Caixin News Agency, December 17th (Reporter Chen Kang) The news of Alibaba selling its shares in Intime Department Store to Yagor, which was widely circulated yesterday, was settled at noon today.
Today, Alibaba announced that the company and another minority shareholder have agreed to sell 100% equity of Intime Department Store to a consortium of buyers composed of members of the Yagor Group and Intime management team. Alibaba's total proceeds from the sale of Intime are approximately 7.4 billion yuan, and it is expected to record a loss of approximately 9.3 billion yuan due to the sale of Intime.
Regarding the acquisition of equity in Intime, a representative from Yagor Group responded to a reporter from Caixin News Agency: "The joint investment of the group and Intime management in Intime aims to 'strengthen the chain and supplement the chain', and improve the fashion ecosystem. After the investment is completed, Yagor Group will provide Intime management with sufficient operational space to support further high-quality development of Intime
On December 16th, it was rumored that Yagor would acquire the shares of Intime Department Store held by Alibaba. Caixin reporters sought confirmation from Intime, but did not receive a positive response. In fact, this is not the first time the news has been reported. In early February this year, there were rumors in the market that Alibaba planned to sell its department store and shopping center operator Intime Commercial, but neither Alibaba nor Intime responded to this.
Why does Yagor value it
Yagor Group, headquartered in Ningbo, was founded in 1979 and is a leading enterprise in the national textile and clothing industry. The company started in the clothing industry and gradually expanded into real estate and investment, forming the "three pillars" of Yagor's main business.
Yagor's investment business income is an important source of profit for the company. In 2022, Yagor's long-term equity investments and other equity instrument investments totaled 60 companies, including Bank of Ningbo (002142. SZ), Jintian Co., Ltd. (601609. SH), Shangmei Co., Ltd. (02145. HK), Chuangye Huikang (300451. SZ), Boqian New Materials (605376. SH), Zhongji United (605305. SH), Midea Real Estate (03990. HK) and other ten listed companies, covering multiple fields such as finance, cosmetics, materials, medical and health application software.
In the past two years, Yagor has strengthened its investment in physical commerce. At the end of 2023, Yagor acquired a core property of Meibang Apparel located in Chengdu for a transaction price of 680 million yuan. This is the fourth store that Yagor has taken over from Meibang and has donated a total of 1.3 billion yuan to Meibang. This year, the HAI550 complex project on Huaihai Middle Road in Shanghai, jointly built by the two parties, officially opened.
Yagor Group Co., Ltd. also changed its company name to "Yagor Fashion Co., Ltd." on December 6 last year, with the intention of further focusing on its main fashion business.
This year, Yagor continues to aggressively enter physical commerce, opening 12 new fashion experience centers in the first three quarters, including Changchun, Guiyang, Taiyuan, Wenzhou, Shanghai, Wuhan and other central cities. These large stores are not only the physical consumption flagship of Yagor, but also an attempt to become local fashion landmarks, such as the Yagor Fashion Experience Hall on Nanjing Road in Shanghai, which reopened in September and invested millions of yuan to build a naked eye 3D giant screen.
At the investor event exchange meeting in November, the company stated that the Fashion Experience Hall is the base for exploring the deep integration of online and offline, enhancing the consumer experience of members, and playing a positive role in enhancing the company's brand power and popularity in various central cities, driving and radiating sales in other channels and regions.
Yintai Business Group has more than 60 department stores and a number of projects to be opened. It has achieved online omni channel sales of Meow Street APP, "Yintai Department Store" WeChat applet, "Yintai Department Store" Alipay applet, and digital members have exceeded 40 million. These resources are certainly what Yagor values in promoting the integration of online and offline consumption.
Why did Alibaba sell at a loss
In 1998, Shen Guojun founded Intime Department Store (Wulin Branch) in Hangzhou, which covers various formats such as department stores and shopping centers; In 2007, Intime Department Store was listed in Hong Kong with the stock code 01833.HK; In 2013, Intime Department Store (Group) Co., Ltd. was officially renamed Intime Commercial (Group) Co., Ltd., and the following year began a decade long integration with Alibaba.
