PUBLISHED ONAugust 22, 2022 4:40 AM
Affected by the internal and external macro environment, the capital market and the industry face uncertain risks. GOME prudently assesses the market situation, with the objective of improving future operational efficiency, the Company plans to reorganize its business segments and optimize its asset structure, use technological means to facilitate the digital transformation of the enterprise and improve the consumer service experience throughout the process, ultimately improve the profitability of the Group.
Focusing on the core business, Creating a new profit model
Household appliances segment is a traditional area of strength of GOME. In this business segment adjustment, the Company will focus on its core business, with the vertical model that concentrates on retail sales of household appliances and consumer electronic products as its main business. After the adjustment, based on the Company's years of experience in the retail field, relying on a large number of offline stores throughout the country and its existing supply chain and after-sales and other infrastructure, the Company has formed five main profit models: exhibition (offline boutique experience), marketing (online and offline omni-channel self-management + sharing supply chain), integrated solutions for home electronics products, extension products for wide scope home appliances and value-added services (delivery, after-sales, extended warranty, paid membership operation, etc.).
Meanwhile, the Company will build an all-scenario and omni-channel provider of O2O appliances and consumer electronics retail by strengthening technology empowerment, comprehensively improving the operation quality of stores and optimizing the store network layout across the nation by closing down inefficient stores, opening new big and premium stores and expanding franchised stores.
For other unrelated or loss-making businesses, the Company's measures are to spin off, sell or discontinue, and gradually reduce investment in more expensive businesses such as GOME Fun, so as to relieve the Company's pressure and focus on developing the core businesses.
Optimize Asset Structure, Promote Enterprise Structure Transformation and Management Upgrade
To increase the amount of tangible assets held by the Company, the Company considered, on the premise of not diluting the equity of minority shareholders and not increasing the cash flow pressure of the Company, to acquire the entire equity interests of Eagle Delight Properties (Overseas) Limited at a substantially preferential price from the Controlling Shareholder. The main assets are GOME Commercial Capital and No. 9 Xiangjiang, the two property rights. The acquisition will significantly optimize the Company's asset adequacy ratio, enhance the confidence of financial institutions in supporting the Company's business, facilitate the Company's future refinancing, and promote the establishment of the Company's offline city display and experience center to enhance its core competitiveness.
In addition, in order to match the next development strategy of GOME, and to further professionally improve the profitability of the full-service closed loop of pre-sale, mid-sale and after-sale and value-added services, Anxun Logistics Co., Ltd ("Anxun Logistics") is an indispensable part. Anxun Logistics has a competitive advantage in large warehousing and distribution, which is a scarce advantageous asset in the market. The Company will consider acquiring from the Controlling Shareholder part of the equity interest of Anxun Logistics at a substantially preferential price at an appropriate time, thereby achieving the goal of the Company obtaining a controlling interest in Anxun Logistics and improving the retail infrastructure.
In order to ensure the implementation of its business and organized strategies, GOME is also promoting enterprise structure transformation and management upgrades. The Company will:
1. Procure the management team to achieve better performance and higher profitability in 2023; and 2. optimize the management structure, improve the quality and professional level of personnel, optimize staff structure and downsize staff, significantly enhance staff efficiency, close loss-making stores, reduce rents through soliciting tenants and surrendering of the lease, select locations to open new urban stores and large stores, thereby significantly improving the area efficiency; rapidly expand its network through the branding operation and management model and the output capability of the commodity supply chain, and develop a self-operated + franchise model to cover the first-tier to sixth-tier cities across the country on the basis of gridization, so as to quickly restore its original market advantage and achieve the best performance level. Driven by the new model, the separation model of exhibition and sales can be implemented in an effective way to improve gross profit margin and positive cash flow and achieve zero inventory.
About GOME RETAIL HOLDINGS LIMITED
GOME RETAIL HOLDINGS LIMITED was listed on the Hong Kong Stock Exchange in July 2004 (Stock Code: 493HK). Founded in 1987 in China, GOME is a leading technology-driven, experience-based, entertainment-oriented and socialized "Home . Living" technology retail service provider in China. Under the strategy of "Home.Living", GOME strengthens its technology empowerment and focuses on the retail of home appliances and consumer electronic products as its main business. Moreover, five main profit models have been formed: exhibition (offline boutique experience), marketing (online and offline omni-channel self-management + sharing supply chain), integrated solutions for home electronics products, extension products for wide scope of home appliances and value-added services (delivery, after-sales, extended warranty, paid membership operation, etc.).
For more information, please visit the official website at: www.gome.com.hk
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