Huarun Retail Back Tesco Burden Net Profit Fell Sharply

Although Tesco (Tesco) has established a joint venture with Huarun million to spend the retail industry in the cold winter, but in the context of the deep adjustment period of the retail industry, Huarun is still unable to avoid the continued decline of Tesco's performance.

In March 3rd, China Resources Enterprise Ltd, represented by Huarun's 10000 retail business, issued a profit warning, saying that the net profit of the company's retail business will drop by HK $2 billion, due to the impact of Tesco's Chinese business, which is heavily affected by the acquisition of 00291.HK.

Huarun family, which is constantly relying on mergers and acquisitions and wants to use big pie to continue to make big brands, has gone to such a situation. Where will it continue to integrate Tesco?

Although Huarun has successfully entered the retail market in Shanghai and Beijing with Tesco, it has also paid a heavy price for it.

In March 3rd, Huarun announced that it would have a combined deficit and a comprehensive loss in the fiscal year ending December 31, 2014.

Compared to the same period in 2013, the group's retail business expected a comprehensive loss of HK $2 billion in the fiscal year ending December 31, 2014.

For the reason that the net profit in 2014 dropped by HK $2 billion, Huarun announced that losses were caused by competition in the mainland's consumer policy and e-commerce industry, and the financial impact of the initial joint venture between Tesco and the group in May last year.

According to a reporter's earnings report, Huarun launched its own business including snowflake beer and Huarun Wanjia, while Huarun snow beer and Huarun beverage business performed well last year, with net profit of HK $1 billion 42 million and HK $151 million in the first three quarters.

In an interview with reporters, the responsible person of Huarun venture confirmed that the reason for the decline in net profit of Huarun's pioneering and retail business was indeed influenced by Huarun's integration of Tesco. At present, the company's integration of Tesco is in progress. At present, Hua Runwan's family is renaming the 135 stores of Tesco in China, which is called Huarun million, and has launched a brand new logo.

At the same time, the person told reporters that in November and December last year, Hua Runwan family Southern District and North China stores and Tesco stores completed the sales system switching respectively, the two stores will achieve goods, procurement,

Financial and other aspects of docking.

According to reporters, in August 2013, Huarun Wanjia and Tesco announced the establishment of a joint venture, Huachang holds 80% of the joint venture company, and Tesco owns 20% of the shares.

The joint venture will operate hypermarkets, supermarkets and other retail businesses in Greater China.

In May 29th last year, the joint venture agreement was approved by the Chinese government, and the two sides will form a diversified retail joint venture. Tesco's China business, including Tesco, will be wholly incorporated into the joint venture company.

In response, many people interviewed by reporters said frankly that because of Tesco's huge losses in China, although Huarun Wan was the master of acquisition expansion, it did not have the ability to integrate quickly after the acquisition of Tesco.

In its third quarter performance report in 2014, entrepreneurship showed that the loss of Tesco stores in British retailers affected by last year's acquisition affected Huarun's loss of 700 million yuan (6.2625, -0.0062, -0.10%) in retail business.

In fact, although the net profit of the first year of Huarun's acquisition of Tesco's Chinese business has dropped sharply, the pain of Huarun's integration of Tesco has actually started.

Recently, Huarun Wanjie CEO hung Jie has publicly said that the next three years is expected to achieve the original Tesco stores turn losses into profits.

However, he did not disclose the specific plan for deficit reduction in the past three years.

In this regard, many people interviewed by the industry say frankly, in fact, the root of Huarun's family is not buying Tesco but it is big but not linked. Although Huarun is big and big, it is all puffy. The company does not have a unified management platform. Although the acquisition of Tesco is expected to improve the management system, it needs more time to improve.

Public information shows that since 2004

Since the Suguo supermarket in Jiangsu, Huarun has been undertaking acquisitions. Until last year, it has successfully acquired nine major supermarket brands including Guangdong min run, Guangzhou Hongcheng, Tianjin home world, Jiangxi Honglong, Xi'an love home and so on.

On the whole, Huarun Wanjia continued to buy 10 major supermarket brands during the past 10 years, with an average annual acquisition of a brand, of which 8 brands have been renamed. Besides the Pacific Coffee and Suguo supermarket, the stores of other enterprises have been unified as Huarun logo.

"Although the logo has been unified, it has only been unified, but it has not been unified in essence, and Tesco's salary is undoubtedly an obvious problem."

Many people told reporters directly.

According to the reporter, the salary standard implemented by Tesco employees after the bid is still the salary standard of Tesco before, and it is not completely unified with the salary standard of Huarun's 10000 state-owned enterprises. The standard of Tesco is still used in reward, treatment and welfare, and Huarun has not changed.

According to Huarun's data, in 2014, the national self owned store sold 104 billion yuan and the total number of self owned stores reached 4127.

It is estimated that after the reorganization of Tesco, the sales volume of the newly established joint venture will be 10 billion pounds, or about 95 billion yuan.

The expected sales are lower than the previous sales forecast for 2014.

Huarun Wanjia CEO hung Jie once said that the losses in 2014 were still within reasonable limits.

By 2015, Huarun's target turnover was 150 billion yuan.