GOME announces its unaudited results for the three-month period ended 31 March 2016

  • Sales Revenue reached RMB15.2 billion, up 5.2% y-o-y, with B2C direct sales revenue of e-commerce business grew by 91.6%
  • Total gross merchandise volume (“GMV”) for both online and offline grew by 12.7% y-o-y, with GOME Online GMV up 105.3% y-o-y
  • Consolidated gross profit margin was 17.0%, remained at a relatively high level

HONG KONG, 2016-May-31 — /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 three-month period ended 31 March 2016 (the “Reporting Period”).

Good Progress Made on Transformation; Consolidated Gross Profit Margin Remained at a Relatively High Level

GOME enters into the implementation stage of the transformation according to the strategy of “Omni-Channel, New Scenario, Strong Linkage” in 2016. Good progress has been made in its transformation efforts to date. During the Reporting Period, the Group’s sales revenue was approximately RMB15.2 billion, up 5.2% year-on-year, with B2C direct sales revenue of GOME Online grew by 91.6%. Overall sales revenue from comparable stores declined by 3.3% while sales revenue from comparable stores in the second-tier market recorded increase of approximately 1.2%. Benefiting from effective cost control, the Group’s adjusted operating expense ratio excluding non-operating factors dropped by 0.2 percentage point year-on-year to 16.0%. Consolidated gross profit margin remained at a relatively high level of approximately 17.0%. Adjusted net profit was RMB200 million, down 31.4% as compared with the corresponding period last year.

As at the end of the reporting period, the Group has 675 stores in the first-tier market and 516 stores in the second-tier market, with sales contribution from the first-tier and the second-tier market accounted for 74.3% and 25.7%, respectively. Meanwhile, the Group’s total GMV for both online and offline grew by 12.7% as compared with the corresponding period last year, with GMV of GOME Online recorded strong growth of 105.3%. GMV from mobile devices up 245.5% year-on-year and was accounted for 63.4% of the online GMV.

Building of New Scenario Experience with Every Effort to Establish Strong Linkages with Customers and Attract Customer Flow

In first-tier market, the Group is committed to upgrading stores with new scenario experience that integrates “food, beverage, entertainment, joy and shopping” and establishing VR showrooms, so as to fully satisfy consumers’ demand and to establish strong linkages with its customers. The upgraded stores allow customers traffics from retail, entertainment and leisure to complement each other, thus drawing in stronger customer flow and driving consumption in the stores. The ZhongTa Global Experience Store fully demonstrates the digitized smart stores of the Group. GOME will make the VR experience zone an integral part of its New Scenario establishment and implement a rapid development strategy. In view of the growing consumption demand for smart TV, and leveraging the Group’s large customer base and internet mindset, GOME is actively exploring the internet TV business model through cooperation with multiple partners, with the aim of building living-room economy for enlarging GOME’s share in internet market and establishing new lucrative business model.

GOME Online Continued to Grow Rapidly; Enhanced O2O Ecosystem with Overseas Ecommerce

During the Reporting Period, the Group’s online business GOME Online maintained strong, with self-operated GMV increasing by 91.6% y-o-y and sales revenue of telecommunication products recording a y-o-y growth of over 200%. For cross-border e-commerce, GOME has successfully built up overseas e-commerce supply chain to enhance its O2O overseas ecommerce platform. The Group is also planning to successively launch Australia Shop and Korea Shop, and to explore opportunities to collaborate with Amazon.cn on overseas supply chains.

Continued Effort in Launching Smart Products and Developing the Third-party Logistics Services

In terms of diversification of product mix, GOME has been expanding product mix with more innovative smart products as potential new growth driver. The new smart products, including VR equipment, drone and smart robot, will help to attract new source of customers by satisfying different demand and optimizing shopping experience of different customer groups. In terms of logistic services, as the leading logistics service provider for large and medium-sized items, the Group continued the development of the second-tier market through its wider footprint of physical stores and its broader logistics geographic coverage to achieve the integrated penetration of its logistic network. In addition, it vigorously developed third-party logistics services. As of 31 March 2016, a total of 582 merchants offering third-party logistics services had joined third-party partnerships with the Group, with 247 new merchants joining in first quarter of 2016.

Proactive Development in Home Appliance After-Sales Services Market to Achieve Transformation from Low Frequency Consumption to High Frequency Consumption

As the integral part of “Omni-channel, New Scenario, Strong Linkage”, GOME extended its home appliances segment from products retail to service market. In April, GOME launched “GOME House Manager”, an online after-sales service platform with the core functions of Ewarranty card, E-manual, door-to-door service appointment, and the visualization of delivery and installation information. With the after-sales service as an entry point, GOME established a “self-operated + third-party” platform as a one-stop O2O model to enhance its strong linkage with customers, thus promoting repeat purchase and achieving transformation from low frequency consumption to high frequency consumption. GOME built up the “closed-loop” system covering the home appliance lifecycle of “purchasing – cleaning – repairing – recycling – repurchasing”, and enhancing the profitability of the after-sales services.

Establishment of GOME Self-media Ecosystem through GOME TOGO (國美來購); A Relatively Low Cost Portal the Generates Rapid Growth in GMV

GOME launched its micro shop brand “GOME TOGO” at the end of 2015. Through the strong communication and linkage with customers via WeChat Moments (朋友圈) run by GOME employees, the Company is to bring the best products all over the world to its consumer and build up the GOME self-media community ecosystem to affect a larger audience. This low cost portal will in turn generate rapid growth in GMV. In the first half 2016, the number of GOME micro shops is expected to reach over 100,000.

Mr. Wang Junzhou, President of GOME, concluded, “The internet era is a time to realize personalized demand. The commercial value is to be re-defined. Traditional operating business model will further shift its focus from products to customers. The existing customer relationship that based on transaction will focus more on the linkage with and among customers. In view of the upgrading and evolution of the industry, GOME implemented the transformation strategy of “Omni-channel, New Scenario, Strong Linkage” that is customerflow driven, and is expected to result in an improvement of the Group’s results upon completion. Leveraging the solid interface platform as customer traffic portals, GOME establishes strong linkages with its customers through the operation of membership, and we believe that it will in turn translate into sustainable growth in total GMV. Looking forward, GOME will open up our strong supply chain platform to serve the community, and shift our focus to customer traffic and customer linkage. We believe that this transformation strategy will support the sustainable development of GOME total retail strategy, thus laying solid foundations for future rapid growth and creating greater value for shareholders.

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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 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.

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

For further enquiries, please contact:

Hong Kong
Hill+Knowlton Strategies Asia
Linda Pui
Tel: (852) 2894 6378 / 9700 0178
Email: linda.pui@hkstrategies.com

Queenie Hung
Tel: (852) 2894 6262 / 6932 2584
Email: queenie.hung@hkstrategies.com

Beijing
Maggie Zhang
Tel: (86) 010 5928 8178
Email: zhangyuan-cw@GOME.com.cn