---
title: "Bestore and Three Squirrels Report Revenue Growth Without Profit Growth in Q3, Offline Battlefield to Be Key"
description: "Bestore and Three Squirrels have both reported revenue growth without corresponding profit growth in their third-quarter reports, but for different reasons. Bestore's performance was mainly affected by the pandemic due to its Wuhan headquarters, while Three Squirrels faces structural weaknesses from over-reliance on online sales."
author: "陈夏怡"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-10-30"
language: "en"
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# Bestore and Three Squirrels Report Revenue Growth Without Profit Growth in Q3, Offline Battlefield to Be Key

> Bestore and Three Squirrels have both reported revenue growth without corresponding profit growth in their third-quarter reports, but for different reasons. Bestore's performance was mainly affected by the pandemic due to its Wuhan headquarters, while Three Squirrels faces structural weaknesses from over-reliance on online sales.

The reasons behind the revenue growth without profit growth for Bestore and Three Squirrels are different.
Leading leisure food companies Bestore and Three Squirrels recently released their third-quarter financial reports. Although the pandemic has been gradually controlled, both companies have seen revenue recovery but have also experienced revenue growth without profit growth.
Data shows that Bestore's operating revenue for the first three quarters was 5.530 billion yuan, up 1.29% year-on-year; net profit attributable to shareholders of the listed company was 264 million yuan, down 16.15% year-on-year.
**Three Squirrels' operating revenue for the first three quarters was 7.231 billion yuan, up 7.7% year-on-year; net profit attributable to shareholders of the listed company was 264 million yuan, down 10.62% year-on-year.**
Regarding the phenomenon of revenue growth without profit growth for Bestore and Three Squirrels, food industry analyst Zhu Danpeng told Yicai reporters that the reasons behind the two are different.
Bestore is headquartered in Wuhan, the epicenter of the pandemic, and its profitability was mainly affected by the pandemic, which is a temporary characteristic, while Three Squirrels has structural shortcomings.
Public data shows that online is the main sales channel for Three Squirrels.
**In the first half of 2020, Three Squirrels' total revenue from third-party e-commerce platforms and its own APP reached 4.465 billion yuan, accounting for 85.02% of operating revenue.**
**In contrast, Bestore's online and offline revenue ratio is relatively balanced. According to its third-quarter report, e-commerce business revenue accounted for 47.6% of the company's total revenue.**
Yicai reporters learned that as internet dividends gradually fade, the cost of acquiring traffic online continues to rise. From a gross margin perspective, offline direct-operated stores have a comparative advantage over online.
Taking Bestore as an example, in the third quarter of 2020, the gross margin of the company's e-commerce business was 32.47%, lower than the 52.72% gross margin of direct retail business. Three Squirrels' over-reliance on online has gradually weakened its overall growth rate and profit space.
In contrast, Bestore, which "walks on two legs," places more emphasis on the balance of a full online and offline matrix layout.
In addition, Zhu Danpeng said that from the perspective of data quality, Three Squirrels mainly obtains data from online sources, lacking support from store data, which can easily lead to inaccurate grasp of consumer trends and affect preparations for procurement, packaging materials, and other aspects.
From the perspective of single-quarter revenue and net profit, Bestore has been relatively stable in revenue and net profit each quarter since the first quarter of 2019, while Three Squirrels has fluctuated more, with net profit showing a downward trend.
Except for the first quarters of 2019 and 2020 (Three Squirrels mainly sells nuts and dried fruits, with high demand during holidays, and due to higher average order value during the New Year season, related expense rates such as transportation costs are lower), Three Squirrels' net profit has been lower than Bestore's despite slightly higher revenue.
**In addition, Bestore's revenue in the third quarter of 2020 was 1.92 billion yuan, basically reaching the level of the same period last year. Three Squirrels' revenue in the third quarter of 2020 was 1.979 billion yuan, a decrease of 10.17% compared to 2.203 billion yuan in the same period last year.**
It is worth noting that Three Squirrels has obviously realized the importance of offline stores and is gradually reversing its situation of revenue growth without profit growth.
According to its disclosed data, in the first half of 2020, it opened a total of 38 new toufu stores and 209 alliance stores. During the same period, Bestore opened a total of 25 direct-operated stores and 47 franchise stores. In addition, although Three Squirrels' revenue in the third quarter of 2020 decreased by 10.16% year-on-year, net profit increased by 161.72% year-on-year.
Source: Yicai (ID: cbn-yicai), Author: Chen Xiayi


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