Gome Retail Holdings Limited · HKEX:493
Gome Retail — H1 2014 Earnings Presentation
43 slides from Gome Retail's earnings presentation, 2014
Slide 1: Omni-Channel Retailer Strategy Creates Sustainable Growth
LOGO Omni-Channel Retailer Strategy Creates Sustainable Growth 2014 Interim Results Announcement
Slide 2: Disclaimer
Disclaimer Acceleration Campaign 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 fo
Slide 3: Content
Acceleration Campaign 1 2014 1H Performance Review Content 2 Omni-Channel Retailer – Acceleration Campaign 3 Appendix 3
Slide 4: 2014 1H Performance Highlights
2014 1H Performance Highlights Acceleration Campaign (RMB) Sales Revenue Consolidated Gross Profit Margin 29.12 Billion (+7.4%) 18.8% (+0.5p.p.) Net Cash Flow from Operations Operating Expenses/Revenue 3.28 Billion (+117.2%) 16.3% (-0.8p.p.) EPS Dividend Payout Ratio 4.1 fen(+115.8%) 40% Profit Attr
Slide 5: 2013-2014 Omni-Channel Performance Highlights
2013-2014 Omni-Channel Performance Highlights Acceleration Campaign Omni-Channel strategy guides GOME to outperform industry in six key indicators for six consecutive quarters Consolidated Gross Profit Margin RMB Million Sales per Sq.m Sales per Store Operating Expenses/Revenue RMB Yuan RMB Million
Slide 6: 2014 1H Omni-Channel Strategic Implementation
2014 1H Omni-Channel Strategic Implementation Acceleration Campaign Offline Channel Online Channel Dept. Tier-One Tier-Two Local Stores Market Other online Mobile Stores Stores Chains B2C Super Place Platforms Terminals markets Omni-Channel 1. 20141H same store sales growth 7.3% 20141H added 79 stor
Slide 7: Omni-Channel Strategic Implementation – Offline Channel
2014 1H Omni-Channel Strategic Implementation – Offline Channel Acceleration Campaign RMB Million Tier-one Market Revenue Tier-one Market Same Store Sales Physical Stores (Tier-one Market) ▲ 5.6% ▲ 6.3% Offline Storesstores Flagship Tier-1renovation & 2 Citiesin tier-one market 20141H :31 stores (20
Slide 8: Omni-Channel Strategic Implementation – Online Channel
Omni-Channel Strategic Implementation – Online Channel Acceleration Campaign Solid growth in both GMV & consolidated gross profit margin since first launch in 2011 2H Steady Increase in GMV Steady Increase in Consolidated GP Margin 8
Slide 9: Omni Channel Strategic Implementation – Differentiated Product
Omni Channel Strategic Implementation – Differentiated Product Acceleration Campaign Revenue RMB Million Differentiated Products ▲ 7.4% Same Store Sales RMB Million 50% ▲ 7.3% 32% Consolidated GP Margin 1.2% ▲0.5p.p. 141H consolidated gross profit margin 18.5%, excl 2009 20141H 2017 compensation fro
Slide 10: Omni-Channel Strategic Implementation – Low Cost Supply Chain
Omni-Channel Strategic Implementation – Low Cost Supply Chain Acceleration Campaign Operating Expenses / Revenue Expenses Breakdown Change in 2013 1H 20141H p.p. Selling & 13.3% 12.3% (1.0) Distribution Rent 5.5% 5.1% (0.4) Sales Salary 3.1% 3.0% (0.1) Advertising 2.0% 1.4% (0.6) Delivery 0.7% 0.8%
Slide 11: Omni-Channel Strategic Implementation – IT Supply Chain
Omni-Channel Strategic Implementation – IT Supply Chain Acceleration Campaign ERP system and store-based planning model contribute to the management of inventory and cash & cash equivalents Inventory Turnover Days Sustained Increase in Cash & Cash Equivalents RMB Million 13,074 9,016 9,344 8,413 7,8
Slide 12: Omni-Channel Strategic Implementation – Increasing Profitability
Omni-Channel Strategic Implementation – Increasing Profitability Acceleration Campaign RMB Million 0.3% 100 14Q2 net profit 141H net profit 325 million, margin 2.1%, excl excl compensation compensation 325 approx. 100 approx. 100 2.1% million from million from major major shareholder shareholder 12
Slide 13: Content
Acceleration Campaign 1 2014 1H Performance Review Content 2 Omni-Channel Retailer – Acceleration Campaign 3 Appendix
Slide 14: Omni-Channel Supply Chain – Strategic Key Words
Strategic Key Words Acceleration Campaign Focus Omni-Channel Supply Chain GOME’s omni-channel strategy focuses on enabling consumers to switch freely between bricks-and-mortar & online stores. (GOME Online + 1,605* stores + store within supermarket, department stores) *including non-listed GOME Grou
Slide 15: Omni-Channel Electronics Retailer in China
