Helen’s Reached 854 Stores, with Own-Brand Products at 78% of 2021 Revenue

This is an English adaptation of a FoodBud historical article originally published on March 29, 2022.

On March 28, Helen’s released its 2021 financial results. Full-year revenue reached RMB 1.84 billion, up 124.4% year on year. Operating profit was RMB 300 million, up 100.2%, while net loss was RMB 230 million.

Own-brand mix kept rising

Helen’s continued to increase the share of revenue from its own products in 2021. Own-brand product revenue was RMB 1.43 billion, accounting for 78% of total revenue.

Gross profit from own-brand alcoholic beverages reached RMB 860 million. The gross margin also improved, rising from 78.4% in 2020 to 80.2% in 2021. By contrast, the gross margin for third-party alcoholic beverages declined.

Store network reached 854 locations

As of March 25, Helen’s covered 26 provinces and 152 cities in mainland China, with its store count expanding to 854. The network was concentrated mainly in lower-tier markets, including second-tier, third-tier and lower-tier cities. The company also had one store in Hong Kong, China.

In 2021, Helen’s opened 431 new stores. Same-store sales increased 32.7% year on year. Average daily sales per same store were RMB 11,800, up 8.2% year on year.

Stores opened in 2018 generated average daily sales of RMB 12,000 per store. Stores newly opened in 2021 generated average daily sales of RMB 7,300 per store.

Unit economics varied by city tier

For stores opened in 2021, average daily sales per store were:

• First-tier cities: RMB 11,900
• Second-tier cities: RMB 6,200
• Third-tier and lower-tier cities: RMB 8,000

For stores opened before 2021, average daily sales per store were:

• First-tier cities: RMB 10,200
• Second-tier cities: RMB 11,800
• Third-tier and lower-tier cities: RMB 12,200

In first-tier cities, Helen’s operating profit margin was essentially negligible, roughly break-even. This was one reason the company had previously considered whether franchising might be a better expansion model in those markets. Operating profit margin was 16.92% in second-tier cities and strongest in third-tier and lower-tier cities, at 23.25%.

Cost structure

As of the end of 2021, Helen’s had 1,374 direct employees and 6,405 outsourced employees. Full-year labor costs were RMB 580 million. Raw material and consumables costs were RMB 577 million, while depreciation of right-of-use assets was RMB 220 million.