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

GOME’s revenue up 7.9% YoY during the first 9 months of 2015

  • Offline Assets and Supply Chain Platform Sync Seamlessly with Online Platform
  • Proposed Acquisition of Non-Listed Retail Assets to Establish a Nationwide Total Retail Network
  • Sales Revenue: RMB48.173 billion, up 7.9% year-on-year
  • Sales Growth of Comparable Stores: up 2.3%; the Growth in the Second-tier Market: up 5.9%
  • E-Commerce Gross Merchandise Volume (including Gross Merchandise Volume of Marketplace): up 112.6% year-on-year; of which 43.7% from mobile terminals
  • Total number of stores increased to 1,224, covering 310 large and medium-sized cities

Hong Kong, 2015-12-1 — /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 operational update for the first three quarters of 2015 (“the reporting period”).

Outstanding Results under O2O Total Retail Strategy
During the Reporting Period, the Group continued to focus on further enhancing its consumer interface platforms with more interactive features and expanding its O2O Total Retail Ecosystem with the aim of attracting more customers and promoting sales growth. The Group continued to optimise its physical stores in first-tier market and accelerate the expansion of its store network in second-tier market. In addition, it promoted the market penetration of its e-commerce business nationwide.

During the Reporting Period, the Group opened 56 new stores and closed 49 underperforming stores in first-tier market. The Group opened 114 new stores and closed 29 stores in second-tier market. The total number of stores as at 30 September 2015 was 1,224, distributed across 310 large and medium-sized cities.

Accelerating Development under Total Retail O2O Strategy
GOME will continue to expand its O2O Total Retail Ecosystem and reinforce its nationwide O2O total retail experience. First of all, starting at the individual customer experience, GOME will improve on community-centric O2O, accelerate e-commerce growth and strengthen smart internet-tv terminals. Next, GOME will further develop its consumer interface platforms with more interactive features, riding on the strong synergy of mobile micro shops, smart stores, second-tier markets and gome.com.cn. GOME will complete the total retail value platform by strengthening its Big Data processing, procurement platform, logistics platform, after-sales platform, IT platform and financial platform. In doing so, GOME can improve the cooperation between the links in the O2O Total Retail Ecosystem, unleashing the unique competitive advantage of the Group’s “Open Omni-channel Retailer” strategy, and achieving the sustainable growth of its O2O Total Retail Ecosystem.

On 26 July 2015, GOME announced its proposed acquisition of the retail network and supply chain assets held by the controlling shareholder (“the Target Group”). The proposed acquisition would potentially achieve synergies in operations and corporate governance, completing the nationwide coverage of the online and offline assets, and its procurement, logistics, after-sales and supply chain platforms within the Total Retail Ecosystem. On 28 October 2015, GOME announced a supplemental agreement with its controlling shareholder in relation to the proposed acquisition of the Target Group. The total implied consideration for the transaction was reduced to HK$9,095 million – representing a discount of nearly 20% compared with the previously proposed consideration of HK$11,268 million – so as to enhance the attractiveness of the transaction to GOME’s shareholders.

If the acquisition is successful, the Target Group and the Listed Company together are expected to realise significant synergies, which are expected to enhance GOME’s overall profitability. Upon the completion of the acquisition, GOME will fully integrate listed and nonlisted offline resources, accelerate penetration into tier-2, tier-3 and tier-4 cities and to support the speedy nationwide coverage of E-Commerce. Through the acquisition, we will be able to upgrade and transform the current regional retail network of the Listed Company into a nationwide retail network and accelerate the implementation of the O2O Total Retail strategy. The synergies arising from the acquisition will lead to sales/market share growth, gross profit improvement and cash flow optimization, cost savings and enhanced corporate governance. Moreover, pursuant to the supplemental agreement and based on profit attributable to owners of the parent for the 6 months ended 30 June 2015, the combined pro forma net profit of the Group and the Target Group amounts to RMB943 million, resulting in an EPS accretion of approximately 3.6% (calculated according to the pro forma enlarged number of shares outstanding after the completion of the acquisition), as compared with 0.5% under the original terms of the acquisition, which further enhances returns for GOME’s shareholders.

“The acquisition of the controlling shareholder of retail assets can further enhance the competitiveness of GOME. It is critical for us to seize the market in the O2O new era,” said Mr. Wang Junzhou, CEO of GOME. “In future, with the ‘Internet +’ national policy, GOME will reinforce its strengths in retail network and supply chain assets, actively develop its online business, reap synergies online and offline, and accelerate implementation of its O2O Total Retail strategy. In doing so, GOME will be able to achieve industry-leading operating performance. We are confident of achieving the goal of ‘building another GOME’ by 2017.”

Notes: As a result of the Company’s announced acquisition of Artway and whitewash waiver application, the Company is currently under an offer period. As such, the announcement only provides an operational update for the first three quarters of 2015. Pursuant to the Code, the unaudited profit attributable to owners of the parent of the Company for the Reporting Period would constitute a profit forecast and will be required to be reported on by the Company’s financial advisers and reporting accountants under the Code if it was announced. There are practical difficulties in reporting on such unaudited financial information in accordance with the requirements of the Code within a short period of time and before the issue of this announcement. Hence, the Company will not disclose profit related information in our Q3 announcement.

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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
Celia Fong
Tel: (852) 2894 6349 / 9842 8809
Email: Celia.fong@hkstrategies.com

Samantha Wang
Tel: (852) 2894 6266 / 9418 0271
Email: samantha.wang@hkstrategies.com

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