East Buy, the e-commerce unit of China’s one-time private tutoring giant New Oriental, posted a net profit of RMB 1.7 billion ($239 million) in the 12-month period to May 2024, of which RMB 1.3 billion came from gains on the shedding of its education business, while profit from continuing operations declined nearly 70% to RMB 249.1 million for the fiscal year.
Why it matters: The latest earnings show that the Hong Kong-listed company is dealing with plummeting profits despite increasing revenue, leading to uncertainty over East Buy’s ability to sustain growth with the departure of Dong Yuhui, China’s top livestreaming influencer.
Details: According to the company’s annual results, “a large majority” of East Buy’s total transaction value in the past year came from TikTok sibling Douyin, which contributed RMB 14.3 billion, an increase of 43% from last year.
- East Buy currently has 29.65 million followers on Douyin, with the widely-used short video platform booking over 181 million orders for the company during the last 12 months. East Buy’s results did not note the number of active users of its standalone app, but declared that GMV from the platform represented only 8.4% of the total figure.
- The firm’s revenue recorded a 56.8% year-on-year rise to RMB 7.07 billion in the period from last June to May.
- East Buy has been struggling since livestreaming star Dong’s namesake venture Time with Yuhui, previously a wholly-owned subsidiary of East Buy, was sold entirely to the presenter in July. Time with Yuhui now has 23 million followers on its Douyin account. In a statement at the time, East Buy CEO Michael Yu said he would make arrangements for payment of the deal, comments largely interpreted as meaning that Dong would get a venture that was priced at RMB 76.6 million for free. East Buy has since cut ties with the key influencer.
- East Buy added in its annual report that it has distributed around RMB 129 million to Dong, comprising unallocated profits from Time with Yuhui that Yu promised to give Dong in July.
Context: Last December, East Buy fired former chief executive Sun Dongxu after his comments angered fans of Dong, one of the e-commerce platform’s top livestreamers. Sun implied in a social media post that Dong’s scripts were written by a team of writers. Days after the controversy, East Buy promoted Dong to a senior partner in the company and named him assistant of culture to the chairman, Michael Yu.
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