Chinese Snacks Retailer Three Squirrels Net Income Plunges 77% in H1 2022

China's biggest snack food producer Three Squirrels (Chinese: 三只松鼠) (300783:SZ) documented a revenue of CNY 4.11 billion in the first half of 2022, down 21.8 YoY. The sales volume also dropped over 15% to 41,900 tons.

Three Squirrels attributed the decline in revenues to the downward e-commerce traffic, shrinkage in SKU and also the logistics shock due to the epidemic, according to the announcement.

The snacking firm generated revenue of CNY 3.013 billion from the third-party e-commerce platform, accounting for 73.25% of its total revenue. However, the revenue from Tmall (down 25.56%) and JD.com (21.64%) all witnessed a decrease over the reporting period.

"We will continue to focus on e-commerce business and will promote the transformation to user operations in the future," said the company in the announcement.

During the reporting period, 56 Feeding Stores were reported closed with only one newly opened. As of the end of June, 2022, Three Squirrels had only 85 stores in the run, achieving operating revenue of CNY 339 million. "We are proactively closing stores that do not meet long-term development scheme and exploring new models based on the competitive landscape in the current snacks market," said Three Squirrels.

In addition, 37 franchise stores opened in the first half of 2022 and 182 were closed, leaving only 780  franchise stores at the end of the period with operating revenue of CNY 298 million.

Founded in 2012 and headquartered in Anhui Province, Three Squirrels once created a legend of selling nuts worth USD 14 million within 20 mins via online shopping platforms like Alibaba and JD.com.

Previously in April, Three Squirrels' first factory started in construction, with a focus on nuts products. The first two planned production lines entered into trial in July 2022 and were officially launched in August.

As of press time, it closed at CNY 19.81 apiece, with a market cap of CNY 8.1 billion.