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RERE.US Corporate Blog – May 2022
Below is a summary of the recent business development of the Company and the industry headlines in May 2022. Regarding the operational metrics, please refer to the Company’s quarterly earnings release and its filings with the U.S. SEC.
Operational update
In May, the AHS stores in Shanghai were still temporarily closed and the employees worked from home as the COVID control measures continued in Shanghai and Beijing. However, in June, store operations resumed quickly and employees returned to the office in Shanghai. In particular, GMV for C2B business revitalized swiftly, surpassing that of the first two weeks in June 2021 - this was mainly credited to the vibrant self-operated store business.
In May, the net increase in the number of AHS stores was 59 - all were profit- and risk-sharing franchise stores (including shop-in-shops), as a result of the Company’s strategy to prudently expand its store coverage. New store openings mainly occurred in Wuhan, Ningbo and Zhengzhou, indicating more consumer touchpoints and sources of supply in the second-tier cities. In terms of city-level operation stations, 3 net additions were incorporated in lower-tier cities in South China to increase local market coverage.
PJT Marketplace launched a sub-brand “Refurbished Products”, opening a virtual shelf of re-conditioned phones. Under the first guidance for refurbishing pre-owned electronic devices in Shenzhen (full text in Chinese), PJT improves the condition and/or performance of the phones in compliance by using original or certified screens and batteries. In addition, reconditioning details and after-sales rules are demonstrated, both providing convenience and assurance to merchant users when selecting ideal goods.
ATRenew planned the tactics for the annual 618 shopping festival while encouraging the green consumption style to trade in and recycle idle goods. The four-stage promotion synchronizes with that of – Paipai kicked off successfully when JD’s Grand Promotion started – during the first fours hour since 8 pm on May 31, recycling and trade-in orders placed through jumped 340% and 318% year-on-year, respectively. While the overall GMV of Paipai Marketplace increased by 192%, and GMV for smartphones, laptops and tablets, and luxury goods increased by 83%, 112% and 189% year-on-year, respectively.
Key highlights
Ms. Rui Zhu joins as an independent director to enhance corporate governance and board diversity
ATRenew welcomes Ms. Rui Zhu to its board of directors and the audit committee. Ms. Rui Zhu is a professor of marketing and the director of Social Innovation Center at Cheung Kong Graduate School of Business (“CKGSB”). With her extensive experience in “business for good”, Ms. Zhu brings unique perspectives to guard the sustainable development and financial stability of the Company. Ms. Zhu leverages her insights in consumer research and marketing to drive the new trends of greener lifestyles and to create incremental social value as ATRenew expects a synchronized evolvement with the circular economy in China. The appointment took effect on May 17 - currently, three out of the eight board members are independent directors.
Announces 1Q22 earnings with another quarterly non-GAAP operating profit
On May 24, ATRenew reported its 1Q22 financial results. Total net revenues increased by 45.7% year-on-year to RMB2.21 billion, beating Company’s guidance. Total GMV and the number of transactions increased by 51.6% and 31.3% year-on-year to RMB9.4 billion and 8.4 million, respectively. The Company continued its monetization momentum with a non-GAAP operating profit of RMB3.9 million. It also held RMB2.4 billion in cash and cash equivalents, restricted cash, short-term investments and funds receivable from third-party payment service providers as of March 31, 2022, representing a solid foundation for stable operation.
Refines frontline organizational structure to further implement the “city-level service integration” strategy
ATRenew refines its frontline structure into the East, the Southern, the Central and the North regions to optimize management performance, penetrate consumer reach nationwide, source first-hand supplies and empower merchant users while leading them to the next level of profitability. ATRenew also adjusts its C2B and B2B businesses on the HQ level to polish the core business capabilities. The structural adjustments were announced on June 1.
Industry news
Shenzhen provides qualified recyclers with a 5% subsidy for selling refurbished devices
On May 23, the Development and Reform Commission and the Commerce Bureau of Shenzhen Municipality led the circulation of Measures to Revitalize Consumption (translated headline, full text of the municipal document in Chinese). In this document, Shenzhen encourages electronic product consumption and clearly outlines a supportive guideline on the recycling and reuse of consumer electronics, that the government will provide qualified corporates with a subsidy equivalent to 5% of the sales of refurbished devices.