Shanghai Jahwa (600315. SH) ushered in its worst performance in the 24 years since its listing. In 2024, the company expects a net profit loss attributable to the parent company of 710 million to 880 million yuan, a year-on-year plunge of 258%, the worst record since its listing in 2001. What's even more shocking is that the single-quarter loss in the fourth quarter was as high as 873 million to 1.043 billion yuan, which is equivalent to all the profits in the first three quarters being completely swallowed up. This 126-year-old company has now lost ground in the fierce market competition, and its position in the industry is in jeopardy.

Performance plummeted: huge losses + goodwill exploded, Shanghai Jahwa encountered an existential crisis

In the first three quarters of 2024, Shanghai Jahwa's revenue was only 4.477 billion yuan, a year-on-year decrease of 12.07%. The company still maintained profitability in the first three quarters, but after entering the fourth quarter, its performance took a sharp turn for the worse, and the single-quarter loss even exceeded the upper limit of the annual loss expectation, reflecting the serious loss of control at the company's operating level.

What's more concerning is that in 2024, Shanghai Jahwa will make a goodwill impairment of up to 550 million to 680 million yuan, mainly from the British baby brand Tommee Tippee acquired in 2017. The acquisition was once highly anticipated, but now it has become a heavy burden for Shanghai Jahwa. According to the financial report, the brand's net profit plummeted from a peak of 210 million yuan in 2019 to 22 million yuan in the first half of 2024.

The explosion of goodwill not only means the evaporation of hundreds of millions of yuan in assets, but also makes the market seriously question Shanghai Jahwa's strategic planning and risk control capabilities. It is worth noting that although the impairment is as high as nearly 700 million yuan, there is still a goodwill balance of more than 1 billion yuan on the books of Shanghai Jahwa, and whether it will continue to be impaired in the future is still a huge hidden danger.

The market share has been cut in half, and the status of the "first brother" of domestic beauty products is not guaranteed

Once a domestic beauty faucet, it has now been replaced by Proya (603605. SH), Bloomage Biotech (688363. SH) and other cutting-edge brands are far away. As of March 5, 2025, the market value of Shanghai Jahwa is only 12.6 billion yuan, while Proya has reached 33.2 billion yuan, and Bloomage Biotech is 23.1 billion yuan, both exceeding Shanghai Jahwa by several times.

From the perspective of market share, the decline of Shanghai Jahwa is more obvious. In 2015, the company's share of the domestic beauty market was 3.2%, but by 2024, this figure has halved to 1.4%, gradually falling from the first echelon of the industry to the marginal zone. During the same period, rising stars such as Proya, Bethany, and Bloomage Biotech rose rapidly and firmly occupied the mainstream of the market with their precise brand positioning, popular products and strong marketing. However, brands such as Herborist and Yuze under Shanghai Jahwa have lost their appeal among young consumers, and sales have continued to decline.

Among them, the Yuze brand, which is mainly promoted by Shanghai Jahwa, will try to enter the sensitive skin anti-aging track in 2024 and launch the 17-type cyclopeptide sensitive skin anti-aging series, but the market response is mediocre, and the sales volume of a single product in the Tmall flagship store is only 1000+. What is more alarming is that in the third quarter of 2024, the revenue of the beauty division will only be 95.0667 million yuan, becoming the only business segment that has not exceeded 100 million yuan, which shows that Shanghai Jahwa's competitiveness in the high-profit skin care market has been seriously insufficient.

Channel failures: radical to self-operation, the tide of returns caused a revenue collapse

In the face of changes in the era of e-commerce, Shanghai Jahwa's channel adjustment is extremely chaotic and has missed the key development window. In 2024, the company aggressively promoted the "dealer to self-operated" model, hoping to improve profit margins by controlling channels, but it triggered a serious wave of returns, which directly led to a sharp decline in revenue. According to the data, domestic business revenue in Q3 2024 plummeted by 26.7% year-on-year, while the company's overall quarterly return rate soared to 23%, much higher than the industry average. Instead of bringing growth, this move has thrown the sales side into chaos, resulting in inventory backlogs and channel tensions.

At the same time, the company's layout in emerging channels such as Douyin and Xiaohongshu is seriously lagging behind. Taking Bloomage Biotech as an example, its self-broadcast business on Douyin channel increased by 70%, and Han Shu achieved an annual GMV increase of 300% through short drama marketing. In contrast, Shanghai Jahwa's e-commerce sales in Q3 2024 will only grow by 1/3 of the industry average, and online sales will account for only 32%, far lower than the industry average (47%). In the era of new media marketing, Shanghai Jahwa still relies on traditional channels, which has greatly reduced its brand exposure and user reach.

Frequent management turmoil, "four changes of leadership in four years" triggered a strategic swing

After Ge Wenyao's departure in 2013, Shanghai Jahwa entered an 11-year period of management turmoil. From 2013 to 2024, the company has changed four CEOs, with an average tenure of less than three years. Xie Wenjian proposed the "five-year 12 billion" plan, but failed to achieve it; Zhang Dongfang promoted the high-end strategy, but the final results were limited; Pan Qiusheng implemented the reform of the business division system, but the revenue regressed to the level of 2017. In 2024, the new CEO Lin Xiaohai took office for less than a year, and suffered the most serious loss in the history of Shanghai Jahwa.

After Lin Xiaohai took office, he greatly adjusted the organizational structure, expanded the original three business divisions to five major business divisions, and carried out large-scale personnel adjustments at the same time. According to statistics, in 2024, the company will recruit and replace 346 people, of which 79 are senior executives above the manager level. However, frequent organizational changes have brought about an increase in management costs, and the instability of corporate culture has made the long-term development of the brand lack direction.

At the same time, the company's management expense ratio is higher than the industry average all year round, and although it has been optimized in 2024, executive compensation will still far exceed the industry level. In the case of declining performance, excessive management costs have undoubtedly further dragged down the profitability of enterprises.

In the face of dismal performance in 2024, Shanghai Jahwa is trying to seek a "bottoming out" through a series of reforms. But the problem is that the market environment has long changed, and the competitive landscape of the domestic beauty industry has completely changed. In the era when Generation Z has become the main consumer force, Shanghai Jahwa still lacks popular products, marketing innovation and accurate brand positioning.

At the same time, goodwill risks, channel adjustment pains, aging brands, and management turmoil will not be resolved in the short term. If Shanghai Jahwa is unable to quickly stabilize the management team, increase R&D investment, and accurately adjust the brand strategy, it may be further marginalized in the future and even lose its competitiveness in the industry.

For investors, the huge losses in 2024 mean that the company's fundamentals have deteriorated significantly, and the likelihood of a rebound in the near term is extremely low. At a time when the domestic beauty industry has entered a stage of deep competition, the future of Shanghai Jahwa is full of uncertainty. If the company cannot quickly adjust its strategy and enhance its market competitiveness, then the former "light of domestic products" may gradually fade out of the field of vision of consumers. (Content source: Business Morning Post).