GOME Electrical Appliances Holding Limited announces the Group’s unaudited results for the first three quarters of 2014

Backed by Omni-Channel Strategy GOME Records Profit Growth for Seven Consecutive Quarters

Four Major Platforms of Procurement, IT, Logistics and
Financial Services Accelerate Open Omni-Channel Development

  • Sales Revenue: RMB44.645 billion, up 7.2% year-on-year
  • Sales Growth of Comparable Stores: up 6.0%
  • E-Commerce Gross Merchandise Volume (including Gross Merchandise Volume of Marketplace): up 72.7% year-on-year; Unique Visitor: up 63.9% year-on-year
  • Consolidated Gross Profit Margin: 18.6%, up 0.6 percentage point year-on-year
  • Net Profit: RMB1.018 billion, up 74.9%
  • Net Profit Margin: 2.3%, up 0.9 percentage point year-on-year

Hong Kong, 2014-11-18— /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE: 493, “GOME” or “The Company”, together with its subsidiaries, “The Group”) today announced the Group’s unaudited results for the first three quarters of 2014 (“the reporting period”).

“Open Omni-Channel Retailer” Strategy Achieves Significant Results
In the second half of 2013, GOME announced its “Open Omni-Channel Retailer” strategy. Since then, the Group has been actively deploying and upgrading its platforms of procurement, logistics and information technology to build the most comprehensive home appliances retail supply chain in China. During the reporting period, with seamless execution of the “Open Omni-Channel Retailer” strategy, the Group continued to advance in its omni-channel development and made significant achievements in different aspects:

(1) Offline Channel:

Tier-One and Tier-Two Cities: Same-store sales grew by 4.7%. There were 68 stores upgraded to new smart comprehensive stores during the reporting period.

Tier-Three and Tier-Four Cities: Same-store sales grew by 12%. During the reporting period, the Group opened a total of 58 stores.

Jointly Operated Stores with Supermarkets and Department Stores: There were 154 new stores added in the first three quarters of the year. Sales revenue for the third quarter of the year stood at RMB185 million, up sharply by 36% quarter-on-quarter.

(2) E-Commerce (Mobile Applications Included):

E-Commerce Gross Merchandise Volume (GMV; including GMV of Marketplace): Up 72.7% year-on-year (of this, GMV for the third quarter rose 100.8% year-on-year)

Unique Visitor (UV) traffic: Up 63.9% year-on-year (of this, UV traffic for the third quarter rose 104.1% year-on-year)

Mobile Terminal GMV: Increased to 12.4% of the E-Commerce GMV (of this, the
proportion rose to 17.2% for the third quarter of the year)

(3) Low-Cost, Highly-Efficient Supply Chain:

Logistics Services: To achieve “Three Deliveries/Day, Precise Delivery, and Installation with Delivery”, the highest standard in the industry, in 200 cities nationwide by the end of 2014.

Differentiated Products: Sales proportion to total sales grew to 32%, which drove continuous improvement in consolidated gross profit margin and same-store sales.

Operating Expenses Ratio continued to be optimised, dropping further by 0.5
percentage point year-on-year; Inventory turnover days were maintained at a steady level of 69 days; balance of cash and cash equivalents trended higher to RMB11.826 billion, generating positive operating cash flow.

Financial Services Platform Upgrade
As a major provider of products and services to end-consumers and a key pillar of logistics services and cash flow generation, retailers have much in common with financial services providers. To better accommodate the needs of suppliers, consumers and corporate clients in omni-channel supply chain, GOME has taken the initiative to fully upgrade its financial services platform, by elevating its original model of relying on third-party providers to one encompassing “Self-Built Infrastructure + Equity Investment + Third-Party Collaboration”.

GOME’s investment in Huishang Bank on November 11, 2014 signified a crucial and strategic step forward for the Group to promote its financial services platform through a shareholding collaboration. Upon the investment in Huishang Bank, the two parties will leverage on their respective competitive advantages to connect the retail supply chain platform with the highly efficient financial services to a fuller extent, and consider further collaborative opportunities. These would include, but are not limited to, tapping into GOME’s existing powerful retail network plus channels to offer services such as consumer credit, factoring finance and business loan, to meet the different demands of up to almost130 million members, around 12,000 suppliers and almost10,000 corporate clients engaging in the retail value chain of the Group in a comprehensive manner.

Four Major Platforms Accelerate Omni-Channel Development
Looking ahead, the deployment of the four platforms of procurement, logistics, information technology and financial services will drive GOME’s omni-channel development covering both online and offline channels. Benefiting from the highly integrated and coordinated development of the procurement, logistics, information technology and financial services functions in the supply chain, the Group will be able to perform in-depth data mining and targeted marketing and further boost the links in the whole retail value chain, giving full play to the unique competitive advantage of the Group’s “Open Omni-channel Retailer” strategy.

Mr. Wang Junzhou, CEO of GOME, said, “GOME’s ‘Open Omni-Channel Retailer’ strategy has enabled us to record impressive results that have outpaced the industry average and our peers for seven consecutive quarters. Going forward, our four unified service platforms – procurement, logistics, information technology and financial services – will offer full support to the Group’s omni-channel development. This includes offline, online, mobile applications and other social channels to further drive business expansion, while providing quality one-stop services for consumers and business partners. We are committed to achieving our goal to ‘Build another GOME’ by 2017, and to creating greater value for our shareholders and society as a whole.”

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About GOME Electrical Appliances Holding Limited
GOME Electrical Appliances Holding Limited has been listed on The Hong Kong Stock Exchange since July 2004 (HKSE: 00493). The GOME Group was founded in China in 1987 and is engaged in the electrical appliances and consumer electronics retail business in China. It is the largest electrical appliances and consumer electronics retail chain and the largest overall retail chain enterprise in China.

Please visit our website for more information: www.gome.com.hk

For further enquiries, please contact:
Hong Kong
Hill+Knowlton Strategies Asia
Elisa Fong
Tel: (852) 2894 6224/ 9528 9627
Email: elisa.fong@hkstrategies.com

Sophia Cheng
Tel: (852) 2894 6267 / 6170 5217
Email: sophia.cheng@hkstrategies.com

Beijing
Helen Song
Tel: 86-10-59288815
Email: songjie6@gome.com.cn