Gome Retail Holdings Limited · HKEX:493
Gome Retail — GOME Electrical Appliances Holding — 9M 2014 Earnings Presentation
37 slides from Gome Retail's earnings presentation, November 2014
Slide 1: Upgrade Omni-Channel Retailer Strategy, Create Sustainable Growth
LOGO Upgrade Omni-Channel Retailer Strategy Create Sustainable Growth 2014 First Nine Months Results Announcement
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 be
Slide 3: Content
1 2014 9M Performance Review 2 Omni-Channel Retailer Strategy Content 3 Financial Services Platform Upgrade 4 Appendix
Slide 4: 2014 First Nine Months Performance Highlights
2014 First Nine Months Performance Highlights （RMB) Sales Revenue Consolidated Gross Profit Margin 44.65 Billion（+7.2%） 18.6%（+0.6 p.p） Net Cash Flow from Operations Operating Expenses/Revenue 2.060 Billion（+88.6%） 16.1%（-0.5 p.p.） Profit Attributable to Cash & Cash Equivalents Owners of the Parent
Slide 5: Omni-Channel Performance Highlights
Omni-Channel Performance Highlights Omni-Channel Strategy guides Gome to outperform industry in six key indicators for seven consecutive quarters RMB Million Sales per Sq. m Sales per Store Operating Expenses/Revenue RMB Yuan RMB Million 5
Slide 6: 2014 9M Omni-Channel Strategic Implementation
2014 9M Omni-Channel Strategic Implementation Offline Channel Online Channel Dept. Other Tier-One Tier-Two Local B2C Market Mobile Stores Online Omni- Stores Stores Chains place Terminals Super Platforms Channel markets 1. 20149M same store sales growth 6.0% 20149M added 154 1. 20149M GMV ▲ 72.7% Y-
Slide 7: Offline Channel
Omni-Channel Strategic Implementation – Offline Channel RMB Million Tier-one Market Revenue Tier-one Market Same Store Sales Physical Stores (Tier-one Market) ▲ 5.0% ▲ 4.7% Flagship stores renovation in tier-one market 2014 9M: 68 stores (2013 9M: 19 stores) Physical Stores Tier-two Market Revenue T
Slide 8: Online Channel
Omni-Channel Strategic Implementation – Online Channel Solid growth in online GMV since first launch in 2011 2H Significant Increase in GMV Steady Increase in Consolidated GP Margin 8
Slide 9: Differentiated Products
Omni-Channel Strategic Implementation – Differentiated Products 2014 9M Revenue RMB Million Differentiated Products ▲ 7.2% 2014 9M Same Store Sales 人民币百万元 50% ▲ 6.0% 32% 2014 9M Consolidated GP Margin 14 9M 1.2% consolidated gross ▲0.6 p.p. 0.2% profit margin would be 18.4%, excl compensation receiv
Slide 10: Low Cost Supply Chain
Omni Channel Strategic Implementation – Low Cost Supply Chain Operating Expenses / Revenue 2014 9M Expenses Breakdown 2013 2014 Change in 9M 9M P.P. Selling & 12.9% 12.2% (0.7) Distribution Rent 5.2% 5.0% (0.2) Sales Salary 3.0% 2.9% (0.1) Advertising 2.1% 1.5% (0.6) Delivery 0.7% 0.8% 0.1 Utilities
Slide 11: IT Supply Chain
Omni-Channel Strategic Implementation – IT Supply Chain ERP system and store-based planning model contribute to the management of inventory and cash & cash equivalents Inventory Turnover Days Sustained Cash & Cash Equivalents RMB Million 11
Slide 12: Increasing Profitability
Omni-Channel Strategic Implementation – Increasing Profitability 141H & 14 9M net profit margin would be 2.1%, excl compensation received for approx. 100 million RMB Million 0.3% 14Q2 net profit 325 0.2% million, excl compensation received 100 for approx. 100 million 2.1% 2.1% 100 325 12
Slide 13: Content
1 2014 9M Performance Review 2 Omni-Channel Retailer Strategy Content 3 Financial Services Platform Upgrade 4 Appendix
Slide 14: Omni-Channel Electronics Retail Market
Omni-Channel Electronics Retail Market Offline Shopping Online Shopping Omni-Channel 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) (Mobile) (PC) (Tablet) (M
Slide 15: Omni-Channel Strategic Model
Omni-Channel Strategic model Consumer Demand Individuals Small Corporate Clients Big Corporate Clients Mobile Offline Channel Online Channel Terminals Omni Dept. Consumer Channel Stores Other Interface Tier 1 Tier 2 Local Market Mobile & B2C Online Stores Stores Chains place APP Super Platforms mark
Slide 16: Omni-Channel Strategic Implementation
Omni-Channel Strategic Implementation Consolidated procurement, logistics, IT platforms Complete the omni-channel strategy with financial services upgrade • Set up five procurement units • Upgrade from reliance on third party to self build + equity investment + • Expand differentiated product third
Slide 17: Omni-Channel Procurement Platform
Omni-Channel Procurement Platform New procurement platform ensures differentiated products reaching 50% by the year 2017 New Procurement Platform Regular Differentiated Products Products Brown White Unit 1 Unit 2 Unit 3 Unit 4 3C Goods Goods Independent Independent Independent Independent Traditiona
Slide 18: Logistics Network: 400 cities with 3 deliveries/day
Omni-Channel Logistics Network Nation Wide Logistics Network 428 warehouses covering 398 cities Harbin Changchun 1,643 stores available for pickup Shenyang Urumchi Hohhot 1.95 million sq.m. warehouse Beijing Dalian Tianjin Taiyuan Shijiazhuang 200 cities with 3 deliveries/day Yinchuan Xining
