Gome Retail Holdings Limited · HKEX:493
Gome Retail — Q1 2013 Earnings Presentation
35 slides from Gome Retail's earnings presentation, May 30, 2013
Slide 1: 2013 First Quarter Results Announcement
2013 First Quarter Results Announcement 30th May 2013
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 Key Message to Investors 2 2013 First Quarter Financial Results (including Dazhong Appliances) 3 2013 – 2015 Strategic Outlook 4 Appendix Sales by Regions & Product Categories, Gross Profit Margin by Categories and Store Network Expansion 1Q12 – 1Q13 Results (excl Dazhong Appliances
Slide 4: Key Messages to Investors
Key Messages to Investors 2013 1Q Results | Page 3
Slide 5: Key Message to Investors
Key Message to Investors During the reporting period, home appliances industry continued to recover and the Group remained committed to the implementation of its strategies. From January to March 2013, revenue was RMB 12.338 billion, up 18.2% year on year; Higher sales revenue and consolidation
Slide 6: Key Message to Investors
Key Message to Investors Sales/consolidated gross profit/net profit increased Y-o-Y Rent/labour expense down Y-o-Y RMB Million 2013 1Q Results | Page 5
Slide 7: Financial Results in 1Q13 (including Dazhong Appliances)
Financial Results in 1Q13 (including Dazhong Appliances) 2013 1Q Results | Page 6
Slide 8: Impact of Dazhong Appliances Consolidation
1. Impact of Dazhong Appliances Consolidation Income Statement Balance Sheet Sales revenue increased Total assets increased Consolidated gross profit margin and Total liabilities increased expenses/sales ratio remained stable Total equity (net assets) remained stable Interest income from
Slide 9: Income Statement Summary
2. Income Statement Summary Increase RMB Million 1Q12 1Q13 (Decrease) Revenue 10,439 12,338 18.2% Consolidated Gross Profit 2,085 2,169 4.0% Operating Profit 19.42 62.31 220.9% Profit Before Tax 14.14 96.85 584.9% Profit / (Loss) Attributable to Owners (13.10) 76.33 682.7% of the Parent Company Cons
Slide 10: Consolidated Gross Profit Margin Analysis
3. Consolidated Gross Profit Margin Analysis 1Q12 1Q13 Consolidated RMB Million Gross Profit 20.0% 17.6% Margin Items 1Q12 1Q13 Consolidated Gross Profit Profit 2,085 2,169 Revenue 10,439 12,338 (RMB Million) Consolidated Gross Profit Margin 20.0% 17.6% Excl E- Gross Profit Margin from 14.2% 14.8% c
Slide 11: Expenses Breakdown
4. Expenses Breakdown Cost control measures reduced SG&A/sales ratio by 2.7 pct pt. Increase 1Q12 1Q13 (Decrease) Selling & Distribution Expenses 16.1% 13.4% (2.7) pct pt Rent 7.5% 6.4% (1.1) pct pt Sales Salaries 3.8% 2.6% (1.2) pct pt Advertising 1.1% 1.7% 0.6 pct pt Delivery 0.7% 0.7% (0.0) pct p
Slide 12: Store Indicators
5. Store Indicators Period-end Sales Area 1,000 sq.m Average Sales Per Store RMB 10,000 Sales Per sq.m RMB Same Store Sales Growth Number of comparable 840 813 791 774 971 stores ： 2013 1Q Results | Page 11
Slide 13: Balance Sheet Summary
6. Balance Sheet Summary RMB Million 1Q12 1Q13 Increase (Decrease) Cash and Cash Equivalents 5,658 6,484 14.6% Pledged Deposits 3,355 5,960 77.6% Inventories 7,998 7,110 (11.1)% Trade Payables 6,070 6,126 0.9% Bill Payables 8,231 11,138 35.3% RMB Million 1Q12 1Q13 Increase (Decrease) Inventory Turno
Slide 14: Strategic Outlook for 2013 - 2015
Strategic Outlook for 2013 - 2015 2013 1Q Results | Page 13
Slide 15: Becoming A Multi-Channel Retailer
Redefining Our Retail Model in China Becoming A Multi-Channel Retailer 2010 2012 2013 2014 2013 2015 2016 2016 2013 1Q Results | Page 14
Slide 16: Strategic Business Model
1. Strategic Business Model Multi-Marketing Web portals, search engines, micro blog, online community, digital media (CCTV), print media … Traditional appliances, 3C/mobile/IT products, ODM/OEM Multi-Product products, life style/digital/financial products Online/offline Platforms E- Mobile Stores St
Slide 17: Competitive Advantages
2. Competitive Advantages Leverage competitive advantages over the course of multi-channel retailer development Procurement Advantage Logistics Advantage Brand/Management Advantage – Scale advantage – Warehouses shared between – E-commerce benefits from online & offline platforms brand loyalty – Tra
Slide 18: Strategy Execution
3. Strategy Execution One back-end platform supports multi-marketing, multi-products and market channel retailing. Integrate existing Expand product Restructure platforms categories logistics network Share one platform Enhance Improve experience warehousing & delivery Online/offline Increase shareho
