Gome Retail Holdings Limited · HKEX:493
Gome Retail — 9M 2012 Earnings Presentation
30 slides from Gome Retail's earnings presentation, Nov 19, 2012
Slide 1: 2012 First Nine-Month Results Announcement
2012 First Nine-Month Results Announcement 19th November, 2012
Slide 2: Disclaimer
Disclaimer This presentation and the accompanying slides (the “Presentation”) which have been prepared by GOME Electrical Appliances Holding Limited (“GOME” or the “Company”) do not constitute any offer or invitation to purchase or subscribe for any securities, and shall not form the basis for or
Slide 3: Content
Content 1 Market Environment 2 Financial Results in the First Nine Months, 2012 3 Key Messages to Investors 4 4Q12 Strategies and Outlook 5 Appendix 9M 2012 Results Announcement | Page 2
Slide 4: Market Environment
Market Environment 9M 2012 Results Announcement | Page 3
Slide 5: Home Appliances Market
1. Home Appliances Market Market size: RMB 1.306 trillion in 2012 GOME’s market share： Tier 1: 30%，Tier 2: 45% Tier 1:traditional appliances(25%)/small appliances(22.5%)/3C(12%) Tier 2: traditional appliances(10%)/small appliances(5%)/3C(3%) Market Size (E-commerce included) RMB Billion Source：McKin
Slide 6: Growth Opportunity
2. Growth Opportunity Tier 2 market will be the growth engine for future Home Appliance Market Breakdown by Cities RMB Billion; % CAGR Growth Driver 2,023 10% 26% 7% ▪ Urbanization furthered demand for home 1,053 appliance 1st Tier City 10% 26% 9% ▪ Product advancement and replacement 2nd Tier City
Slide 7: Financial Results in the First Nine Months, 2012
Financial Results in the First Nine Months, 2012 9M 2012 Results Announcement | Page 6
Slide 8: Income Statement Summary and Analysis
1. Income Statement Summary and Analysis Operating results affected macro environment Change RMB Million 1Q 2Q 3Q 9M12 vs. 9M11 Revenue 9,762 13,364 12,931 36,057 (18.0)% Consolidated Gross Profit 1,948 1,837 1,940 5,725 (31.0)% Operating Profit / (Loss) 53 (581) (235) (763) (133.5)% Profit / (Loss)
Slide 9: Consolidated Gross Margin Analysis
2. Consolidated Gross Margin Analysis RMB Million 9M11 9M12 Items 9M11 9M12 Consolidated 18.9% 15.9% gross margin Revenue 43,983 36,057 Consolidated 8,292 5,725 Consolidated gross gross profit 18.9% 15.9% margin (RMB Million) Gross margin 12.8% 12.3% E-commerce Total other income 6.1% 3.6% excluded,
Slide 10: Expenses Breakdown
3. Expenses Breakdown Cost measures started to take effect in 3Q Change RMB Million 1Q 2Q 3Q 9M12 vs. 9M11 Selling & Distribution 1,534 1,917 1,727 5,178 6.5% Expenses Rent 714 754 732 2,200 21.8% Sales Salaries 372 415 404 1,191 (7.9)% Advertising 107 326 220 653 14.0% Delivery 71 84 90 245 (17.8)%
Slide 11: Store Indicators
4. Store Indicators Store improvement plan started in 2Q Period-end sales area 1,000 sq.m Average sales per store 10,000 RMB Sales per sq.m Yuan RMB Same Store Sale Growth Number of comparable stores： 680 669 662 661 788 763 741 9M 2012 Results Announcement | Page 10
Slide 12: Balance Sheet Summary
5. Balance Sheet Summary 3Q Inventory turnover days reduced, positive cash flow from operating activities RMB Million As at 31st As at 30th Change December, 2011 September 2012 Cash and Cash Equivalents 5,971 6,665 11.6% Pledged Deposits 4,389 5,964 35.9% Inventories 9,625 9,306 (3.3)% Trade Payable
Slide 13: Key Messages to Investors
Key Messages to Investors 9M 2012 Results Announcement | Page 12
Slide 14: Key Messages to Investors
Key Messages to Investors During the reporting period, the Group remained under macro pressure Sales revenue reached RMB 36.06 billion, decreased by 18.0% y-o-y. Sales decline, operating cost increased, and investment in e-commerce during build-up phase led to a loss of RMB 687million. Bricks &
Slide 15: Key Messages to Investors
