Omni-Channel Retailer - TodayIR.comThis presentation and the accompanying slides (the...
Transcript of Omni-Channel Retailer - TodayIR.comThis presentation and the accompanying slides (the...
LOGO
Omni-Channel
Retailer 2013 Annual Results Announcement
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 relied on in connection with any contract or
binding commitment whatsoever. They are only being furnished to you and may not be photocopied, reproduced or
distributed to any other persons at any time without the prior written consent of the Company. This Presentation
has been prepared by the Company based on information and data which the Company considers reliable, but the
Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on,
the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This
Presentation may not be all inclusive and may not contain all of the information that you may consider material.
Any liability in respect of the contents of or any omission from this Presentation is expressly excluded.
Certain matters discussed in this presentation may contain statements regarding the Company’s market
opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-
looking statements are not guarantees of future performance and are subject to known and unknown risks,
uncertainties and assumptions that are difficult to predict. The Company’s actual results, levels of activity,
performance or achievements could differ materially and adversely from results expressed in or implied by this
Presentation, including, amongst others: whether the Company can successfully penetrate new markets and the
degree to which the Company gains traction in these new markets; the sustainability of recent growth rates; the
anticipation of the growth of certain market segments; the positioning of the Company’s products and services in
those segments; the competitive environment; and general market conditions. The Company assumes no
obligation to update any forward-looking information contained in this presentation. Any forward-looking statements
and projections made by third parties included in this Presentation are not adopted by the Company and the
Company is not responsible for such third-party statements and projections.
Disclaimer
1
Key Messages 1
2
3
4
Content
2013 Performance Review
Strategic Implementation
Appendix
2
From 2014, dividend payout ratio
to increase from no more than 30% to 40%
2013 interim & final dividend payout ratio
approximately: 30%
2013 special dividend
approximately: RMB 268 Million
The management has full confidence in the prospects
of the Company with continued growth in earnings
creating value for investors
Strong Performance Continues
to Create Value for Investors
3
Key Messages 1
2
3
4
Content
2013 Performance Review
Strategic Implementation
Appendix
4
( in RMB) Revenue
Consolidated
Gross Profit Margin
Operating
Expense/Revenue
Inventory
Turnover Days
Net Cashflow
from Operations
Net Profit
Attributable to
Owners of the
Parent Company
Cash & Cash
Equivalents
as of 31/12/2013
56.4 B
(+10.4%)
18.4%
(+1.7p.p.)
16.6%
(-1.6 p.p.)
892 M (+222.5%)
9.02 B (+27.6%)
2.0 B
61 Days
(-13 Days)
Main Driving Force of Robust Performance:
Low-Cost High-Efficient Supply Chain
5
In RMB Million 2012 2013 Increase
Revenue 51,097 56,401 10.4%
Consolidated gross profit 8,513 10,354 21.6%
Consolidated gross profit margin 16.7% 18.4% 1.7 p.p.
Operating (loss)/profit (812) 1,015 225.0%
Operating profit margin (1.6)% 1.8% 3.4 p.p.
(Loss)/Profit before tax (759) 1,195 257.4%
(Loss)/Profit attributable to owners of the parent company (728) 892 222.5%
Net profit margin (attributable to owners of the parent company) (1.4)% 1.6% 3.0 p.p.
Main Driving Force of Robust Performance:
Low-Cost High-Efficient Supply Chain
6
Note: Discrepancy due to rounding error
Compared with 2012:
• High GPM products proportion increased from17%
to 22%,average GPM 23-27%
• Regular product decreased from 80% to 70%,average GPM 15-18%
• Quantity product increased from 3% to 8%,average GPM10-13%
High
GPM
22%
70%
8%
Regular Quantity
2013 Product Mix
Powerful Benefits of Procurement Platform
7
51,097.1 56,400.7
2012 2013
42,026.8 47,779.7
2012 2013
RMB Million
RMB Million
Revenue ▲10.4% YoY
Same Store Sales ▲ 13.7% YoY
Consolidated Gross Profit Margin ▲ 1.7 p.p.
