HONG KONG, Sept 1, 2022 – (ACN Newswire) – GOME Retail Holdings Limited (HKEX Code: 493. HK, “GOME” or “the business”, and as well as its subsidiaries, “the Group”)announced its unaudited interim results through the half a year ended 30 June 2022 (the “Reporting Period”).
The consolidated gross profit percentage and operating cashflow improved significantly, and construction of the entire retail ecological sharing platform has been completed
In 1H 2022, GOME continues to market the implementation of the “Home . Living” Strategy, and in line with the development philosophy from the platform perspective, users’ perspective, and technology perspective, the business created a “full retail ecosystem sharing platform” by establishing and integrating its six business platforms, namely “online platform, offline platform, supply chain platform, logistics platform, big data & cloud platform and sharing and joint development platform”. The Group further promoted the grid-based style of “Home Living and Home Services” by implementing the core business strategies of entertainment-oriented marketing, good deal, quality service, and technology, striving to meet up the all-around consumption and service needs of family users.
In the initial half of the entire year, there are numerous lockdown and control measures generally in most regions suffering from the recurring outbreaks of the pandemic in China, the momentum of economic recovery slowed up, and offline entities were disrupted significantly. And web business was also hit hard because the outbreak of the pandemic due to the disruption to the logistics service. However, with the gradual introduction of the national stimulus package, like the stimulus to automobile consumption in June, or in July 13 departments like the Ministry of Commerce issued the “Several Measures on Promoting Green and Smart Appliance Consumption” to comprehensively promote the domestic green and smart household appliance consumption, would greatly benefiting the business’s business recovery and significant growth in future. In 1H of 2022, the sales revenue of the Group was approximately RMB12,109 million, and the consolidated gross profit percentage was approximately 19.81%, increasing substantially by 5.56 percentage points in comparison with the corresponding period this past year. The Group’s operating expenses were approximately RMB4,839 million, which decreased by 3.10% when compared with the corresponding period this past year. The Group’s loss due to the owners of the parent was approximately RMB2,966 million. Through the Reporting Period, the Group’s cash flows generated from operating activities had significant improvement on the corresponding period this past year, achieving a confident net inflow of RMB55 million.
Concentrating on the primary business with a vertical model, decrease the burden in the next half year
The field of household appliances may be the traditional strength of GOME Retail, the Group’s strategic focus in the coming period will concentrate on the primary business with the vertical model. GOME will concentrate on retail sales of household appliances and consumer electronic products, in line with the Company’s years of experience in the retail field, counting on a lot of offline stores through the entire country and its own existing supply chain and after-sales along with other infrastructure, to create five main profit models: exhibition (offline boutique experience), marketing (online and offline omni-channel self-management + sharing supply chain), integrated solutions for home electronics products, extension products for wide scope kitchen appliances and value-added services (delivery, after-sales, warranty, paid membership operation, etc.), where the separation of exhibition and sales and adding the brand new offline display service charging model would benefit our revenue structure optimized. The result of the transformation has been proven in the 1H 2022, the Group’s consolidated gross profit was RMB2.4 billion, and the consolidated gross profit percentage was approximately 19.81%, increased by 5.5 percentage points when compared with the corresponding period this past year.
By closing inefficient stores and expanding franchised stores, GOME will comprehensively optimize the store network layout, strengthening the price reduction in the next half of the entire year. Maintaining the coverage of offline stores, the amount of offline stores was reduced by 370, and the business plans to close 30%-35% of inefficient businesses’ self-operated stores later on. Unrelated or loss-making businesses will undoubtedly be spun off, sold, or discontinued, and investment in expensive businesses will undoubtedly be gradually reduced. And since Q2, GOME has optimized personnel allocation, improved employees’ quality and professionalism, and effective control the business’s salary costs.
Offline stores optimized and upgraded, and the brand new model helps regain market share
The Group will build an all-scenario and omni-channel provider of O2O appliances and gadgets retail by strengthening technology empowerment and comprehensively improving the operation quality of stores. While retaining 700 high-quality and efficient self-operated stores, the Group plans to include 100 superior city pavilions to optimize the grid-based model and enhance the existing sales per unit area; with Gome’s high-quality management model and offer chain, the business will rapidly expand its network layout to cover the first ever to sixth tier cities nationwide with grid-based coverage to quickly regain its original market advantage.
Furthermore, since July, stores in Chongqing, Wuhan, along with other cities have begun to implement the brand new mode of operation. The brand new model stores will implement another exhibition and sales model to meet up consumers’ needs for an improved product experience the truth is. The brand new model stores concentrate on four dimensions: function, category, scenario, and sales per employee to supply customers with a far more complete service experience. With regards to function, large stores and small stores concentrate on differentiation and additional refinement of product categories; when it comes to category, the business targets high-end products and offline scenes of rigid demand to supply consumers with a far more intuitive product experience; when it comes to scenery, systematically planned store lines and much more interactive demos display are employed for specific products. Through single-brand multi-dimensional reuse enhancement, further improving efficiency and the sales model, will significantly improve sales per employee. The brand new model is likely to enhance the sales per unit area and sales per employee of the stores by a lot more than 40%.