Omni-Channel Electronics Retailer in China Acceleration Campaign Omni-Channel Offline Shopping Online Shopping Shopping Search Online Online Online Online GOME stores (PC) (Tablet) (Mobile) GOME stores (Mobile) Order Online Online Online Online Online Online Order online in GOME stores (PC) (Tablet)
Slide 16: Omni-Channel Supply Chain
Omni-Channel Supply Chain Acceleration Campaign Open Social Platform Offline Channel Online Channel Mobile Consumer Dept. Omni- Interface Tier 1 Tier 2 Stores Local Other Mobile Channel B2C Platform Stores Stores Super Chains Platforms Terminals Markets Business Model Self-Owned Operation Joint Oper
Slide 17: Build Another GOME by 2017 – Acceleration Campaign
Build Another GOME by 2017– Acceleration Campaign Acceleration Campaign Encourage creativity & innovation in every business unit of GOME Omni-Channel Acceleration Campaign Structural Online Upgrade Acceleration Infrastructure Offline Upgrade Acceleration Smart Enhance consumer Optimized experi
Slide 18: 1. Structural Upgrade
1. Structural Upgrade Acceleration Campaign Before : Headquarter 4 Regions 54 Independent Tier-One Branches* 131 Affiliated Tier-Two Branches* Now: Headquarter 7 Regions 54 Independent Tier-One Branches* 56 Affiliated Tier-Two Branches* 75 Independent Tier-Two Branches * 1. Smart: Leverage on IT sys
Slide 19: 2. Infrastructure Upgrade – Omni-Channel Procurement Platform
2. Infrastructure Upgrade – Omni-Channel Procurement Platform Acceleration Campaign New procurement platform ensures differentiated products reaching 50% by 2017 New Procurement Platform Regular Differentiated Products Products Brown goods White goods 3C Unit 1 Unit 2 Unit 3 Unit 4 Independent Indep
Slide 20: 2. Infrastructure Upgrade – IT System
2. Infrastructure Upgrade – IT System Acceleration Campaign Comprehensive IT system support online & offline supply chain Supply Chain GOME Key Data Stakeholders (Product, Sales Price) Suppliers GOME Headquarter Inventory Order Beijing GOME 3rd Party Logistics Coordination Beijing Dazhong Soft
Slide 21: 2. Infrastructure Upgrade – Logistics Network
2. Infrastructure Upgrade – Logistics Network Acceleration Campaign Nation Wide Logistics Network Logistics Network Capacity* 428 warehouses covering 398 cities Harbin 1,605 stores available for pickup Changchun Shenyang 1.95 million sq.m warehouse Urumchi Hohhot Beijing Dalian 200 cities wi
Slide 22: 2. Infrastructure Upgrade – Express Logistics
2. Infrastructure Upgrade – Express Logistics Acceleration Campaign 3 Deliveries/Day Fast Morning, afternoon & evening Precise Delivery Accurate Consumers can specify time of delivery Installation Specialized with delivery Installation of appliances upon delivery 22
Slide 23: 3. Offline Acceleration – Physical Store
3. Offline Acceleration – Physical Store Acceleration Campaign Accelerate the introduction of new smart retail terminals at 1,605* stores Price Comparison: Wi-Fi coverage in1,605* stores Store Experience: consumer experience oriented Sales Assistance: professional sales team Wireless Shelf: onli
Slide 24: 3. Offline Acceleration – Network Development
3. Offline Acceleration – Network Development Acceleration Campaign Tier-One Market Development Strategy 1. Focus on network & cost optimization, flagship store operation 2. Prioritize properties in existing & new business districts and along metro lines Tier-Two Market Development Strategy 1. Flags
Slide 25: 3. Offline Acceleration – Stores in Dept. Stores & Supermarket
3. Offline Acceleration – Stores in Dept. Stores & Supermarket Acceleration Campaign Strategic Alliance : leading supermarkets, department stores in Beijing, Shanghai, Guangdong, Hebei, Henan, Liaoning & Shandong Wumart Stores (74 stores) Supermarkets Zhejiang Lianhua* (26 stores) 109 Department Gua
Slide 26: 4. Online Acceleration – Strategic Positioning
4. Online Acceleration – Strategic Positioning Acceleration Campaign Goal: Omni-channel products & service platform with core competitive advantage in direct home appliances retailing Self-owned Operation + Market place + Virtual Mobile App + Big Data Maximize number of SKU to Mobile App accelerate
Slide 27: 4. Online Acceleration – Self-owned Operation + Market place + Virtual
4. Online Acceleration – Self-owned Operation + Market place + Virtual Acceleration Campaign Focus on both value & price: to create value for consumers & increase market share with price competitiveness Traditional Appliances Price: Low-price benchmark Small Appliances online/offline Core: self-ow