16.7% 18.4%
2012 20132013
92
74 82
74
64 56
68 61
Q1 Q2 Q3 Q4
2012 2013
• ERP system and store-based planning model contribute to decrease in inventory
turnover days and increase in cash & cash equivalents
56.6
87.1
68.9 70.7 64.8
84.1 78.7
90.2
2012Q1 2012Q2 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 2013Q4
Powerful Benefits of IT System
8
Reduction in Inventory Turnover Days Increase in Cash & Cash Equivalents
(In Hundred Million)
Operating Expense Optimization
9
14.4%
12.7%
10%
11%
12%
13%
14%
15%
16%
2012 Rent Salary Advertising Delivery Utilities 2013
-1.0%
-0.3%
-0.1% -0.2%
-0.1%
• Mainly through Optimization in rent and salary expenses, 2013 Selling & Distribution
Expenses ▼1.7 p.p. YoY
• Optimization in rent and salary expenses save RMB 229 million in 2013
(0.1)
(5.9)
(2.2)
1.0 0.8
2.5 2.6 3.1
-0.1%
-4.2%
-1.6%
0.8% 0.6%
1.7% 1.8% 2.1%
12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4
Net profit attributable to owners of the parent company
Net profit margin attributable to owners of the parent company
RMB 100 Million
Sustained Growth in Profitability
10
Key Messages 1
2
3
4
Content
2013 Performance Review
Strategic Implementation
Appendix
11
Low-Cost High-Efficient Supply Chain
2014
2015
2016
2017
Goal:Build Another GOME
1Y 3Y
Ensures success by 2017
1Y:2014 focus on building open supply chain system
(incl procurement/logistics/IT)
3Y:2015-2017 open up our supply chain to:
supermarkets/department stores/local chains/online
retailers
Transform from Multi-Channel Retailer
to O2M Omni-Channel Retailer
12
O2M = physical stores + e-commerce + mobile commerce’
Omni-
Channel Tier 1
Stores B2C
Dept.
Stores
Super
Markets
Other
Platforms Mobile
Terminals
Local
Chains Platform
Offline Online Mobile
Tier 2
Stores
Open
Supply
Chain
Business
Model
Big Data
Self-Owned Operation
Low-Cost High-Efficient Supply Chain
Procurement Logistics IT
O2M Omni-Channel Supply Chain
13
Open Social Platform
Consumer
Interface
Value
Platform
Joint Operation Inventory Supply
Open Supply Chain Tactics
Store Network Tactics
E-Commerce Tactics
O2M Omni-Channel
Retailer Low-cost high-efficient supply chain lies at
the heart.
In addition to supporting 1,585* stores and
e-commerce platforms, it will also be
opened up to supermarkets and department
stores, local chains and online retailers
Through self-owned operation, joint
operation and inventory supply to build a
retail ecosystem in China
Refocus on crux of retail business &
Enhance retail value platform
Path & Tactics to Becoming
O2M Omni-Channel Retailer
14
* 1,585 stores =listed + non-listed entities
Exclusively differentiated products
• are of critical importance in the open procurement platform
• cover more than 100+ brands, 2,000+ SKU, with high GPM at 23%-27%
2013
30%
70%
30%
2017
50% 50%
Differentiated
Products
Regular
Products
Differentiated
Products
Regular
Products
Supply Chain Tactic - Open Procurement Platform
Low-price benchmark: competency in product offering from wide selections, full models, and price range
satisfying various budgets
15
Differentiated products
to be increased to 50%
Target by 2017
16
• Strengthening & extending the following business units in 2014
Supply Chain Tactic - Open Procurement Platform
MVNO
• To be introduced to
supermarkets/department
stores/local chains from
Gome stores
• To improve consumer
loyalty & revenue, boost
online and the O2M
business
• To develop 1.5+ million
high ARPU users
Accessories
• To be introduced to
supermarkets/department
stores/local chains from
Gome stores
• To enrich selection of
accessories by 5,000
models
Warranty
• To be introduced to
supermarkets/department
stores/local chains from
Gome stores
• Warranty & extended
warranty for Gome
purchases
• Extended warranty for
non-Gome purchases
• Open up procurement platform to: Gome stores & Gome.Com, supermarkets/department
stores/local chains/online retailers
• Partner with suppliers in product planning, launch and marketing
17
Supply Chain Tactic - Open Procurement Platform
Open
Procurement
Platform
Order, distribution & replenishment
WuMart
……
Order, distribution & replenishment Suppliers
Suppliers
……….