Comprehensive upgrade of supply chain model, empower quality products
To improve the choice and sales capacity of quality products, upgrading the supply chain model can be an indispensable part. In the self-sourcing & underwriting custom model, in line with the traditional supply chain, the business will further raise the proportion of underwriting customization to attain product differentiation and improve the profitability of the supply chain. Further, the business will deepen cooperation with suppliers, implement differentiation strategies, and much more precise brand positioning; strengthen in-depth cooperation with head brands and enrich waist brands to empower the choice and sales of quality products and improve inventory turnover, which is conducive to subsequent business development.
Optimize asset structure, promote enterprise structure transformation and management upgrade
To improve the quantity of tangible assets held by GOME, the business acquired the house rights of two properties at a substantial discount, GOME Commercial Capital no. 9 Xiangjiang, which is built as offline shopping and experience centers. The acquisitions will significantly enhance the Company’s asset adequacy ratio, improve the confidence of finance institutions in supporting the business’s business, facilitate the business’s future refinancing and improve its core competitiveness.
Moreover, to help expand professionally enhance the profitability of the full-service closed loop of pre-sale, mid-sale, and after-sale and value-added services, the business plans to obtain from the Controlling Shareholder portion of the equity interest of Anxun Logistics at a substantially preferential price. Anxun Logistics includes a competitive advantage in neuro-scientific large warehousing and distribution, that is a scarce advantageous asset on the market. Anxun Logistics’ third-party business makes up about over 48% of its revenue and contains good profitability and solid cashflow. It is likely to maintain the average growth rate of 20%-40% within the next five years and a net profit growth rate of over 40%. Following the acquisition, it’ll turn into a new profit growth point for the business.
Strengthen technology empowerment and strategic cooperation, Actively take social responsibility
In the initial 1 / 2 of 2022, the business entered into strategic cooperation with Huawei, Tencent, and Alibaba Cloud respectively, concentrating on digitalization and big data/cloud for deep technology empowerment. The cooperation with Huawei centered on the digital enhancements of retail business. The strategic cooperation between your Company and Tencent covered big data & cloud, internet technologies, marketing and advertising, and smart stores. Achieving the strategic cooperation with Alibaba Cloud, both parties will cooperate in the retail business, supply chain, marketing, operations, etc. By strategic cooperation with the very best domestic Internet companies, and consolidating the resources and strengths of partners, technology empowers the specific business operation, will expedite the digital and intelligent transformation of around 4,000 stores of the Group in China, increase the entire scale of the Group, enable the Group to attain low-cost traffic and precise marketing, enhance consumers’ online and offline cross-scenario experience.
Through the Reporting Period, suffering from the outbreaks of the pandemic, the business is facing an uncertain external business environment. Nevertheless, the Group has always shouldered its social responsibilities by undertaking grid-based business management through its online platform “FUN” APP and offline network of around 4,000 GOME stores and developed the role of backbone enterprises internal and external. Internally, the Group strived to safeguard over 50,000 employees in 776 cities by implementing effective prevention and control measures. Externally, the Group was focused on securing stable supply and prices at all outlets and online platforms through the pandemic, ensuring healthcare products and daily necessities at normal prices. The Group took the initiative to keep adequate supply and boost consumption through the pandemic by offering to deploy sufficient supplies to regions severely affected.
Regarding outlook and prospects, the GOME management team said: “Later on, the business will efficiently utilize the omni-retail ecological sharing platform, focus the vertical model on the primary business and improve operational efficiency because the main strategic target within the next period, reorganizing the business enterprise segments and optimizing the asset structure, to be able to deal with the impact of unfavorable market factors like the pandemic, enhance the profitability of the business; using technological methods to help the digital transformation of enterprises and improve consumer service experience. We shall promote strategic focus in the prevailing development process, quickly realize the business’s operational elements, continue steadily to improve operational efficiency, and enhance profitability. Simultaneously, strengthen interaction with external strategic partners, perform more in-depth cooperation, and continue steadily to empower one another with regards to goods, services, traffic, and technology, that is likely to achieve better profitability in 2023, reach the very best level ever sold in 2024, and exceed the very best level significantly in 2025.”
About GOME RETAIL HOLDINGS LIMITED
GOME RETAIL HOLDINGS LIMITED was listed on the Hong Kong STOCK MARKET in July 2004 (Stock Code: 493HK). Founded in 1987 in China, GOME is really a leading technology-driven, experience-based, entertainment-oriented, and socialized “Home . Living” technology retail company in China. Beneath the strategy of “Home . Living”, GOME strengthens its technology empowerment and targets the retail of kitchen appliances and consumer electronic products as its main business. Moreover, five main profit models have already been formed: exhibition (offline boutique experience), marketing (online and offline omni-channel self-management + sharing supply chain), integrated solutions for home electronics products, extension products for a broad scope of kitchen appliances, and value-added services (delivery, after-sales, warranty, paid membership operation, etc.).
Please visit our website to learn more: www.gome.com.hk
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