years. In 2010, the profit attributable to its company owners was 341 million yuan, 312 million 800 thousand yuan in 2011 and 156 million 300 thousand yuan in 2012, a drop of 50% in 2012 and a year-on-year increase.

For Spring Department stores, in the face of declining profits for a long time, the transfer of shares at this time will bring new vitality to the brand's future development. For Wangfujing, the acquisition will bring many potential benefits.

The acquisition made Wangfujing department store scale expand rapidly. From the scale of sales, spring department stores in 2012 revenue of 5 billion 400 million yuan, Wangfujing department store in 2012, the scale of revenue 18 billion 264 million yuan, the total size of the two sides reached about 23000000000 yuan. From the commercial operation area, in 2012, the Wangfujing was about 1 million 350 thousand square meters, and the spring department store was about 550 thousand square meters. After the acquisition, the total business area of the two sides was about 1 million 900 thousand square meters. All this has made Wangfujing department store scale expand rapidly.

From the scale of shops, as of January this year, Wangfujing department stores had 30 stores with different echelons, of which 6 were in the headquarters of Beijing, 15 in provincial capital cities, and 9 in two or three cities. By the end of 2012, there were 16 stores in spring, including 13 spring department stores and 3 Oteri J networks, all over Beijing and 8 provinces. Among them, there are 5 stores in Xiamen, 3 in Guiyang, 2 in Qingdao, 2 in Beijing, and 1 in Liupanshui, Zunyi, Xi'an and Taiyuan. After the completion of the acquisition, the number of stores held by Wangfujing department store reached 46, and became the department store group with the highest number of stores nationwide after Wanda and Parkson Department stores.

The acquisition also strengthened Wangfujing's control over South market. At present, 30 stores in Wangfujing department store are mainly located in northern and Midwestern cities, such as Changsha, Taiyuan, Chengdu, Xining, etc. In the 16 stores of spring department stores, Guizhou is the most powerful and Xiamen is also a key city. In the city of its layout, 7 cities are not yet located in Wangfujing. After the acquisition, the Wangfujing department store can strengthen its advantages in Beijing stronghold, and at the same time, it will complement each other in Guiyang, Xiamen, Qingdao, Shenyang and so on, so as to strengthen its control over South market.

More importantly, the acquisition made a new breakthrough in the transformation of Wangfujing department stores.

Due to the weakness of consumption and joint venture mode, the domestic department store industry has lost profits in recent years. Statistics of China's general merchandise business association show that in 2012, the sales volume of 81 large and medium-sized retail enterprises was 228 billion 270 million yuan, an increase of 8.92%, which was significantly lower than the average sales growth rate of 16.5% in 2006-2011 years. In recent years, large chain department stores have transformed into shopping centers and outlets, seeking new growth points. Since 2011, Wangfujing has begun to enter the shopping mall. This time, with the acquisition of spring department stores, it once again successfully entered the Orai format, will receive outlets and related management experience, to achieve "department store + shopping center + ole" multi format business.

Liu Bing, chairman of Wangfujing department store, said that China's economy has entered a stage of medium speed development, and the economy is facing deep adjustment and transformation. Retail enterprises are also facing many challenges. The joint efforts of enterprises to build a "carrier" of the retail industry will enable them to gain a firm foothold in the market competition through large-scale and meticulous development.

Department stores or usher in a new round of mergers and acquisitions

The acquisition of spring department stores in Wangfujing is of great significance to the whole department store industry. It will bring good demonstration effect to the merger and integration among other enterprises, or will open a new round of merger and reorganization of department stores.

The integration of large retail groups and the improvement of retail market concentration are important indicators to judge whether a country's retail market is mature. Compared with the department stores in developed countries such as Europe, America, Korea and Japan, the concentration of China's department stores is low and the gap is obvious. At present, the concentration of Japanese department stores is 57%, the United States is 59%, Korea is 90%, and China is only 10%.

From the scale of the single department retail group, the gap is also very large. Messi, the largest department store in the US, owns 840 Macy 's and Bloomingdale' s department stores in 45 states, and also operates Macys, Bloomingdales and 9 Bloomingdale 's discount stores. In 2011, its sales amounted to US $26 billion 400 million. Sears is the third largest department store in the United States and has more than 4000 stores in the United States and Canada.

By contrast, the scale of domestic department stores is obviously small, and some are still single shops. Some shops have only one digit number, but the sales amount is only a few hundred million yuan a year, and many of them are only 23 billion yuan. Even a number of leading department stores listed companies have only a few dozen stores nationwide, and the sales scale is only about ten billion yuan.

The scale of 10 billion yuan and tens of billions of dollars, dozens of shops and thousands or even thousands of shops is not an order of magnitude. Therefore, how to become bigger and stronger will be a topic that domestic chain stores will face in the coming decades. In this process, mergers and acquisitions are the most important means.

According to the analysis of Ping An Securities's 295 mergers and acquisitions cases of department stores in the United States in the past 30 years, M & A is the most effective way to promote industry consolidation and market concentration. At present, the Macy, s, Sears, JcPenny, Nordstrom, Dillard and Saks of the top ten department stores in the United States achieve the absolute growth of scale and share by merging regional department stores. For example, in 1994, the United States Department Store acquired Messi department store and gradually developed into today's scale. In 2005, Sears merged with Kmart, forming the third largest retail group in the United States.

At home, in recent years, Xidan shopping malls and new Yansha holdings have formed the first business group.

Huang Wenjie, executive director of Guangdong Circulation Industry Association, believes that the overall size and distribution area of China's department stores is relatively small. Accelerating the development and gradually forming a genuine national department store group is an inevitable trend of development. Wangfujing purchases spring department stores, which is a precursor to industry consolidation and increasing concentration. In the process of expansion, it is a way to cross the regional investment to open a store. The acquisition of equity is also a way, but the latter can be expanded more rapidly, and it can also avoid the localization difficulties caused by the regional differences across the region, so as to make the expansion more rapid and more stable. Only by increasing the concentration of the industry can we achieve the benefits of scale operation.

Ping An Securities pointed out that whether from the industry development life cycle or from the macro economic cycle, the domestic retail industry has entered a new round of M & a peak. Although the traditional retail business is not good at the operational level, most department stores are almost at their best in terms of asset quality and cash flow. Rammed property value, stable cash flow and the potential financing ability of cash flow securitization have highlighted the value of retail companies's mergers and acquisitions and provided a rare historical opportunity for industry consolidation. For a retail companies that already has a certain amount of weight, relying on its own limited growth of new stores, the future will rely more on acquisitions and mergers to achieve a qualitative leap and market concentration.