Slide 28: 4. Online Acceleration – Online & Offline Integration
4. Online Acceleration – Online & Offline Integration Acceleration Campaign Consolidate online/offline resources, streamline online/offline channels Procurement Online/offline sharing of 100 billion capacity Inventory Complete sharing of inventory online/offline Online Mobile Internet IT Inter
Slide 29: 4. Online Acceleration – Mobile APP + Big Data
4. Online Acceleration – Mobile APP + Big Data Acceleration Campaign Omni-channel big data analysis support supply chain & financial business Supply chain Prepayment GOME Pay Fund & Wealth Consumer finance card Internet (Meifubao) Management Credit Microfinance (Meitong Card) Finance Location Hotspo
Slide 30: 4. Online Acceleration – Logistics Network
4. Online Acceleration – Logistics Network Acceleration Campaign 3 deliveries/day, precise delivery & installation with delivery available both online/offline Trust is a pleasure Inspired to be trusted Trust is a pleasure Inspired to be trusted —To Build Trust Through— —To Build Trust Through— 3 Del
Slide 31: 4. Online Acceleration
4. Online Acceleration Acceleration Campaign 2011-2013 2014-2015 2016-2017 Accelerated Foundation Development Fast Expansion Building Specialized Leading Platform Platform 31
Slide 32: Build Another GOME by 2017
Build Another GOME by 2017 Acceleration Campaign Same Store Sales Growth Tier-Two Market Share Growth E-commerce Supermarkets, department stores Low-Cost, Highly-Efficient 2013 2014 2017 Supply Chain Omni-Channel Retailer Strategy 32
Slide 33: Content
Acceleration Campaign 1 2014 1H Performance Review Content 2 Omni-Channel Retailer – Acceleration Campaign 3 Appendix
Slide 34: Income Statement Summary
Income Statement Summary Acceleration Campaign RMB Million 2013 1H 2014 1H Increase Revenue 27,114 29,124 7.4% Consolidated gross profit 4,973 5,484 10.3% Consolidated gross profit margin 18.3% 18.8% 0.5 p.p. Operating profit 349 738 111.5% Operating profit margin 1.3% 2.5% 1.2 p.p. Profit before ta
Slide 35: Balance Sheet & Cash Flow Statement
Balance Sheet & Cash Flow Statement Acceleration Campaign As of As of RMB Million Change 31st Dec 2013 30th Jun 2014 Balance Sheet Cash & cash equivalents 9,016 13,074 45.0% Pledged deposits 6,407 4,409 (31.2)% Pledged deposit ratio (excl DGPOL) 32.9% 29.8% (3.1)p.p. Inventories 8,221 9,235 12.3% In
Slide 36: Consolidated Gross Profit Margin
Consolidated Gross Profit Margin Acceleration Campaign RMB Million RMB Million 2013 1H 2014 1H Revenue 27,114 29,124 18.8% 18.3% 4,973 5,484 0.3% Consolidated Gross Profit Consolidated Gross Profit 18.3% 18.8% Margin 141H consolidated Gross Profit Margin from 15.3% 15.2% gross profit Suppliers margi
Slide 37: Store Indicators
Store Indicators Acceleration Campaign Period-end Sales Area Average Sales Per Store 1,000 sq.m. RMB Million Average Sales Per Sq.m Same Store Sales Growth RMB Yuan 3,873 No. of comparable 971 947 911 897 963 942 37 stores
Slide 38: Tier-One & Tier-Two Market Revenue
Tier-One* & Tier-Two* Market Revenue Acceleration Campaign 2014 1H revenue ▲ 7.4% Y-o-Y, tier-two market proportion ▲ 1.3p.p. to 20.1% 23,256 RMB Million 81.2% 79.9% 22,018 20.1% 5,868 18.8%. 5,096 一二线城市 Tier-1&2 cities 三四线城市 Tier-3&4 cities 一二线城市 Tier-1&2 cities 三四线城市 Tier-3&4 cities 2013 1H 2014 1
Slide 39: Revenue by Region
Revenue by Region Acceleration Campaign 2014 1H Revenue: RMB 29.12 Billion 2013 1H Revenue: RMB 27.11 Billion 38% 37% 18% 18% 10% 10% 9% 9% 8% 8% 7% 6% 6% 6% 5% 5% Beijing Guangzhou Shenzhen Shanghai Chengdu Xi'an Tianjin Others 2014 1H 2013 1H 39
Slide 40: Revenue & Gross Profit Margin by Category
Revenue & Gross Profit Margin by Category Acceleration Campaign Revenue by Category Gross Profit Margin by Category 40
Slide 41: Store Network
Store Network Acceleration Campaign As of 30th June 2014 Group GOME ChinaParadise Dazhong Cellstar Flagship stores 223 162 33 28 - Standard stores 342 288 37 17 - Specialized stores 523 383 89 9 42 Total: 1,088 833 159 54 42 T1 Market 680 480 113 50 37 T2 Market 408 353 46 4 5 Net store increase/(de
Slide 42: Top Five Suppliers
Top Five Suppliers Acceleration Campaign Top Five Suppliers in 2014 1H Top Five Suppliers in 2013 1H 42
Slide 43: THANK YOU
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