The consolidated gross profit margin and operating cash flow improved significantly, and construction of the full retail ecological sharing platform has been completed
In 1H 2022, GOME continues to promote the implementation of the "Home . Living" Strategy, and based on the development philosophy from the platform perspective, users' perspective, and technology perspective, the Company created a "full retail ecosystem sharing platform" by establishing and integrating its six business platforms, namely "online platform, offline platform, supply chain platform, logistics platform, big data & cloud platform and sharing and joint development platform". The Group further promoted the grid-based model of "Home Living and Home Services" by implementing the core business strategies of entertainment-oriented marketing, low price, quality service, and technology, striving to meet the all-around consumption and service needs of family users.
In the first half of the year, there are various lockdown and control measures in most regions affected by the recurring outbreaks of the pandemic in
Focusing on the main business with a vertical model, reduce the burden in the second half year
The field of household appliances is the traditional strength of
By closing inefficient stores and expanding franchised stores, GOME will comprehensively optimize the store network layout, strengthening the cost reduction in the second half of the year. Maintaining the coverage of offline stores, the number of offline stores was reduced by 370, and the Company plans to close 30%-35% of inefficient businesses' self-operated stores in the future. Unrelated or loss-making businesses will be spun off, sold, or discontinued, and investment in expensive businesses will be gradually reduced. And since Q2, GOME has optimized personnel allocation, improved employees' quality and professionalism, and effective control the Company's salary costs.
Offline stores optimized and upgraded, and the new model helps regain market share
The Group will build an all-scenario and omni-channel provider of O2O appliances and consumer electronics retail by strengthening technology empowerment and comprehensively improving the operation quality of stores. While retaining 700 high-quality and efficient self-operated stores, the Group plans to add 100 superior city pavilions to optimize the grid-based model and improve the existing sales per unit area; with Gome's high-quality management model and supply chain, the Company will rapidly expand its network layout to cover the first to sixth tier cities nationwide with grid-based coverage to quickly regain its original market advantage.
In addition, since July, stores in
Comprehensive upgrade of supply chain model, empower quality products
To enhance the selection and sales capacity of quality products, upgrading the supply chain model is an indispensable part. In the self-sourcing & underwriting custom model, based on the traditional supply chain, the Company will further increase the proportion of underwriting customization to achieve product differentiation and enhance the profitability of the supply chain. Further, the Company will deepen cooperation with suppliers, implement differentiation strategies, and more precise brand positioning; strengthen in-depth cooperation with head brands and enrich waist brands to empower the selection and sales of quality products and improve inventory turnover, which will be conducive to subsequent business development.
Optimize asset structure, promote enterprise structure transformation and management upgrade
To increase the amount of tangible assets held by GOME, the Company acquired the property rights of two properties at a significant discount,
Moreover, to further professionally improve the profitability of the full-service closed loop of pre-sale, mid-sale, and after-sale and value-added services, the Company plans to acquire from the Controlling Shareholder part of the equity interest of Anxun Logistics at a substantially preferential price. Anxun Logistics has a competitive advantage in the field of large warehousing and distribution, which is a scarce advantageous asset in the market. Anxun Logistics' third-party business accounts for over 48% of its revenue and has good profitability and solid cash flow. It is expected to maintain an average growth rate of 20%-40% in the next five years and a net profit growth rate of over 40%. After the acquisition, it will become a new profit growth point for the Company.
Strengthen technology empowerment and strategic cooperation, Actively take social responsibility
In the first half of 2022, the Company entered into strategic cooperation with Huawei, Tencent, and
During the Reporting Period, affected by the outbreaks of the pandemic, the Company is facing an uncertain external business environment. Nevertheless, the Group has always shouldered its social responsibilities by carrying out grid-based business management through its online platform "FUN" APP and offline network of approximately 4,000 GOME stores and developed the role of backbone enterprises internal and external. Internally, the Group strived to protect over 50,000 employees in 776 cities by implementing effective prevention and control measures. Externally, the Group was committed to securing stable supply and prices at all outlets and online platforms during the pandemic, ensuring healthcare products and daily necessities at normal prices. The Group took the initiative to maintain adequate supply and boost consumption during the pandemic by offering to deploy sufficient supplies to regions severely affected.
Regarding outlook and prospects, the GOME management team said: "In the future, the Company will efficiently use the omni-retail ecological sharing platform, focus the vertical model on the main business and improve operational efficiency as the main strategic target in the next period, reorganizing the business segments and optimizing the asset structure, in order to cope with the impact of unfavorable market factors such as the pandemic, improve the profitability of the Company; using technological means to help the digital transformation of enterprises and improve consumer service experience. We will promote strategic focus in the existing development process, quickly realize the Company's operational elements, continue to improve operational efficiency, and enhance profitability. At the same time, strengthen interaction with external strategic partners, carry out more in-depth cooperation, and continue to empower each other in terms of goods, services, traffic, and technology, which is expected to achieve better profitability in 2023, reach the best level in history in 2024, and exceed the best level significantly in 2025."
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