In March 2014, Alibaba Group and Intime Commercial Group jointly announced that Alibaba Group would make a strategic investment of HKD 5.37 billion in Intime Commercial. The two parties would construct a future commercial infrastructure system that connects online and offline, and also establish a joint venture company.
After the transaction is completed, Alibaba Group will hold 9.9% of the shares of Intime Commercial and convertible bonds totaling approximately HKD 3.71 billion. The two parties agree that within the next three years, subject to relevant laws and regulations, Alibaba Group may convert the convertible bonds into ordinary shares of Intime Commercial, so that Alibaba Group's ultimate shareholding in Intime Commercial will not be less than 25%.
In 2015, Zhang Yong, the newly appointed CEO of Alibaba, was appointed as the Chairman of the Board of Directors of Intime Commercial, and also served as the Chairman of the Intime Commercial Strategic Development Committee. He stated that "Intime Commercial's positioning is to undertake the mission of transforming and upgrading the platform for online and offline retail department stores. In July of that year, Alibaba held a 28% stake in Yintai Commercial, becoming the single largest shareholder.
Under the flood of the Internet at that time, Yintai, as a traditional department store retail industry, chose to transform in a timely manner. After joining hands with Ali, Chen Xiaodong, CEO of Yintai Commercial Group, said, "Physical retail and the Internet must be integrated and fully integrated, which is certain. Ali has big data and more than ten years of experience on the wire, and we will certainly develop faster after cooperation."
In 2016, Intime Commercial Group announced that it had accepted Alibaba's share swap notice. Alibaba, through its indirectly wholly-owned subsidiary, The Libra Capital Greater China Fund Limited, held shares in Intime Commercial, along with the then Vice Chairman of Alibaba, Joseph Tsai, and the Alibaba Group. The total shareholding ratio reached 27.90%, making it the largest shareholder of Intime Commercial. The shareholding ratio of the Shen Guojun family, the founder and former chairman of Intime, has decreased from 21.87% to 17.56%.
In 2016, Jack Ma officially proposed the "New Retail" strategy, which is a data-driven pan retail format centered on consumer experience. As the cooperation deepens, both Alibaba and Intime have increasing confidence in the new direction of change. One year later, Alibaba officially acquired Intime Commercial with a capital of HKD 19.8 billion and a premium of over 40%.
In January 2017, Intime Commercial announced that Alibaba Investment Limited, a wholly-owned subsidiary of Alibaba, and Shen Guojun, the founder of Intime Commercial (Group) Co., Ltd., had privatized Intime for a transaction amount of HKD 19.8 billion (approximately RMB 17.7 billion).
This year, Yintai's membership system was connected with the big data of Alibaba Tmall and Alipay, and all 50 offline stores were digitized. Within a few years, multiple chess pieces such as Meow Street, Meow Ke, Meow Huo, Xiyou, Xixuan, Jihuo, and Junior have appeared on Yintai's chessboard.
The binding between Alibaba and Intime is closely related to the promotion of Alibaba's new retail strategy. The vision of both parties is to truly connect online and offline channels through digitization, enhance offline shopping experience, and transform physical retail. However, after 2018, the trend of "new retail" gradually receded, and the rapid rise of "live streaming e-commerce" put an end to everyone's beautiful imagination. Subsequently, Zhang Yong, an important promoter of Alibaba's "new retail" strategy, left, and new investments and trade-offs emerged.
In the eyes of Intime, the "new retail" strategy still has practical value. Chen Xiaodong said in a media interview at the end of last year that only by being infinitely close to consumers can one have the opportunity to occupy the market. To achieve innovative changes in retail centered on consumers, digitalization is indispensable. "Intime Department Store is digitizing the most valuable parts of physical retail, online and offline retail, and so on