On December 17th, Alibaba announced on the Hong Kong Stock Exchange that the company and another minority shareholder have agreed to sell 100% equity of Intime to a consortium of buyers consisting of members of the Yagor Group and Intime management team.
Yintai is one of the department stores under Alibaba. Alibaba currently holds approximately 99% of the equity of Intime.
The total proceeds from Alibaba's sale of Intime amounted to approximately RMB 7.4 billion (USD 1 billion). Alibaba expects to record a loss of approximately RMB 9.3 billion (USD 1.3 billion) due to the sale of Intime.
According to the announcement, the completion of the sale of Intime must pass the review of concentration of Chinese operators and other customary delivery conditions. Alibaba Chairman Joseph Tsai stated during the earnings conference call that traditional physical retail business is not Alibaba's core business, and it is reasonable to withdraw from such business. Since the beginning of this year, there have been rumors in the market that Alibaba is seeking to sell assets such as its parent company, Sun Yat sen Retail, Intime, and Hema, but most of them have not been confirmed.
But it can be confirmed that with the changing consumer trends and the arrival of the AI era, Alibaba will continue to focus on its main business and gradually withdraw from non core assets. The era of burning money to expand the market is over. The chaos in the new retail industry will continue to escalate.
Yagor Investment Considers' Improving Fashion Ecosystem ', Alibaba Considers Selling for a Long Time
As early as the beginning of this year, reporters from Beike Finance of the New Beijing News learned from multiple sources that Alibaba was already considering selling its department store and shopping center operator Intime Commerce, and had contacted multiple companies with potential acquisition intentions.
The sale is now close to being finalized. At 10:24 on December 17th, Yagor hit the daily limit up. Yagor Group was founded in 1979 and is headquartered in Ningbo, Zhejiang Province. It is a leading enterprise in the national textile and clothing industry.
Yagor has five major industries: fashion, real estate, investment, international trade, and tourism. According to official data from Yagor, it will achieve sales revenue of RMB 191.6 billion, total profit of RMB 4.2 billion, and paid in tax revenue of RMB 4.4 billion in 2023. Ranked 36th among the top 500 private enterprises in China. As of the end of 2023, Yagor Group has total assets of 101.4 billion yuan and net assets of 42.8 billion yuan.
The relevant person in charge of Yagor Group stated that Yagor Group (Ningbo) Co., Ltd. has always focused on investment and development in the fashion industry, and its listed company "Yagor Fashion Co., Ltd." is committed to the operation of the fashion industry. The joint investment of the group and the management of Intime aims to "strengthen and supplement the chain" and improve the fashion ecosystem. After the investment is completed, Yagor Group will provide sufficient operational space for the management of Intime and support its further high-quality development.
Previously, Alibaba had invested HKD 5.37 billion in Intime in 2014, becoming the second largest shareholder. In 2017, Alibaba partnered with Intime Department Store founder Shen Guojun's wholly-owned company to privatize Intime Commercial, with a transaction amount of HKD 19.8 billion. After privatization, Alibaba became the controlling shareholder of Intime Commercial.
At that time, with the rapid development of Internet technology and the huge change in consumer spending habits, the traditional retail industry was facing unprecedented challenges. The rise of e-commerce has diverted a large number of offline customers, and consumers' demands for shopping experience are also increasing. The pure offline retail model is no longer able to meet market demand. In this context, Alibaba actively lays out offline physical commerce and seeks a new retail model that integrates online and offline.
After entering the Alibaba system, Intime embarked on a digital transformation, establishing the first digital paid membership system in the domestic department store industry and expanding its online and offline service scenarios. As of now, Intime Commercial Group has over 60 department stores and has exceeded 40 million digital members.
Alibaba gradually withdraws from non core assets, new retail growth slows down, chaos escalates
With the changing consumer trends and the arrival of the AI era, Alibaba has once again rebuilt its strategic focus, gradually withdrawing from non core assets and focusing on its main business. At the same time, Alibaba achieves asset value and returns value to shareholders by exiting non core assets.
Last September, Alibaba established two strategic priorities of "user first, AI driven" and reorganized its business strategy around these two priorities. On November 21st, Alibaba CEO Wu Yongming released a staff email announcing the establishment of the Alibaba E-commerce Business Group, appointing Jiang Fan to be in charge and report to Wu Yongming. The new e-commerce business group will comprehensively integrate Taobao Tmall Group, International Digital Business Group, as well as e-commerce businesses such as 1688 and Xianyu, forming a business cluster covering the entire industry chain at home and abroad.
Alibaba stated that the establishment of a new e-commerce business group this time is a new thinking and action made by Wu Yongming, as the CEO of Alibaba Group, towards how to make good use of domestic and international resources to form a joint development force in the e-commerce field in the future, reflecting Alibaba's determination to invest in its core e-commerce business.
With this round of adjustment, Alibaba's development strategy focusing on core businesses has become clearer. Wu Yongming stated that e-commerce and AI technology are the most critical development directions for the group.
Since the beginning of this year, there have been rumors in the market that Alibaba is seeking to sell assets such as its parent company, Sun Yat sen Retail, Intime, and Hema, but most of them have not been confirmed. However, after multiple business adjustments, Alibaba's new retail landscape continues to face challenges.
Alibaba Chairman Joseph Tsai responded to the sale of non core assets during the earnings conference call on February 7, 2024. He stated that in the nine months since fiscal year 2024, Alibaba has withdrawn $1.7 billion in non core assets. Traditional physical retail business is not Alibaba's core business, and it is reasonable to withdraw from such business.
In recent years, with the cooling business environment and related factors such as policies, coupled with slower growth, reduced financing frequency and amount, many new retail enterprises are making a final attempt to go public. The overall cold situation of the new retail industry is already in front of us.
The "price war" is no longer the core competitiveness of new retail. Traffic, customer acquisition, and fulfillment are still the "three mountains" facing new retail enterprises. Each company also faces common industry problems such as traffic anxiety, giant competition, and high supply chain costs.
With the recovery of the offline economy, only by ensuring the quality of goods and services while improving supply chain efficiency and continuously reducing costs can we truly stand out in competition and achieve sustainable development. According to research information from the China Academy of Sciences, in the next five years, online shopping will continue to grow rapidly by 5% -30% in various segments of local life through the integration of online and offline, with a total scale expected to exceed 38 trillion yuan.
The era of burning money to expand the market is clearly over. In the foreseeable future, new retail will continue to present a situation of multiple modes and roles coexisting, and the chaos will continue to escalate.