Gome Retail Holdings Limited · HKEX:493
Gome Retail — GOME Electrical Appliances Holding — FY2011 Earnings Presentation
45 slides from Gome Retail's earnings presentation, Mar 27, 2012
Slide 1: 2011 Annual Results Announcement
2011 Annual Results Announcement 27th March, 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: Chairman’s Statement
Chairman’s Statement The home appliances sector is undergoing revolutionary changes in China. As the largest player in the industry, GOME takes the lead to address the problems and promote a healthy development of the industry. With an insightful understanding of the economy and industry, GOME has e
Slide 4: Board Structure
Board Structure Chairman Independent Executive Non-Executive Directors Directors Directors ZHANG Da SZE Tsai Ping NG Kin Wah ZHU Jia Zhong CHAN Yuk Sang ZOU Xiao Chun WANG Li Hong LEE Kong Wai I.A. Reynolds NG Wai Hung T.J. Manning 2011 Annual Results | Page 3
Slide 5: Board Committees
Board Committees Chairman of Committee Remuneration Nomination Audit Independent Committee Committee Committee Committee SZE Tsai Ping SZE Tsai Ping SZE Tsai Ping SZE Tsai Ping CHAN Yuk Sang CHAN Yuk Sang CHAN Yuk Sang CHAN Yuk Sang LEE Kong Wai LEE Kong Wai LEE Kong Wai LEE Kong Wai NG Wai Hung NG
Slide 6: Performance Review
2011 Performance Review 2011 Annual Results | Page 5
Slide 7: 2011 – Major Business Initiatives
2011 – Major Business Initiatives During the reporting period, the Group opened 282 stores and closed 29 stores with a net increase of 253 Store Network stores. As at the end of the reporting period, total number rose from 826 in 2010 to 1,079 in 2011, covering Expansion and Optimization 235 mediu
Slide 8: 2011 – Operating Environment
2011 – Operating Environment In 2011, the property market remained under macro control, resulting a significant decrease in Macro Control in the transaction volume, in particular in the fourth quarter. Therefore, the growth rate of the Property Market traditional household appliances in T1 markets
Slide 9: Income Statement Summary and Analysis
Income Statement Summary and Analysis RMB Million 2010 2011 Change Revenue 50,910 59,821 17.5% Consolidated Gross profit 9,360 10,859 16.0% Operating Profit 2,706 2,323 (14.1)% Profit before Tax 2,510 2,475 (1.4)% Net Profit Attributable to Shareholders 1,962 1,840 (6.2)% Basic Earnings Per Share 12
Slide 10: Consolidated Gross Profit Margin
Consolidated Gross Profit Margin Consolidated Gross Profit Margin Factors Contributing to Off-line Growth in Consolidate Profit Margin 2011 Annual Results | Page 9
Slide 11: Expenses Breakdown
Expenses Breakdown % of Revenue 2010 2011 Change% Selling & Distribution 10.05% 11.54% 1.49% Rent 3.90% 4.38% 0.48% Sales Salaries 2.33% 2.94% 0.61% Advertising 1.21% 1.51% 0.30% Delivery 0.55% 0.68% 0.13% Utilities 0.73% 0.68% (0.05) % Other S&D 1.33% 1.35% 0.02% Administrative 2.29% 2.04% (0.25) %
Slide 12: Operating Profit Margin and Net Profit Margin
Operating Profit Margin and Net Profit Margin Operating Profit Margin Net Profit Margin 2011 Annual Results | Page 11
Slide 13: Financial Analysis
Financial Analysis RMB Million 2010 2011 Change Cash and Cash Equivalents 6,232 5,971 (4.2)% Pledged Deposit 6,268 4,389 (30.0)% Inventory 8,085 9,625 19.1% Trade Payables 5,758 7,177 24.6% Bill Payables 11,142 9,963 (10.6)% Inventory Turnover Days – Annual 59 days 62 days 3 days Trade Payables Turn
Slide 14: Store Network and Operating Efficiency
Store Network and Operating Efficiency Number of Stores Period-end Sales Area 1,000 sq. m Average Sales per Store Average Sales per sq. m RMB 10,000 RMB 2011 Annual Results | Page 13
Slide 15: Store Efficiency
Store Efficiency Same Store Sales Growth Consolidated Growth 2011 Annual Results | Page 14
Slide 16: Gross Margin by Product Categories
Gross Margin by Product Categories Continuous increase in the gross margin of different product categories due to: Further optimizing the product mix, increasing the sales proportion of high-margin products such as small home appliances, accessories, ODM/OEM products Strengthening the collabor