Slide 19: Omni-Channel IT System
Omni-Channel IT System 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 Software Vendors Return Delivery Shanghai
Slide 20: Content
1 2014 9M Performance Review 2 Omni-Channel Retailer Strategy Content 3 Financial Services Platform Upgrade 4 Appendix
Slide 21: Financial Services Platform Upgrade: Gome's financial products & services
Financial Services Platform Upgrade Gome’s financial products & services Carry out precise marketing campaigns that based on in-depth big data analysis, in order to increase consumer loyalty Co- fund Insurance branded Products products credit card Consumer Credit Installment Install Business Wealth
Slide 22: Financial Services Upgrade
Financial Services Upgrade Overall Upgrade Self Build Strengthen relationships with consumers & suppliers Existing • Better risk control Model • Greater flexibility Precise Marketing Third Party Collaboration Upgrade Equity Investment • Direct data access Data based Marketing • Upgrade with multi-st
Slide 23: Financial Services Platform Upgrade
Financial Services Platform Upgrade “Self-built + equity investment + third party collaboration” model to support transaction + finance + data platform Transaction Finance Data Consumers Suppliers Venders Financial Services Self Build Platform Third Party Equity Investment 23
Slide 24: Financial Services Platform Upgrade: Huishang Bank
Financial Services Platform Upgrade Equity investment and share of big data between Gome’s supply chain and Huishang Bank’s financial system initiates the upgrade towards “self-built + equity investment + third party collaboration” model Subscribe 632,500,000 new H Shares of Huishang Bank at the Iss
Slide 25: Financial Services Platform Upgrade
Financial Services Platform Upgrade Provide approx. 12,000 suppliers with factoring & Provide almost 130 million users with business Loan, to increase the visibilities of risks financial services such as installment, associated with financial products and services on consumer credit, prepaid card, c
Slide 26: Omni-Channel Strategic Upgrade Prospect
Omni-Channel Strategic Upgrade Prospect Procurement, logistics, IT & financial services platforms continue to support expansion in online, offline, mobile & other channels Consumer credit to members Factoring finance to suppliers Price competitive in all range & categories 3 deliveries/day Precise d
Slide 27: Content
1 2014 9M Performance Review 2 Omni-Channel Retailer Strategy Content 3 Financial Services Platform Upgrade 4 Appendix
Slide 28: Income Statement Summary
Income Statement Summary （RMB Million） 2013 9M 2014 9M Increase Revenue 41,660 44,645 7.2% Consolidated gross profit 7,501 8,289 10.5% Consolidated gross profit margin 18.0% 18.6% 0.6p.p. Operating profit 573 1,088 89.9% Operating profit margin 1.4% 2.4% 1.0p.p. Profit before tax 708 1,270 79.4% Pro
Slide 29: Balance Sheet & Cash Flow Statement
Balance Sheet & Cash Flow Statement （RMB Million） As of 31st Dec 2013 As of 30th Sept 2014 Change Balance Sheet Cash & cash equivalents 9,016 11,826 31.2% Pledged deposits 6,407 5,212 (18.7)% Pledged deposit ratio (excl 32.9% 31.1% (1.8)p.p. DGPOL) Inventories 8,221 10,794 31.3% Inventory turnover d
Slide 30: Consolidated Gross Profit Margin
Consolidated Gross Profit Margin RMB Million 18.6% （RMB Million） 2013 9M 2014 9M 18.0% 0.2% Revenue 41,660 44,645 14 9M consolidated Consolidated Gross Profit 7,501 8,289 gross profit Consolidated Gross Profit margin would 18.0% 18.6% be 18.4%, excl Margin compensation Gross Profit Margin from recei
Slide 31: Store Indicators
Store Indicators Period-end Sales Area Average Sales Per Store 1,000 sq.m RMB Million Average Sales Per Sq.m 3,873 RMB Yuan Same Store Sales Growth No. of comparable 971 947 911 897 963 942 921 31 stores：
Slide 32: Tier-One & Tier-Two Market Revenue
Tier-One* & Tier-Two* Market Revenue 2014 9M▲ 7.2% Y-o-Y, tier-two market proportion▲ 1.6 p.p. to 20.1% 2014 9M Tier-One & Tier -Two Market Sales Ratio 2014 9M Tier-One & Tier -Two Market Sales RMB Million *Tier-one market: tier-one & two cities *Tier-two market: tier-three & four cities 32
Slide 33: Revenue by Region
Revenue by Region 2014 9M Revenue:RMB 44.645 Billion 2013 9M Revenue:RMB 41.660 Billion 33
Slide 34: Revenue & Gross Profit Margin by Category
Revenue & Gross Profit Margin by Category Revenue by Category Gross Profit Margin by Category 34
Slide 35: Store Network
Store Network China Group Gome Dazhong As of 30th Sept 2014 Paradise Cellstar Flagship stores 227 165 34 28 0 Standard stores 349 294 38 17 0 Specialized stores 541 401 91 8 41 Total: 1117 860 163 53 41 T1 Market 692 494 115 48 35 T2 Market 425 366 48 5 6 Net store increase/(decrease) in 42 38 8 (3)
Slide 36: Top Five Suppliers
Top Five suppliers 2014 9M Top Five Suppliers 2013 9M Top Five Suppliers 36
Slide 37: Thank you
ae | sl Thank you
GOME Electrical Appliances Holding — 9M 2014 Earnings Presentation on 6ix