Today, a piece of retail industry news caused quite a stir: Alibaba Group plans to sell its controlling stake in Intime Department Store to apparel giant Youngor Group for 7.4 billion yuan. The sale of Intime by Alibaba had been hinted at as early as February. During Alibaba's earnings call on February 7, board chairman Joe Tsai addressed the issue of divesting non-core assets, stating: "Currently, Alibaba's balance sheet still holds some traditional physical retail businesses that are not core focus areas. It is reasonable for Alibaba to exit, but given the current market conditions, the exit may take time to realize." Subsequently, news of Alibaba selling Intime spread widely, and now it has finally been settled. This transaction not only marks a major adjustment for Alibaba in the new retail sector but may also herald new changes in the industry landscape.
Intime Embraces Online Yet Struggles with Operational Pressure Intime was founded in 1998, initially starting with department store retail. At that time, coinciding with China's gradual economic liberalization, the domestic retail sector began to flourish. Intime expanded nationwide, opening multiple department stores and gradually building its brand influence. Entering the millennium, the supermarket and real estate industries experienced rapid growth. Intime ventured into commercial real estate, developing shopping centers and commercial complexes, transitioning from a single retail business to a diversified commercial group. By 2007, Intime Department Store successfully listed on the Hong Kong Stock Exchange, enjoying a period of great success. Later, with the rise of e-commerce, Intime actively embraced the internet, collaborating with e-commerce giants like Alibaba Group to explore new retail models integrating online and offline. External observers praised it as an internet-based department store fully architected on the cloud. Embracing online, however, could not change the decline of the department store industry. Facing consecutive losses in retail operations, Shen Guojun ultimately chose to let go. In 2017, he sold it to Jack Ma, a fellow Zhejiang businessman with whom he had always maintained good relations. With Alibaba's support, Intime Department Store first initiated digital transformation, establishing the first digital paid membership system in China's department store industry, INTIME 365, and expanding online and offline service scenarios. It also launched the Miao Street app, achieved mutual recognition between the Taobao app and Miao Street app, unified inventory between stores and online, and adopted DingTalk for all employees, relying on DingTalk for digitalized management and operations. While these changes brought some short-term results, aggregating thousands of member groups, they still could not mask Intime's operational pressure. In the third quarter of fiscal year 2024, its segment, "All Others," saw a 7% year-on-year decline in revenue and an 87% year-on-year increase in net loss. The operational difficulty is evident.
Alibaba's New Retail A Completely Losing Proposition? Since Jack Ma proposed the concept of "New Retail" in 2016, Alibaba has been exploring new retail models integrating online and offline. Through acquisitions and partnerships, Alibaba rapidly expanded its footprint in physical retail, with Intime Department Store, Sun Art Retail, and Hema being key components. At that time, Alibaba's e-commerce business was in a growth phase, and the acquisitions brought several positive effects. Intime brought brand resources. Around 2010, few brands were willing to open stores on Tmall. Intime had resources from thousands of well-known brands, and Tmall needed Intime's support at that time. Hema continuously expanded its stores, gaining influence and even attracting a competitor's executive—Hou Yi from JD.com—setting an example for new retail. Given these advantages, why did Alibaba sell? On one hand, intensifying market competition, the development of mobile internet, and the homogenization of mall brands and products have led to evolving consumer shopping habits. The department store retail sector has suffered shocks, with declining performance and store closures becoming the norm. These impacts have been reflected in Alibaba's physical retail landscape, increasing operational difficulty. Hema Fresh, the benchmark of Alibaba's new retail, was born with the label "new" compared to traditional channel transformation. It went from being highly praised by multiple capitals and rapid expansion to struggling with profitability. Since its inception, Hema has been loss-making for seven consecutive years, only achieving overall profitability in 2022. If even Hema, with its new genes, finds it so difficult to operate, let alone Intime. When Alibaba first took over Intime, although it intended to renovate stores, turning an elephant around is easier said than done. Alibaba expects to record a loss of approximately 9.3 billion yuan from the sale of Intime. This figure corroborates a statement from a source close to Alibaba's management: selling Intime is Alibaba's way of reducing burden, shedding a "heavy load." On the other hand, Alibaba will continue to focus on its core business in the future, concentrating resources and attention on areas with greater growth potential and technology-driven sectors, namely e-commerce and the "cloud + AI" direction. Selling all equity in Intime is just one step in its plan. Now that Alibaba has let go of Intime, it can only be said that Intime's phased mission has been completed.
A Hot Potato in Outsiders' Eyes Why Did Youngor Take It Over? Youngor started with menswear and, after years of development, has become a diversified commercial group covering real estate development, financial investment, and other fields. From its financial reports, Youngor's development strategy and operational approach focus on its core business—the apparel main business, multi-brand development, and active investment. In 2021, Youngor acquired a 40% stake in American trendy brand UNDEFEATED and established a Greater China joint venture. In 2022, Youngor, together with Challenger Capital, founded by Tang Binsen, the founder of Genki Forest, co-invested in American high-end designer fashion brand Alexander Wang. In 2023, Youngor invested in domestic beauty brand Lin Qingxuan, becoming its second-largest shareholder. Today, it also announced the acquisition of Intime Department Store, becoming its "new owner," with an acquisition amount of approximately 7.4 billion yuan. As soon as the news broke today, Youngor's stock price fluctuated, once hitting the daily limit. As of today's close, the company's stock price was 9.38 yuan per share, up 3.65%, with a turnover of 1.691 billion yuan, a turnover rate of 3.9%, and a total market value of 43.368 billion yuan. Regarding this acquisition, Youngor Group responded: This time, the group and Intime's management jointly invest in Intime, aiming to "strengthen the chain and supplement the chain" and improve the fashion ecosystem. After the investment is completed, Youngor Group will give Intime's management full operational space and support Intime's further high-quality development.