Slide 17: Consolidated Gross Profit Margin
Consolidated Gross Profit Margin % of Revenue 18.4% 18.2% RMB million RMB Million 9,360 10,859 Items 2010 2011 Revenue 50,910 59,821 Excluding e- Total Other Income 6.8% 5.6% commerce, the consolidated Include： gross margin Income from Suppliers 4.3% 3.5% would be 18.8%, up by 40 bps on Management F
Slide 18: Opportunities and Challenges
Opportunities and Challenges 2011 Annual Results | Page 17
Slide 19: Opportunities and Challenges
1. Opportunities and Challenges Opportunities Challenges Traditional home appliances market: growth potential is Consumer electronics market and e-Commerce: fierce still enormous competition Consumer electronics market and e-commerce: great Continued macro control in the property market pote
Slide 20: Opportunities and Challenges: Consumer Electronics Market
1. Opportunities and Challenges Consumer Electronic Market potential of consumer electronics/home appliances Products Future growth will be driven Traditional home appliances by consumer electronics Small appliances products 3C 1,802 With the growth of per capita income, and the huge population
Slide 21: Home Appliances Market by City Tier
1. Opportunities and Challenges home appliances market categorized by different tiers of cities CAGR Key driving forces Billion RMB， Percentage 1,802 10% 7% ▪ Urbanization to promote demand of home appliances 26% 9% ▪ Product upgrade and replacement 1,002 1st tier cities 11% 26% 11% ▪ Healthy GDP gr
Slide 22: E-commerce in Home Appliances
1. Opportunities and Challenges E-commerce is growing rapidly in China, but the market is fragmented and the competition is fierce Potential competitors include e-commerce players and traditional retailers actively expanding into e-commerce business Proportion of e-commerce in home appliances in
Slide 23: Competitive Advantages
2. Competitive Advantages Innovative business model: driven by consumer demand instead of product procurement; avoiding commoditization of positioning, products, sales and services; focusing on product and customer management to expand the business in differentiated products and enhance gross prof
Slide 24: Competitive Advantages: ERP and Supply Chain
2. Competitive Advantages ERP Leader Navigator System ERP Information HP SAP System Service Software System Provider Provider Effective Supply Chain Management Optimized Management Integrated management system to reduce cost Orders Inventory Budget, profit and cost measured at individual store,
Slide 25: Competitive Advantages: Logistics and Store Network
2. Competitive Advantages Efficient logistics network Accurate data collection system Comprehensive information Unique brick-and-mortar store management system network Home Appliances Mobile Handsets Customers Small Home Appliances Greater GOME’s Network of over 1,700 Brick-and-mortar Stores
Slide 26: Strategic Initiatives
2012 Strategic Initiatives 2011 Annual Results | Page 25
Slide 27: GOME’s Five Year Plan Roadmap
GOME’s Five Year Plan Roadmap 1 3. Enhance 1.Establish regional 2. Enhance Strengthen consumer Strengthen Strengthen 4. Strengthen 5. Develop new dominance andImprove Operating Efficiency operating Infrastructur satisfaction supplier and Infrastructur infrastructure Infrastructur businesses scale ex
Slide 28: Network Expansion & SSS Growth Enhancement
1. Network Expansion & SSS Growth Enhancement Store expansion: steady and continuous Optimization in T1 markets / expansion into T2 and T3 markets Boost same-store growth Network Expansion Same-store Growth Renovate stores, T1 markets: larger and enhance product mix more efficient stores a
Slide 29: Network Expansion: Store Formats
1. Network Expansion & SSS Growth Enhancement New Life Plaza / Flagship Store / Standard Store Multi-Brand Development strategies： Development strategies： • Multi-brand strategies and Strategy • Smaller stores in core enlargement of the market share business districts • A full suite of products • Pr
Slide 30: Store Management and Profitability
