Walmart, the home furnishing giant, saw its profit increase by more than 60% in one year!

In the past two years, affected by the global epidemic, the cross-border e-commerce industry has developed rapidly. Many companies have seized the development opportunities in overseas markets under this cross-border tailwind, and cross-border companies of all sizes have sprung up in the public eye.

Amazon, Walmart, eBay, Wish, Shopify and other platforms have welcomed a large number of new customers. Correspondingly, the product categories of these e-commerce platforms have also been rapidly expanded. Chinese products such as masks, toys, clothes, tools and home furniture are gradually occupying the global market.

Among these many overseas brands, there is a company that specializes in Walmart home furnishings, which has demonstrated gratifying performance during the epidemic.

With a net profit of 880 million yuan a year , Huisen Home Furnishings is a big seller at Walmart

On March 26, Huisen Home Furnishing announced its audited annual results ending December 31, 2021.

During the review period, Huisen Home Furnishing's revenue was RMB 5.139 billion, an increase of approximately 31.9% over the same period in 2020. The profit for the year was approximately RMB 888 million, an increase of approximately 64.2% over the same period in 2020. As the increase in purchase orders drove sales growth, gross profit increased by approximately RMB 355 million. The company's basic and diluted earnings per share were RMB 0.29, compared with RMB 0.24 in 2020.

For Huisen Home Furnishing, its revenue data for fiscal year 2021 can be said to be quite gratifying, with revenue exceeding the 5 billion yuan mark for the first time. Against the backdrop of rising raw material prices and shipping costs in 2021, it is indeed not easy to achieve such results.

Huisen Home Furnishing is located in Ganzhou City, Jiangxi Province, and is mainly focused on the production and sale of panel furniture in an original design and manufacturing manner. Huisen provides customers with comprehensive manufacturing solutions, and is able to design, develop and manufacture functional and economical panel furniture, soft furniture and outdoor /sports furniture.

Among them, panel furniture is Huisen's main product, including TV cabinets, shelves, bookshelves, desks and coffee tables. Based on the export volume in 2019, Huisen is the largest exporter of panel furniture in China. During the review period, its panel furniture revenue increased by 33.9%. Due to the increase in gross profit of some new products and the increase in the average selling price of products, which partially offset the impact of exchange rates, Huisen Home Furnishing's gross profit margin also increased.

Huisen Group's soft furniture, the main product is sofas. During the review period, its soft furniture revenue increased by 19.4%. The gross profit margin in fiscal year 2020 and the review period was relatively stable, and some products with higher gross profit margins had higher sales.

As for outdoor /sports furniture, it includes outdoor leisure furniture, sports and leisure equipment, and sports and leisure equipment mainly includes table tennis tables and billiard tables. During the review period, sports furniture revenue was approximately RMB 154 million, a decrease of approximately 3.1% from fiscal year 2020, and gross profit margin increased from 28.0% in fiscal year 2020 to 29.3% during the review period, mainly due to the increase in the average selling price of some products and the discontinuation of production and sales of outdoor leisure furniture with lower gross profit margins.

Walmart is one of the main customers of Huisen Group's furniture products. The two companies have established a long-term business partnership since 2011. It can be said that Huisen is Walmart's largest direct supplier of panel furniture in China. From fiscal year 2017 to the first half of fiscal year 2020, Huisen Home Furnishing's revenue share on the Walmart platform was 19.8%, 22.0%, 23.9% and 24.1% respectively, and the share is steadily increasing.

Huisen Home Furnishing Business Review and Future Outlook

In fiscal year 2021, Huisen Home's main business is the production and sales of panel furniture, upholstered furniture, sports furniture and custom furniture, and it no longer produces outdoor furniture. The main reasons are as follows: ① Due to the impact of the epidemic, outdoor activities have been greatly reduced, and the order volume of outdoor leisure equipment has also decreased; ② Compared with other furniture products, outdoor leisure equipment production facilities occupy a larger area. In order to improve the efficiency of production facilities, Huisen Home adjusted its product structure and stopped the production of outdoor leisure equipment to make room for the production of panel furniture and upholstered furniture.

In addition, Huisen Home Furnishing continues to strengthen its design capabilities and launch more original design and manufacturing (ODM) products. In fiscal 2021, ODM product sales accounted for more than 82% of Huisen's total revenue, and the proportion of original design and manufacturing product sales has been on an upward trend for four consecutive years.

As the epidemic hit the world economy, Huisen Home Furnishing continued to adhere to its operating strategy for fiscal year 2020 in fiscal year 2021, focusing on maintaining relationships with customers such as overseas retail chains and furniture traders, and prudently expanding its business with small and medium-sized enterprises to maintain a high-quality customer base.

When talking about the outlook for future development, Huisen Home Furnishing said that stable and long-term business relationships are the foundation of its success. In the future, the company will strategically give priority to orders from major customers, especially maintaining long-term cooperative relationships with several major customers. In addition, Huisen Home Furnishing will continue to attach importance to improving its independent research and development capabilities and continuously expand the proportion of ODM sales to increase customer dependence and the group's competitiveness.

Smart home business is also the future development direction of Huisen Home Furnishing. In order to expand the smart furniture business, Huisen Home Furnishing further strengthened its cooperation with Jiangxi University of Science and Technology in the research and development of smart furniture on June 16, 2021, including but not limited to professional and technical personnel training and the establishment of a smart furniture research institute, focusing on the research and development of smart furniture and prefabricated decoration.

Current status of the global furniture market in 2021

Cross-border export trade is actually not easy to do in 2021. Affected by the epidemic, a series of difficulties such as rising labor costs, global container shortages, supply chain disruptions, and new virus strains have emerged one after another, and the home furnishing industry has also suffered certain tests.

The economic development of countries around the world has been affected to a certain extent by the epidemic. However, my country has taken strong prevention and control measures in the face of the COVID-19 pandemic, accelerating the resumption of production in all walks of life, making Chinese-made products more popular around the world. In addition, the loose monetary policies in Europe and the United States, especially the booming real estate market in the United States, have brought about explosive growth in the home furnishing industry.

Taking advantage of this opportunity, China's furniture exporters have attracted orders from all over the world and ushered in rapid development. According to statistics from China's General Administration of Customs, the export value of furniture products and parts manufactured in China in fiscal year 2021 was approximately RMB 477.19 billion, an increase of approximately 18.2% year-on-year.

Huisen Home Furnishing has also ushered in rapid development in this development opportunity. The US market is Huisen Home Furnishing's main source of sales revenue. In 2021, Huisen Home Furnishing's sales revenue in the United States increased by 32.3% compared with fiscal year 2020, and the sales ratio of total revenue also increased from 67.1% in fiscal year 2020 to 67.3% in fiscal year 2021. In addition, as Huisen Home Furnishing actively expands its overseas markets, its sales revenue in countries such as Malaysia, Vietnam and Canada has also achieved faster growth compared with the same period last year.

With the development of economic levels and the increase of per capita disposable income in various countries, the willingness to consume home products will continue to grow in the future. Especially in some developed countries and regions, due to the high degree of urbanization and strong consumer power of residents, the demand for home furnishings will be relatively stable, and the future development prospects of home furnishing products are bright.

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