Joint
Planning
Mopark
Dept.Store
To cover
To cover
To cover To cover To cover
To cover
Tmall
Gome
Store
Dangdang
Gome
E-commerce
……
Mobile
Terminal
To cover To cover To cover
Joint
Planning
Joint
Planning
Upgrade I
Online/offline logistics integrated on one platform
Upgrade II
Regional based logistics become centralized
• Build modern RDCs in core cities covering neighboring areas in strategic implementation of
O2M Omni Channel
• Complete two system upgrades to facilitate integrated logistics operation and 3PL in 2014
18
Supply Chain Tactic - Open Logistics Platform
Shanghai Gome
Suzhou Gome
Nantong Gome
Jiaxing China Paradise
Shanghai China Paradise
Consumer
Consumer
Consumer
Shanghai
Logistics
Centre
Integrated
warehousing
&
Shared
inventory
Gome Online
Integrated
Delivery
Integrated
Delivery
Integrated
Delivery
Consumer
Offline:
Self-owned Operation +
Joint Operation+
Inventory Supply
IT system
Financing System
Consumer
Online:
Gome.Com + mobile
terminals
Supplier Supplier
Logistics:
Shared warehouse and
Delivery
Products
Delivery
Products
Delivery
Order + Payment
Procurement Procurement
Information + Cash Flow Information + Cash Flow
Order + Payment
• Core components: Gome logistics network + Gome Logistics system
• Nation-wide regional logistics system: covering 428 cities with1,585 delivery points
19
Supply Chain Tactic - Open Logistics Platform
* RDCs/428 warehouse/1,585 city based delivery points = listed + non-listed entities
Trucks
Warehouse
EWM
Settlement
Delivery
Information platform
Propriety Warehouse
management
External distribution
resources management
Tmall / dangdang
Supermarkets, department stores & Gome store within store
Gome online/offline
Gome Logistics Platform
Gome Logistics Network
Online/offline integrated
logistics platform
Other logistics & delivery
8* RDCs
428* Warehouses
1,585* city based delivery points
Logistics analysis
……
Nationwide
Integrated operation
Gome Logistics System
Logistic Service Benchmark:
Same-day twice delivery, accurate delivery,
and Delivery & Installation Service ( to raise
the bar of logistics service in home appliance
industry)
Open IT
Cloud
System
Supply Chain Tactic - Open IT Cloud System
Procurement Cloud Platform
Logistics cloud platform
Product cloud platform
CRM cloud platform
Operation cloud platform
Order/replenishment
Pricing/supplier
Warehouse/ delivery
Transportation/3rd party
Product/promotion
Pricing/display
Membership/after-sales
Delivery/installation
Inventory/marketing
Store/after-sales
20
Gome Online/Offline
Supermarkets/deparmen
stores/local chains
Tmall/Dangdang
……
IT Capability Benchmark:
• Support entire operational
process on individual product
• Support entire operational
process on in-store service
• Store-based, individual product-
based and individual employee-
based accounting
Services
Pricing Experience
The future belongs to those with a strong supply chain that can meet
consumer demand in product, price, service and experience
Store
Network
Products • Provide solutions
• Easy shopping , exchange &
return
• Fast delivery & installation
• Improve employees’ wellbeing
• Trend setting products
(Apple/Samsung/Nikon/Sony)
