GOME Retail 2017 interim results: Group’s overall GMV increased 23% year-on-year to RMB 61.7 billion

Financial Highlights:
Group’s overall GMV increased 23% year-on-year to RMB 61.7 billion
 Sales revenue increased 7.8% year-on-year to RMB 38.07 billion
 Comparable store sales reached RMB 22.92 billion, representing a year-on-year
increase of 2.3%
 Consolidated gross profit margin increased 1.4 percentage points year-on-year to

Hong Kong, 2017-Aug-29 — /EPR Retail News/ — GOME Retail Holdings Limited (HKEX stock code: 493, “GOME” or “the Company”, formerly known as “GOME Electrical Appliances Holding Limited”, together with its subsidiaries, “the Group”) today ( August 28, 2017) announced the Group’s unaudited consolidated results for the six-month period ended 30 June 2017 (“the reporting period”).

Change Name to “GOME Retail” and Push Forward the Development of New Retail
In the first half of 2017, the retail sector started to recover in general, while the new retail concept was becoming prominent in the industry. While exploring the new retail model, GOME believes that the nature of retail to provide excellent products and services for consumers has never changed. The Company has recently changed its name from “GOM Electrical Appliances” to “GOME Retail”, to better reflect its transformation from an “electrical appliance retailer” to an integrated home solution provider. In future, GOME will continue to leverage the strong support of “New Scenario, Supply Chain and After-sale Service” to upgrade its new retail strategy.

As the Group’s strategies have started to bear fruit, gross merchandise volume (“GMV”) has been gradually improving. During the reporting period, the Group reported GMV of RMB 61.7 billion, representing a 23% increase from the same period in 2016. Online GMV reached RMB 20.5 billion, while offline GMV reached RMB 41.2 billion. Among which, mobile GMV increased by 75%, representing 74% of total online GMV.

Besides, during the reporting period, the Group’s sales revenue increased by 7.8% year-on year to RMB 38.07 billion; comparable store sales reached RMB 22.92 billion, representing a year-on-year increase of 2.3%; EBITDA increased by 59.1% year-on-year to RMB672 million; net profit reached RMB122 million. Currently, the Group operates 868 stores and 713 stores in the first and second tier markets, respectively.

Optimizing GOME New Retail Ecosystem on the Back of Technology
During the reporting period, the Group continued to enhance its New Retail Ecosystem byintegrating the online and offline resources leveraging its strong supply chain system, logistics technology, Internet technology and Big Data analysis. GOME capitalized on its “GOME Plus” mobile application to strengthen the integration of online and offline operations, as well as connecting its business units, customers, front end and back end and upstream and downstream of the industry chain. To form a strong linkage with its customers, GOME’s ecosystem uses different scenarios to provide product differentiations and ultimate experiences.

Cross-industry Integration to Build a New Household Scenario
During the reporting period, GOME continued to strengthen the construction of its new scenarios to push same-store sales growth. In June, the Group announced it will invest RMB356 million in “iKongjian”, a well-known online home decoration company in China, to build different household scenarios in its shops and provide integrated “Home Decoration + Household Products + Electrical Appliance” service. With the grand opening of iKongjianGOME’s flagship store, customers will be given fresh experiences by the unique designs of the sample apartments. The Group expects this business pillar to bring in revenue of RMB1.5 to 2 billion next year, increasing the same store sales growth of 2%-3%. GOME’s cross-industry collaboration with iKongjian proves the Group’s new attempt to integrate industry value chain vertically and explore customer relationship circle. Moreover, it shows that the Group is gradually transforming itself into an integrated home solution provider.

Identifying Customer Needs and Optimizing the Product Structure Based on Supply Chain
In the new age of the Internet, whoever understands the user needs will be best able to seize the opportunities. Through its Big Data analysis, GOME can identify user needs and stay o top of the market trend, so as to introduce differentiated products to form a high margin product structure. For example, the Group has expanded the household product mix, introduced trendy hot items and added diversified brands to products of a single kind. The strategy has been proven effective as the Group’s consolidated gross profit margin increased 1.4 percentage points year-on-year to 17.8% in the first half of 2017.

Improve Logistics Platform to Expedite Market Penetration and to Enhance After-sales
GOME will mainly tap into markets of low-tier cities to expand its market share as the home appliance market has continued to boom in the third and fourth tier cities of China. It plans to open 2,000 stores in the fourth and fifth tier cities during 2017 to 2019. GOME continues to complete and improve its self-owned logistic system to expedite the penetration into both online and offline markets and to enhance the after-sales service. During the reporting period, GOME has widely spread the “delivery + installation” services to each business unit and shortened the delivery time and service responsive time in a significant way, implying the pursuit of “the transaction is not the end but the beginning of the after-sales service”. As a important part of GOME’s new retail deployment, “GOME House Manager” has been optimized to form a standardized platform for after-sales services, raising the threshold for competing in the home appliance service sector.

Mr. Wang Junzhou, the President of GOME concluded: “GOME highly values user-oriented thinking, Internet technology and value-added service on the track of transformation. I’m pleased to see GOME has achieved steady operating results in the first half of the year. Looking forward, we will capitalize on “new market, new business and new technology” to continue executing the existing strategy, bring high-quality goods and services to our customers and cultivate our own core competitiveness in this retail revolution. GOME will give back to shareholders and society with an exceptional business performance.”

About GOME Retail Holdings Limited
GOME Retail Holdings 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 largest electrical appliances and consumer electronics 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
Email: linda.pui@hkstrategies.com

Maggie Zhang
Tel: (86 10) 5928 8178
Email: zhangyuan-cw@gome.com.cn

Sophie Liu
Tel: (852) 2894 6318
Email: sophie.liu@hkstrategies.com

Source: GOME Retail Holdings Limited