Core Financial Indicators Exceed Industry Average for Eight Consecutive Quarters E-commerce Business Grew Rapidly with GMV Doubled in Q4 Business Model Upgrade to Total Retail Company to Build Another GOME by 2017
• GOME achieved industry leading results with core financial indicators for eight consecutive quarters:
1. 2014 Sales revenue up 7.0% y-o-y to RMB60.36 billion with second-tier markets sales up 15.0% y-o-y
2. Same store sales growth (SSSG) reached 4.8%, second-tier market recorded SSSG of 9.3%
3. Sales revenue per sq.m. sustained an upward trend for eight consecutive quarters to RMB3,943 in 2014 Q4
4. Operating expense ratio continued to improve and fell 0.3 percentage point y-o-y to 16.3%
5. Profitability stayed solid: Consolidated gross profit margin achieved 18.5%; Net profit margin amounted to 2.1%
6. Online GMV increased 84.4% y-o-y, of which number of new mobile terminal users grew by 97.2% y-o-y
• Omni-channel strategy continued to create value for shareholders with earnings per share amounted to RMB7.6 fen. The Board proposed a final dividend of HK$1.80 cents per ordinary share
Hong Kong, 2015-3-24 — /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE stock code: 493, “GOME” or “The Company”, together with its subsidiaries, “The Group”) today announced the Group’s audited consolidated results for the year ended 31 December 2014 (“the Reporting Period”). In 2014, GOME spared no effort to pursue its strategic goal of becoming an “Open Omni-channel Retailer”. By optimizing its open supply chain platform, driving further improvements in the areas of procurement, logistics, information system and financial services, as well as building an open omni-channel platform encompassing “online + offline + mobile terminal + other socialized channels”, the Group has managed to provide cross-regional and cross-channel full services to consumers as a whole. The launch of this strategic transformation, supported by the low-cost highly-efficient open supply chain, has enabled the Group to achieve year-on-year growth in key financial indicators for eight consecutive quarters and increase its operating efficiency. During the reporting period, profit attributable to the owners of the parent company surged 43.5% to RMB1.28 billion. The Group’s differentiated products rose significantly from 1.2% of total revenue in 2009 to 33% in 2014.
In 2014, the Group continued its store renovation initiative and expanded its reach to secondtier markets, strengthened its joint operations with supermarkets and department stores, and promoted its e-commerce development. During the reporting period, the Group completed renovation in 100 smart stores, and opened 145 new stores of which 78 were located in second-tier markets. Additionally, the Group launched a full strategic alliance with department stores and supermarkets with 154 newly-opened joint operation stores, leading to a 67% q-o-q increment in the segment’s sales revenue in the fourth quarter.
Under e-commerce development, GOME Online greatly increased the level of unique visits and customer loyalty. This was done through online and offline integration of its supply chain covering procurement, logistics, information system and financial services platforms, and by focusing on the expansion of all product types, price competiveness and the analysis and application of big data. In 2014, the total gross merchandise value (GMV) of the online channel increased 84.4% over the previous year and increased 117.3% in the fourth quarter over the corresponding period the previous year. At the same time, the unique visits (UV) for 2014 was up 85.3% over the previous year and up 149.5% in the fourth quarter from the corresponding period the previous year. Moreover, the Group has been actively developing mobile applications. Measures such as products with pre-installed applications drove mobile terminal membership sign-ups for GOME Online. The number of new mobile terminal users increased 97.2% over the previous year. Mobile GMV accounted for 19.4% of online GMV in 2014 and 35.1% in the fourth quarter.
Business Model Upgrades to Total Retail to Build “Another GOME” in 2017
With the onset of the mobile Internet era, the development of consumer behavior is trending towards a focus on the individual, with fragmented consumption time, diversified shopping setting, and less distinction between channels. With the change in consumption behavior and demand, GOME is destined to upgrade the “omni-channel experience” in both online and offline to “total retail experience” emerging from the integrated online and offline channels, allowing consumers to move freely between online, offline, mobile terminals and jointoperating channels. The Group will focus on the development of Mobile Micro Shops (「微 店」) on the front-end interface platform, connecting online and offline. Meanwhile, the Group will enhance the value of the supply chain with a focus on the back-end big data infrastructure to build a total retail community with more than 100 million customers.
Through GOME’s total retail shopping process, consumers from different entrances will enjoy more product choices than ever, diversified services including shopping assistance, queries, payment, installation, after-sales, reviews and feedbacks etc. Meanwhile, the Group will also conduct targeted marketing and promote repeat purchases by transferring real-time customer behavior data to the front-end in a timely manner using the big data terminal.
