Recently, I saw that Uni-President Supermarket (7-11) and FamilyMart nearby my company were promoting Chinese New Year lucky bags. Originally, it was reasonable to put things on sale when they were about to expire, but it was quite surprising that this happened during the annual lucky bag.
Speaking of grabbing lucky bags, in my impression, it is a tactic used by department stores to attract people to spend money during the Spring Festival every year. It should be traced back to Japan. It is said that in the Edo period, merchants collected rags from clothes and sold them in bags. It was sold at that time and was called “Huibishou Bag”. Later, it was extended to January 1st every year. Department stores put many items into paper bags or cloth bags for sale, named “Fukubukuro”, which was originally meant to carry luck and happiness. Since the buyer does not know what is inside the lucky bag, there is a sense of anticipation of opening the gift.
Later in Taiwan, Japanese department stores also launched annual lucky bags, and they all boasted that the lucky bags contained millions of cars, overseas air tickets, or Gogoro electric motorcycles. However, this may have become a situation where they competed with each other for the grand prize. In recent years, comparisons have I haven’t seen any department store operators aggressively publicizing the rush to buy lucky bags. They just quietly announce on their official website that they are selling limited-time and limited-edition lucky bags. Generally speaking, a lucky bag costs NT$1,000, but the total value of the gifts in the lucky bags often exceeds NT$1,000, so there are still quite a few. People rush to buy.
The reason behind the slow sales of lucky bags
Since lucky bags are so meaningful, and there is a small amount of luck in making money after buying them, why are the lucky bags at the two major supermarkets so unsaleable this year, and even have to be auctioned off or buy one, get one free?
From an economic point of view, I think supply is greater than demand! Take FamilyMart as an example, although a lucky bag only costs 249 yuan, the contents include: snack and drink combinations worth 200 yuan (group A~J, 10 combinations), FamiCollection cold drink redemption coupons (3) worth 60 to 80 yuan Various combinations, random), exclusive gifts (exquisite gifts or product exchange coupons) and lottery tickets, but I always feel that there is nothing surprising.
7-Eleven has launched many co-branded lucky bags, with prices ranging from 499 to 1,699 yuan. However, the feeling of limited quantity will make consumers want to rush to buy them. However, this year, many of them will fall into the fate of promotions.
Looking at the operating model from the financial reports of Uni-President Supermarket (2912) and FamilyMart (5903)
Why are the two major supermarkets competing for the annual lucky bag business opportunity? And why are there so many rushes for promotions right after the Lantern Festival? I think this has something to do with the business model of convenience stores. Let’s start with the financial report. Please refer to the attached Figures 1 and 2.
Figure 1. Uni-President Super (2912) quarterly profit and loss statement
Source: XQ
Figure 2. FamilyMart (5903) quarterly profit and loss statement
Source: XQ
Figures 1 and 2 are the condensed income statements of Uni-President Super (2912) and FamilyMart (5903) respectively for the latest quarter. We can find that the gross profit margins of both supermarket giants are around 34% to 36%, which seems pretty good, but the after-tax net profit margin is only 2 to 3%. This single-digit net profit margin is only higher than the “gross three to three” 4. The electronics foundry industry is just a little better.Why do the two supermarket giants have an average gross profit margin of 30%, but an average after-tax net profit margin of only 3%?
The key is cost. We know that the gross profit margin is the money earned from selling goods, but it also needs to deduct the expenses incurred in operations, such as water and electricity bills, store rent, personnel costs, etc. The expense rate is nearly 30%. After 30% discount, the money earned There is not much left.
And this situation may get worse, because electricity prices will increase after April, and personnel salaries will also increase year by year. However, the goods sold may not fully reflect the increase in costs. It can be expected that EPS will return to the past level. , it’s actually a bit difficult.
Sell one and earn one!Supermarket duo aggressively launches coffee drink promotions
So how should the supermarket duo respond? There is actually no way to solve this problem by expanding the number of stores.The solution is to sell more products with high gross profit and fast turnover. What is it? The answer is coffee.
According to TVBS news reports,Supermarket coffee almost earns a cup by selling one cup. When converted into numbers, the gross profit margin is 100%. If the same expense rate of 30% is used to estimate, the net profit of a cup of coffee may be as high as 70%.so supermarkets have launched a discount service for buying a large number of cups and sending them to you. It looks like a promotion, but in fact the purpose behind it is to increase the promotion of high-margin products. Therefore, the 50% off second item of drinks that must be launched every summer is actually the same. reason.
At this point, you may want to know, can the supermarket duo still invest? My answer is that there is nothing wrong with it, as long as you confirm the investment method first.
Based on our description above,The supermarket duo is an industry with low profits, low growth, but high cash inflow, so it is good to use it as a stock deposit, especially since the domestic supermarket market has almost been determined to be an oligopoly market, and a third company is needed. It’s not easy to seize the marketand in fact the same is true for the dividend distribution from the two companies. Please refer to Appendix 1 and 2.
Table 1. Dividend distribution of Uni-President Chao (2912) in the past three years
Table 2. FamilyMart (5903) dividend distribution in the past three years
Dividend payout rate is high and stable
Attached Tables 1 and 2 are the cash dividends announced by Uni-President Supermarket and FamilyMart respectively in the past three years. We found thatThe amount of over-allocation of dividends from Uni-President is very stable. It has distributed a cash dividend of 9 yuan for three consecutive years. The dividend payment rate has exceeded 100% for two years. Although FamilyMart’s cash dividends are high and low, the dividend payment rate is also close to 80%. It’s a high standard.The dividend yields of both are around 3%, but the EPS of Uni-President (2912) is high, and the corresponding stock price is also high.investment friends can choose according to their personal circumstances.
As for the lucky bags, from the perspective of supermarket turnover rate, it is a good thing to be able to sell them cheaply. I wish you all good luck with your investment and lots of money!
About the author_Chen Weitai
He has been engaged in the financial and securities industry for more than 17 years. He is a qualified securities analyst. He is currently the Chief Investment Officer of Zhongying Wealth, CMoney Financial Consultant, and Chief Financial Writer. He is also a lecturer at the Securities and Futures Foundation and Zhongzheng Community University. Net guest author.
The investment mentality focuses first on the long-short cycle of the overall economy, and combines fundamental stock selection with technical operations; it is believed that “selecting opportunities to enter the market” is the way to make profits in stock market investment. Currently there are 2 books: “Believe me, you can make endless money” and “Taiwan Stocks Biographical History”.
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2024-03-04 02:56:32
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