GOME Electrical Appliances Holding Limited announces unaudited interim results for the six-month period ended 30 June 2016

Hong Kong, 2016-Aug-30 — /EPR Retail News/ — GOME Electrical Appliances Holding Limited (HKSE: 493, “GOME” or the “Company,” together with its subsidiaries, the “Group”) today (29 August, 2016) announced its unaudited interim results for the six-month period ended 30 June 2016 (the “Reporting Period”).

Steady Sales Growth with Larger Contribution from GOME Online
In the first half of 2016, the Group remained committed to its strategic transformation towards “Omni-channel, New scenario and Strong linkage” and rolled out a series of targeted investments and renovations. The Group cultivated younger generation consumer groups while maintaining its leading position in existing client base and buying traffic, which laid a solid foundation for rolling out its long term strategic imperatives.

During the Reporting Period, total sales revenue of the Group reached RMB35.31 billion, up 11.4% YoY. Online direct sales revenue of GOME Online grew by 63.0%. The consolidated gross profit margin stood at 16.4%. The operating expense ratio slightly increased by 0.8 percentage point to 16.3%, mainly due to store renovations. Profit attributable to owners of the parent was RMB124 million, down 82% YoY. The Group’s financial position remained solid with RMB11.33 billion of cash and cash equivalents recorded at the end of the period.

As at the end of the Reporting Period, post-March closed transactions and consolidated store numbers stood at 941 stores in first tier market, which recorded 7.6% sales revenue growth and 786 stores in second tier market which recorded 24.9% sales revenue growth.

The Group’s GMV grew 22% to RMB50.2 billion, while GMV generated by GOME Online reached RMB13.3 billion, up 101.2% YoY. GMV generated by mobile applications increased 206% YoY, accounting for 65% of total GMV generated by GOME Online. The GMV generated by after-sales services grew 63% while GMV generated by overseas e-commerce platforms grew 160%.

A New Retail Ecosystem is Building upon a Steady Roll-out of Total Retail Ecosystem Strategy
Rolling out its total retail ecosystem strategy revealed the strategic imperativeness of the Group to cope with a rapidly changing competitive landscape and consumer behavior in retail markets. The Group continued to grow its GMV and customer traffic attracted by building themed retailing platforms with focuses on providing a better customer experience and leveraging on its advantages in supply chain management. Looking ahead, the Group remains committed to pushing forward its strategic transformation steadily and forging its value proposition of becoming an integrated home solutions provider with online and offline channels.

Building New Scenario Ecosystem with New Traffic Attraction Initiatives
Based on a six-scenario strategic business building plan, namely: “Leisure & Entertainment, Lifestyle & Gourmet, Home Furnishing & Design, Internet-TV, Internet of Things & Smart Devices, and E-commerce,” the Group remains focused on building a total retail ecosystem designed to satisfy customer needs of improving quality of life. By carrying out initiatives in five different areas, including entertainment, kitchen & lifestyle, online game tournaments, Internet-TV, and home furnishing & design, the Group intends to organically merge its online and office traffic attraction portals, cover a wider range of retail consumers while cultivating consumption patterns of younger-generation consumers, which eventually will drive sales growth with growing customer traffic.

By vertically partnering with high quality content providers and manufacturers in the value chain, as an all-channel distributor, the Group will push forward the launch of Internet-TV system strategies and seize opportunities to build its presence in “living room economies,” which is crucial to attract younger generations of consumers. The Group targets to realize the whole sales of TV product by 2018 are Internet-TVs.

Internet of Things and smart devices are channels to extend product distribution to the after-sales services market. The Group’s real time monitoring “Smart Cloud” platform is built upon these channels and is aimed at enabling retailers to better understand consumption patterns through data mining and analysis. In addition to the rapid growth of after-sales services platforms and encouraging re-purchase behaviors, the Group’s targeted information push and marketing tools are also designed to cover the full life cycle of customer consumption patterns.

By leveraging on its open supply chain platforms and full and complete process controllable IT software systems, the Group will further integrate the prime resources of its ecosystem partners, both online and offline. The Group also strengthens its value proposition as an integrated home solutions provider by partnering and resource sharing with different types of household name retailers, including Amazon and Feiniu.com. These partnerships also attract consumer traffic by extending customer coverage and supplementing low frequency products with high frequency ones.

Advantages of Integrated Supply Chain Establish Higher Entry Barriers for Retailers
The Group maintains its competitive advantages in the retail industry by adopting flexible and innovative merchandise procurement models and the operation of differentiated products with pricing power controls. The Group also forges a better cloud warehouse model on the top of extending its distribution channels to lower tiers markets. The logistics services alliance that was built upon an open supply chain and resources sharing with Haier and other partners in the ecosystem enables the Group to optimize backbone logistic lines, storage capacity and overall operational efficiency. In addition, GOME establishes a global merchandise platform specializing in importing overseas supply chain resources to the domestic market gradually in the future, the Group also proactively seeks opportunities to expand its presence in global supply chains by exporting domestic resources to overseas markets.

Smart Cloud Platform to Enhance Customer Ties
With the Group’s “Smart Cloud” platform, “GOME House Manager” is an O2O resources sharing platform with an aim of forging with the open smartness, as well as provide a full range of home and residential services with a focus of home appliances, creating a closed loop of the home appliance life cycle of “Purchase – Clean – Maintain – Recycle – Repurchase.” This important portal is aimed at enabling the Group to create new service markets and further strengthen its market-leading position as a full range integrated after-sales services provider, with higher customer loyalty and stronger bonding with consumers.

In addition, the Group also connects its potential customers with GOME TOGO Micro shops, which supplements merchandise distribution with brand building through wholly word of mouth marketing. The number of Micro shops already exceeded 110,000 at the end of the Reporting Period.

Mr. Wang Junzhou, President of GOME, said: “It’s crucial for retailers to satisfy ever-changing consumer appetites and integrate prime resources alongside industry value chain. By integrating supplementary prime resources and forging new scenario and various traffic entries, GOME is building a multi-format and comprehensive product range retailing ecosystem. Relying on the vertically integrated value chain to strengthen our supply chain advantages, GOME is able to lift its own efficiency while providing highly cost-effective logistics services to the entire industry value chain, which eventually delivers high quality products to consumers at reasonable prices. And this ecosystem’s overall profitability should be able to increase with differentiated products, which are designed to satisfy consumer’s diversified needs and pursuit of higher quality of life. Meanwhile, by leveraging GOME’s brand awareness established over the years, GOME is able to rapidly plunge into consumer service market with home appliance related services as a breakthrough point. Benefited from stronger customer ties built upon our cloud platform, which is designed for data collection and analysis of consumer behavior, we should be able to encourage repurchase while closing consumer service cycle.

Looking ahead, GOME remains proactive in integration of prime resources, attracting customer traffic, and building strong linkage with its customers. Meanwhile, GOME is also committed to upgrading and emerging as a leading retailer transformed from the old fashioned retailing business toward a more enterprising, open-minded firm embracing new ideas and technologies, which the management of the Company believes would eventually create value for shareholders, the society and most importantly – consumers.”

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

Investors and Media Inquiry:
Hong Kong
Financial PR (HK) Limited
James Lo
jameslo@financialpr.hk

Alex Wang
alexwang@financialpr.hk
Tel: (852) 2610-0846

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

Source: GOME Electrical Appliances Holding Limited