• Wide selection of SKUs
• Products to suit all budgets
• Low price, high margin
• Price competitive low-mid-
high end products
• Price match with online
retailers
• Intelligent marketplace
• Wifi & HD digital signal
• Instant paging services
21
Store Network Tactic – Store Management
Opening
• Stable total number of stores
in Tier 1&2 cities, emphatic on
flagship stores renovation
• New stores mainly to be open
in Tier 3&4 cities
• 50-100 new stores in total
• Shut stores with losses
exceeding RMB 1 million and
lacking strategic significance
• Close 30-50 stores in Tier 1&2
cities
• Sublet and/or terminate leases
of underperforming stores
• Reduce rental expenses
through GFA optimization
Extend Gome’s low-cost high-
efficient supply chain towards
other retailers, providing services
in procurement, logistics, and IT
system etc:
• Offline Channels: having
signed with Wumart(1025.HK),
Mopark Department Store,
and Zhejiang Lianhua
Supermarkets on strategic
cooperation in home
appliances and electronics
retailing
• Online Channels: having
signed with Tmall.Com,
Buy.Ccb.Com and
Dangdang.Com on strategic
cooperation
Closure
Rent
Channel Optimization in Tier 1&2 Cities
Expansion in Tier 3&4 Cities
22
Store Network Tactic – Network Expansion
E-commerce Tactics
Consumer Experience
Online:
Self-Owned
Operation &
Joint Operation
Mobile
Terminal
Other Online
Platforms
O2M
Partnership
Omni-
Channel
Key
Open
Supply
Chain Big Data Analysis
Gome’s Low-Cost High-Efficient Supply Chain
Procurement Logistics IT
23
• Breakthrough: traditional appliances and consumer electronics
Integrated supply chain
Integrated logistics network
Shared 100 million members
Shared offline advertising
Congregated big data
Guaranteed lowest price
Price match
Online products available in stores
Online order & offline delivery
Online order & offline pickup,
exchange & return
24
We now offer for online & offline
E-commerce Tactics
Benefits of Omni-Channel Supply Chain
15
2013 2017 2013
O2M Omni-Channel Retailer Strategy
Refined store management
New stores
E-commerce
Supermarkets, department stores,
and Local chains
Build Another GOME by 2017
Low-Cost High-Efficient
Supply Chain
Extension
Key Messages 1
2
3
4
Content
2013 Performance Review
Strategic Implementation
Appendix
26
Amount in RMB Million As of 31st Dec 2012 As of 31st Dec 2013 Change
Balance sheet
Cash & cash equivalents 7,067 9,016 27.6%
Pledged deposits 6,240 6,407 2.7%
Pledged deposit ratio (excl DGPOL) 33.1% 32.9% (0.2) p.p.
Inventories 7,779 8,221 5.7%
Inventory turnover days 74 61 (13) Days
Trade payables 6,630 5,992 (9.6)%
Trade payable turnover days 59 48 (11) Days
Bills payables 11,387 12,085 6.1%
Bills payable turnover days 91 89 (2) Days
Cash flow Statement
Net cash flows from operating activities
4,140 1,995 -51.8%
Cash flows used in investing activities
(829) (328) -60.5%
Cash flows used in financing activities
(2,666) 294 111.0%
Balance Sheet & Cash Flows Statement
27
DGPOL: Domestic Guarantee Pledged for Overseas Loan. Note: Discrepancy due to rounding error
13.3% 15.1%
1.1%
0.9% 2.3%
2.4%
2012 2013
Other income
Other net income from suppliers