Slide 19: Key Strategic Initiatives for 2013 - 2015
The home appliances market in China holds significant potentials. Key Strategic Initiatives for 2013 - 2015 2013 1Q Results | Page 18
Slide 20: Offline Business Development Strategy
1. Offline Business Development Strategy Tier 1 market: network optimization to improve profitability Tier 2 market: network expansion to achieve sustainable growth Tier 1 Market Tier 2 Market – Improve store layout – Development model: flagship store + satellite store – Enhance shopping experience
Slide 21: Online Business Development Strategy
2. Online Business Development Strategy Enhance shopping experience with a multitude of categories Expedite integration to increase gross profit margin and control cost One website with a multitude of categories + mobile commerce 3 B2C GOME.COM.CN Market place Procurement platform Membership databas
Slide 22: Supply Chain Development Strategy
3. Supply Chain Development Strategy Emphasize efficient product management to build a low-cost, highly-efficient supply chain Offline Stores E-commerce 1. Supplier Coordination 1. Integrate Online & Offline Supply Chain - Information sharing - Coordinate product mix - Timely interaction - Convert s
Slide 23: Product Development Strategy
4. Product Development Strategy Build one integrated supply chain to cater to online and offline businesses Development Target： Increase number of SKU to 1.5 – 2 million Differentiated products to account for 30 – 40% of sales OEM/ODM, exclusive products to account for 20 – 30% of sales Development
Slide 24: Logistics Network Development Strategy
5. Logistics Network Development Strategy Use asset-light model, build automatic warehousing and logistics network with nation-wide coverage Central Logistics Hub 2nd Regional Logistics Centre Last Mile Delivery Integrate and upgrade Upgrade existing urban Store staff delivery existing logisti
Slide 25: Appendix
Appendix 2013 1Q Results | Page 24
Slide 26: Sales by Regions
1. Sales by Regions 1Q12: RMB 10.439 billion 45% 38% 30% 17% 15% 10% 10% 9% 6% 5% 5% 0% Beijing Guangzhou Shenzhen Shanghai Chengdu Xi'an Chongqing Others 1Q13: RMB 12.338 billion 2013 1Q Results | Page 25
Slide 27: Sales by Product Categories
2. Sales by Product Categories 2013 1Q Results | Page 26
Slide 28: Gross Profit Margin by Product Categories
3. Gross Profit Margin by Product Categories Constant increase in gross profit margin due to: Further improvement to product mix, increase in the sales of products with high gross profit margins, such as small appliances, accessories, ODM/OEM products Strengthening collaboration with suppliers
Slide 29: Store Network Expansion
4. Store Network Expansion China Group GOME Dazhong Cell Star As of 31st March 2013 Paradise Flagship stores 212 152 36 24 0 Standard stores 388 304 57 27 0 Specialized stores 481 365 61 9 46 Total: 1,081 821 154 60 46 T1 Market 695 484 114 56 41 T2 Market 386 337 40 4 5 Net store increase/decrease
Slide 30: Stable Supplier Relationships
5. Stable Supplier Relationships Top 5 Suppliers in 1Q12 Top 5 Suppliers in 1Q13 2013 1Q Results | Page 29
Slide 31: 1Q12 – 1Q13 Results (excl Dazhong Appliances)
1Q12 – 1Q13 Results (excl Dazhong Appliances) 2013 1Q Results | Page 30
Slide 32: 1Q12 – 1Q13 Results (excl Dazhong Appliances)
1Q12 – 1Q13 Results (excl Dazhong Appliances) Income Statement Analysis 1Q12 1Q13 Increase RMB Million (excl Dazhong) (excl Dazhong) (Decrease) Revenue 9,762 11,035 13.0% Consolidated Gross Profit 1,948 2,007 3.0% Operating Profit 53 58 9.4% Profit Before Tax 95 137 44.2% Profit Attributable to Owne
Slide 33: 1Q12 – 1Q13 Results (excl Dazhong Appliances)
1Q12 – 1Q13 Results (excl Dazhong Appliances) Business bottomed out in 3Q12 with continuous improvement Sales Revenue Consolidated Gross Profit Net Profit (excl Dazhong) (excl Dazhong) (excl Dazhong) Differentiated products Turned profitable for two Y-o-Y sales revenue up contributed to consolidated
Slide 34: 1Q12 – 1Q13 Results (excl Dazhong Appliances)
1Q12 – 1Q13 Results (excl Dazhong Appliances) Strategic adjustments and cost measures continued to take effect Floor Area Optimization Rent & Labour Cost Optimization (excl Dazhong) (excl Dazhong) 10,000 sq.m Cost controlled by streamlining Continued efforts made to store size and labour force optim
Slide 35: Thank You
Thank You 2013 1Q Results | Page 34