Key Messages to Investors Cost measures started to take effect, business started to bottom out in 2Q12 and showed signs of improvement Loss reduced and Operating Inventory profitability expenses started turnover days improved to reduce shortened 1 2 3 4 5 6 Optimization in Decline in SSSG Cash flow
Slide 16: Key Messages to Investors
Key Messages to Investors Cost measures started to take effect, business started to bottom out in 2Q12 and showed signs of improvement Sales Revenue Consolidated Gross Margin Net Profit Revenue increased gradually Consolidated gross margin Net loss narrowed improved 9M 2012 Results Announcemen
Slide 17: Key Messages to Investors
Key Messages to Investors Cost measures started to take effect, business started to bottom out in 2Q12 and showed signs of improvement Floor Area Optimization Operating Expenses to Sales Ratio Same Store Sales Growth Optimized area 10,000 sq.m Same store sales decline narrowed Store optimization c
Slide 18: 4Q12 Strategies & Outlook
4Q12 Strategies & Outlook 9M 2012 Results Announcement | Page 17
Slide 19: Strategic Layout
1. Strategic Layout Multi-Channel Retailer: online/offline businesses with one integrated infrastructure Consumer demand Oriented Tier 1 market Tier 2 market E-commerce (1st 2nd (3rd 4th Tier cities) Steady Tier cities) growth Same store Network sales growth coverage Supply Chain 100 billion Nation-
Slide 20: Tier 1 Market
2. Tier 1 Market Same store sales growth focused 1 2 3 Tier 1 market Tier 2 market E-commerce （1 2 tier cities） （3rd 4th tier cities） st nd Multi-channel Retailer Total market value of approx. 632 billion by 2016 Growth Total market value of approx. 361 billion in 2012, of which GOME’s tradition
Slide 21: Tier 2 Market
3. Tier 2 Market Strong growth engine for physical stores 1 2 3 Tier 1 market Tier 2 market E-commerce （1 2 tier cities） （3rd 4th tier cities） st nd Multi-channel Retailer Total market value of approx. 1 trillion by 2016, exceeds tier 1 market Growth Total market value of approx. 506 billion in
Slide 22: E-commerce
4. E-commerce Integrate online/offline infrastructure to become a multi-channel retailer 1 2 3 Tier 1 market Tier 2 market E-commerce （1 2 tier cities） （3rd 4th tier cities） st nd Multi-channel Retailer 1. High operating cost Current issues 2. Low gross margin facing B2C players 3. Continuous loss 1
Slide 23: Strengthening Supply Chain Operations
5. Strengthening Supply Chain Operations Boost product competitiveness and consolidated gross profit margin Supply chain elements Measures Merchandizing deliver right products to the right stores at right inventory level Ordering and Speed up inventory turnover, reduce loss caused by price reduction
Slide 24: Appendix
Appendix 9M 2012 Results Announcement | Page 23
Slide 25: Sales by Regions
Sales by Regions 9M2011 Total: RMB 43.98 billion 9M2012 Total: RMB 36.06 billion 9M 2012 Results Announcement | Page 24
Slide 26: Sales by Product Categories
Sales by Product Categories 9M 2012 Results Announcement | Page 25
Slide 27: Gross Margin by Product Categories
Gross Margin by Product Categories Continuous increase in gross profit margin due to: Further optimization of product mix, increasing the sales proportion of high-margin products such as small appliances, accessories, ODM/OEM products Strengthening collaboration with suppliers and optimize con
Slide 28: Store Network Expansion
Store Network Expansion As of 30th September, 2012 Group GOME China Paradise CellStar Flagship stores 216 171 45 0 Standard stores 391 338 53 0 Specialized stores 463 352 65 46 Total: 1070 861 163 46 T1 Market 672 511 120 41 T2 Market(1) 398 350 43 5 Net store increase/decrease in 9M2012: (9) (5) (4
Slide 29: Stable Supplier Relationship
Stable Supplier Relationship Top 5 suppliers for 9M2011 Top 5 suppliers for 9M2012 9M 2012 Results Announcement | Page 28
Slide 30: Thank you
Thank you 9M 2012 Results Announcement | Page 29