Gross profit from suppliers
RMB Million 2012 2013
Revenue 51,097 56,401
Consolidated Gross Profit 8,513 10,354
Consolidated Gross Profit
Margin 16.7% 18.4%
Gross Profit Margin from
Suppliers 13.3% 15.1%
Other Income 3.4% 3.3%
Income from suppliers 1.1% 0.9%
Management fee from non-
listed Gome Group 0.5% 0.4%
Income from air conditioner
installation 0.2% 0.2%
Gross rental income 0.5% 0.5%
Government grants 0.4% 0.3%
Others 0.7% 1.0%
16.7% 18.4%
8,513
10,354
RMB Million
Consolidated Gross Profit Margin
28
Note: Discrepancy due to rounding error
2012 2013 Change
Selling &
Distribution
Expenses 14.4% 12.7% (1.7)
Rent 6.3% 5.3% (1.0)
Sales Salaries 3.2% 2.9% (0.3)
Advertising 1.8% 1.6% (0.2)
Delivery 0.8% 0.7% (0.1)
Utilities 0.9% 0.8% (0.1)
Other S&D 1.4% 1.4% (0.0)
Administrative
Expenses 2.9% 2.8% (0.1)
Other Expenses 0.9% 1.1% 0.2
Total 18.2% 16.6% (1.6)
19.8%
18.5%
16.7%
18.4%
17.1% 17.0%
15.8%
16.4%
Operating Expenses/Revenue
Operating Expenses
29
Expenses/Revenue
Note: Discrepancy due to rounding error
-34.9% -27.3% -23.4% -22.6%
16.9% 15.1% 12.4% 13.7%
121Q 121H 123Q 12FY 131Q 131H 133Q 13FY
Average Sales per Store
4,087 4,026 3,977 3,865 3,758 3,684 3,614 3,592
12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4
1,000 sq.m
RMB Yuan
RMB Million
Number of comparable stores:
Period-end Sales Area
Average Sales per sq.m
Same Store Sales Growth
840 813 791 774 971 947 911 897
8.7 11.2 11.5 10.4 10.7
12.9 12.7 13.1
12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4
2,471 3,204 3,269 2,994 3,086 3,748 3,721 3,873
12Q1 12Q2 12Q3 12Q4 13Q1 13Q2 13Q3 13Q4
Store Indicators
30
18%
9% 9% 8% 6% 6% 5%
39%
Beijing Guangzhou Shanghai Shenzhen Chengdu Xi'an Tianjin Others
2012 Revenue: RMB 51.1 billion
2013 Revenue: RMB 56.4 billion
18%
10% 10% 9% 6% 6% 5%
36%
北京 广州 上海 深圳 成都 西安 天津 其他 Beijing Guangzhou Shanghai Shenzhe Chengdu Xi’an Tianjin Others Beijing Guangzhou Shanghai Shenzhen Chengdu Xi’an Tianjin
Revenue by Region
31
14% 15% 15%
10%
17%
9%
12%
16% 16%
17%
12%
19%
9%
12%
AV Air-con FridgeWashingMachine
Tel-comm SmallAppliances
Computer Digital
2012 2013
23%
14%
18%
16%
12% 11%
6%
24%
15%
20%
15%
12%
10%
4%
AV Air-con FridgeWashingMachine
Tel-comm SmallAppliances
Computer Digital
2012 2013
Revenue by Category Gross Profit Margin by Category
Revenue & Gross Profit Margin by Category
32
Store Network
33
As of 31st December 2013 Group GOME ChinaParadise Dazhong Cellstar
Flagship stores 212 150 35 27 0
Standard stores 327 273 38 16 0
Specialized stores 536 399 82 13 42
Total: 1,075 822 155 56 42
T1 Market 683 482 112 52 37
T2 Market 392 340 43 4 5
Net store increase/(decrease) in 2013: (33) (20) (6) (3) (4)
Number of stores newly opened: 93 77 14 1 1
T1 Market 47 40 6 1 0
T2 Market 46 37 8 0 1
Number of cities accessed: 260 221 59 1 6
T1 Cities 26 20 9 1 1
T2 Cities 234 201 50 0 5
Number of cities newly accessed 13 12 1 0 0
Top Five Suppliers in 2012
Top Five Suppliers in 2013
13.7% 11.3% 5.9% 4.4% 4.3%
39.6%
Samsung Haier Midea Gree Hisense Top Five
12.4% 11.4% 5.1% 4.1% 3.6%
36.6%
Haier Samsung Midea Apple Hisense Top Five
Top Five Suppliers
34
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