The veteran educational institution New Oriental (EDU.NYSE; 09901.HK) suffered a troubled time. According to media reports, at the New Oriental executives meeting held at 10 a.m. on September 17, Yu Minhong, the founder and chairman of New Oriental, announced that the offline enrollment of elementary and junior high school subjects will be suspended after the fall courses. Teaching points will be gradually closed.
Yu Minhong said at the meeting that the decision to shrink Xiaochu’s offline business was mainly due to time and price constraints. Under the current policy environment, “adjustment is imminent.” Yu Minhong encouraged the principals of various branch schools to actively try new directions such as quality. “It’s a big deal that all the business attempts have failed. New Oriental has no money on the account. We broke up after a big drink.”
At the same time, the meeting also disclosed the latest layoff plan. Yu Minhong said that the original plan was to lay off 40,000 employees by the end of August, but as of mid-September, fewer than 10,000 employees were laid off. An executive who participated in the meeting said that by the end of the year the number of layoffs will exceed 40,000.
A Times Weekly reporter asked relevant New Oriental personnel for verification on the above news, and no substantive response has been received as of press time.
Financial report data shows that as of February 28, 2021, New Oriental’s revenue for the third quarter of fiscal year 2021 reached US$1.191 billion, a year-on-year increase of 29%, and the net profit attributable to shareholders reached US$151 million, a year-on-year increase of 9.9%. The financial report also disclosed that the main growth driver of revenue came from the K12 business, of which the middle school business increased by 35% year-on-year, and the children’s business increased by 40% year-on-year. In addition, New Oriental has 1,625 schools and learning centers nationwide.
This is not New Oriental’s first large-scale layoffs. On September 14, Dongfang Youbo shut down the K12 subject training business. Oriental Youbo is an online live lesson brand owned by New Oriental Online (01797.HK), a subsidiary of New Oriental Holdings.
Zhu Yu, CEO of Dongfang Youbo, posted in Moments that the company has sufficient funds to complete refunds and layoffs by October.
In addition to New Oriental, several other K12 giants have also started layoffs and adjustment plans. In the financial report conference held on September 22, GOTU. NYSE CFO Shen Nan said that GOTU is the first company in the industry to adjust its organization comprehensively and quickly to achieve further focus. According to media reports, Gaotu has previously closed 13 of 16 counseling centers nationwide and laid off tens of thousands of employees, accounting for about 1/3 of all employees.
After losing the most important K12 business, New Oriental began to transform itself to save itself.
According to media reports, at the executive meeting on September 17, Yu Minhong encouraged principals from all over the country to actively try, “From going abroad to primary and secondary schools, New Oriental has experienced a rebirth, and I hope everyone will continue to carry forward this spirit.” Education or custody center, try to see which one can run through, anyway, there is still money in New Oriental’s account.”
Recently, many New Oriental branch schools in Tianjin, Lianyungang, Hainan and other places have changed their business scope, adding training in the art, science and technology, sports and other categories, as well as family education consultation, kindergarten and off-campus care services for primary and secondary school students.
In August 2021, Beijing New Oriental Quality Growth Center was officially launched. The center has a total of six major modules, 12 courses for students, and 5 courses for parents. The courses cover programming, robotics, art, eloquence, calligraphy, chess, Chinese learning and other courses.
In addition, the layout of live broadcast and short video is also an important direction for New Oriental in the next step.
According to media reports, Yu Minhong said at the executive meeting, “Weiya can sell more than 10 billion in a year. Can I do more than 10 billion in live broadcast with dozens of teachers?”
The Times Weekly reporter noticed that on the workplace social platform “Maimai”, an employee certified as “New Oriental HR” posted on September 24, saying that he would recruit “short video director and live broadcast operation supervisor.” In addition, all local New Oriental schools are still recruiting children’s programming product managers, high school teachers, and postgraduate business course consultants.
It is worth noting that New Oriental’s financial report will also be disclosed soon. On September 13, New Oriental announced that it will hold a meeting on September 24 to approve the company’s audited results and release for the fiscal year ending May 31, 2021. Prior to this, New Oriental had temporarily cancelled the results announcement originally scheduled for August 2. But as of press time, New Oriental’s financial report has not yet been released.
On September 24, New Oriental Hong Kong stocks closed at 14.74 Hong Kong dollars per share, down 4.53%, and the total market value was 25.268 billion Hong Kong dollars.
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