1. Network Expansion & SSS Growth Enhancement Store management and profitability enhanced by core competence Store categorization and adjustment of in-store display Store Product optimization to ensure adequate supply Distribution capacity Strengthening the sales channel to elevate customers’ reno
Slide 31: Operation Strengthening to Enhance Efficiency
2. Operation Strengthening to Enhance Efficiency — Operational transition — Driven by consumer demand instead of product procurement Store and supplier management Product and customer management 2012 Monitoring System: Supporting System: Procurement / Greater GOME Audit Pricing Information sys
Slide 32: Optimized Management
2. Operation Strengthening to Enhance Efficiency Optimized management: adjusting attributes to enhance profitability, store efficiency, with a view to a sustainable growth - Optimized store categorization (increase sales per square meter and per person) Classification into 4 categories and 11 leve
Slide 33: Supply Chain Management
2. Operation Strengthening to Enhance Efficiency Major suppliers and strategic partners Supply chain management - Strategic collaboration - Contract optimization - Increase inventory turnover Contract and product management - Contract management - Product management Centralized and regional procurem
Slide 34: ODM/OEM Products
2. Operation Strengthening to Enhance Efficiency ODM/OEM products： To be rolled out in over 1,700 stores on Greater GOME platform in 2012 Self-managed operation Comprehensive after-sale services Rapid inventory turnover Increase the growth in gross profit 1 2 3 4 Air-conditioners: Kitchen &
Slide 35: E-Commerce Integration
3. E-Commerce Integration Capitalize on our strengths in electrical Horizontal channel expansion appliances and low-cost handsets to Expansion of online channels to boost establish competitive advantages the sales Utilize the GOME’s brand, services and distribution to establish competitive a
Slide 36: E-Commerce Integration: Unified Platform
3. E-Commerce Integration Capitalize on the Group’s unified platform to exemplify its competitive advantages Competitive pricing through greater GOME’s relationships with manufacturers Multi-category Expansion Unified procurement Based on 3C products and traditional home appliances Increase th
Slide 37: 3C Business Development
4. 3C Business Development Leverage the largest nationwide retail network to promote 3C business through various models Collaborate with the telecom operators in selling mobile handsets and services Strategic alliances with telecom operators Strategic collaboration with various brands Share exis
Slide 38: Infrastructure Strengthening
5. Infrastructure Strengthening Enhance core competence and achieve sustainable development Brick-and- E-Commerce mortar stores Logistics ERP After-sale Supply Chain System Service Management System 2011 Annual Results | Page 37
Slide 39: Conclusion
6. Conclusion Customer's Satisfaction Expense Consolidated 顾客利益 Sales Growth Stabilization Contribution Growth Increase operating Same store Membership efficiency Products E- sale growth procurement management and and store and commerce individual and integration network management Precision store e
Slide 40: Appendix
Appendix 2011 Annual Results | Page 39
Slide 41: Sales by Regions
Sales by Regions 2010 2011 Total: RMB 50.91 billion Total: RMB 59.82 billion 2011 Annual Results | Page 40
Slide 42: Sales by Categories
Sales by Categories 2010 2011 Total: RMB 50.91 billion Total: RMB 59.82 billion 2011 Annual Results | Page 41
Slide 43: Accelerated Store Network Expansion
Accelerated Store Network Expansion As of 31 December 2011 Group GOME China Paradise CellStar Flagship stores 208 165 43 0 Standard stores (incl. supermarket stores) 345 294 51 0 Specialized stores 526 407 73 46 Total: 1079 866 167 46 Tier 1 Market 642 481 121 40 Tier 2 Market 437 385 46 6 Net store
Slide 44: Stable Supplier Relationships
Stable Supplier Relationships Top five suppliers in 2010 Top five suppliers in 2011 2011 Annual Results | Page 43
Slide 45: Thank You
Thank You 2011 Annual Results | Page 44
GOME Electrical Appliances Holding — FY2011 Earnings Presentation on 6ix