Key tasks in 2015 include:
• Total Retail Interface Platforms: (1) Mobile micro shops: Loyal fans are the consumers with the most potential. Anchored by the micro shops, GOME will connect offline, online and data terminal to create a superb consumer experience. Leveraging social media which focuses on one-to-one information sharing through a network of connections, GOME will launch and share enormous products, achieving crosscategories, cross-brands and round-the-clock sales, transcending the boundaries of time and space and offering exclusive customized services to consumers. The Group currently owns 130 million members + 12,000 suppliers + 10,000 vendors + 100,000 employees (including non-listed Gome group). The Group will establish more than Page 3 of 4 100,000 mobile micro shops in 2015, and double the number of its fans by 2017. (2) Smart stores: By expediting the digitization of its physical stores; increasing product variety, introducing a sophisticated product experience and new technology, the Group will allow consumers to actually purchase while shopping and playing; (3) Second-tier market: GOME will accelerate the expansion of store networks to further cover different counties and towns, while expecting to enter 100 new cities in the next three years; (4) GOME On-line: The Group will further develop direct sales of electrical appliance categories and marketplace sales of non-electrical appliances. GOME aims to achieve a CAGR of 100% in GMV and number of mobile terminal users in the coming three years, by accelerating the development of the mobile terminal and e-commerce business, becoming China’s leading e-commerce platform.
• Total Retail Value Platforms: (1) Big Data terminal: The Group will make use of its massive transaction data to build a big data terminal. By capturing customers’ behavior through cloud computing and data analysis, the Group will be able to conduct targeted marketing, creating total retail interface platforms which allow boundless shopping experience and thorough penetration. Furthermore, the Group will leverage the data to boost collaboration between value platforms including procurement, logistics, after-sales, financial services and information. Recently, The Group has successfully created a big event ‘13th Mar Black Friday’ in 400+ cities in China through targeted marketing with its Big Data terminal. (2) Procurement: With the new procurement model driven by data and synergies with suppliers, GOME will maintain its low price benchmark and increase its pace to achieve the target of raising the proportion of differentiated products to 50% by 2017. (3) Logistics: GOME is committed to building China’s biggest socialized logistics network platform for home appliances. With its strong infrastructure and supporting resources and 1,688 chain stores nationwide (including the stores under the non-listed GOME group), GOME will continue to establish the highest service standard of “Three deliveries/day, precise delivery, installation on delivery”. (4) After-sales services: GOME has already become China’s biggest air-conditioner and television installation service provider. By offering the whole process after-sales service within the product validity period including installation, extended warranty, maintenance and home appliances recycling, and the promise of “Deal with the problem within 24-hours”, GOME aims to become China’s largest platform for home appliances after-sales services by 2017. (5) Information system: GOME will build the GOME cloud platform and establish the data cloud, logistics cloud, after-sales cloud, product cloud, corporate resources cloud and finance cloud etc., achieving the sharing between logistics, data and capital resources. (6) Financial services: GOME has successfully launched many internet finance products, such as Mei Tong prepaid card, Mei Ying Bao and other services; and will focus on the development of factoring finance and business loans. This will let it offer better and more targeted financial products and services to customers and suppliers, enhancing loyalty to GOME supply chain.
Mr. Wang Junzhou, CEO of GOME, concluded: “The infrastructure under GOME’s ‘open omnichannel retailer’ strategy has been completed which in turn paved the way for the Group’s remarkable results. In 2015, with Internet Plus becoming the national strategy, and with the development of mobile terminals and social media, GOME will perform in-depth data mining and carry out targeted marketing with the aid of big data terminal. It will accelerate the integration and interaction between its online, offline and mobile terminals, and strive to build a “GOME ecosystem” covering consumer groups of all ages, channels and markets. This will support the Group build China’s best total retail platform and achieve the target of “building another GOME” by 2017, thus creating greater value for shareholders, suppliers and consumers.”
About GOME Electrical Appliances Holding Limited
GOME Electrical Appliances Holding Limited was listed on The Hong Kong Stock Exchange in July 2004 (HKSE: 00493). The GOME Group was founded in China in 1987 and is engaged in the retail business of electrical appliances and consumer electronics in China. It is the leading retail chain of electrical appliances and consumer electronics and the leading retail chain enterprise in China.
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