LOGO
Omni-Channel Retailer Strategy
Creates Sustainable Growth
2014 Interim Results Announcement
Acceleration Campaign
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
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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
2
Acceleration Campaign
2014 1H Performance Review 1
2
3
Content Omni-Channel Retailer – Acceleration Campaign
Appendix
3
Acceleration Campaign
(RMB)
4
Sales Revenue Consolidated Gross Profit Margin
29.12 Billion (+7.4%) 18.8% (+0.5p.p.)
Net Cash Flow from Operations Operating Expenses/Revenue
3.28 Billion (+117.2%) 16.3% (-0.8p.p.)
EPS Dividend Payout Ratio
4.1 fen(+115.8%) 40%
Profit Attributable to
Owners of the Parent Company
Cash & Cash Equivalents
(as of 30th June 2014)
690 Million (+115.2%) 13.07 Billion (+45.0%)
2014 1H Performance Highlights
Acceleration Campaign
2013-2014 Omni-Channel Performance Highlights
Sales per Sq.m Sales per Store Operating Expenses/Revenue
RMB Million
RMB Million RMB Yuan
Consolidated Gross Profit Margin
Omni-Channel strategy guides GOME to outperform industry
in six key indicators for six consecutive quarters
5
Acceleration Campaign
Procurement Logistics IT
2014 1H Omni-Channel Strategic Implementation
Omni-Channel
Tier-One
Stores B2C
Dept.
Stores
Super
markets
Local
Chains Market
Place
Tier-Two
Stores
Open
Supply Chain
Business
Model
Offline Channel Online Channel
Self-Owned Operation Joint Operation Inventory Supply
1. 20141H same store sales growth 7.3%
(Renovated 31 flagship stores)
2. 20141H opened 55 new stores
(34 new stores in tier-two market)
20141H added 79 stores
within department stores &
supermarkets Mobile GMV
2014 1H: 10% of
online GMV
GMV
1. 20141H ▲ 53.7% Y-o-Y
(2014Q2 ▲ 64.8% Y-o-Y)
2. 2014 1H UV ▲ 43.8% Y-o-Y
Other online
Platforms
Mobile
Terminals
20141H Consolidated gross profit margin: 18.8%
Differentiated products: 32% 3 deliveries/day, precise delivery
Available in 178 cities
Comprehensive online/offline integration of
procurement/IT facilities
6
Acceleration Campaign
Offline Stores
Tier-1 & 2 Cities
Offline Stores
Tier-3 & 4 cities
2014 1H Omni-Channel Strategic Implementation – Offline Channel
RMB Million
7
Tier-one Market Same Store Sales Tier-one Market Revenue
▲ 5.6% ▲ 6.3% Physical Stores
(Tier-one Market)
Flagship stores renovation in tier-one market
20141H :31 stores
(20131H: 4 stores)
Physical Stores (Tier-two Market)
New stores in tier-two
market
20141H :34 stores
(20131H :22 stores)
Physical Stores (Dept. stores &
supermarkets )
New stores within
dept. stores &
supermarkets
20141H : 79 stores
Tier-two Market Revenue Tier-two Market Same Store Sales
▲ 15.1% ▲ 11.3%
2014 Q2 Channel Integration Revenue
▲ 60%
Acceleration Campaign
Omni-Channel Strategic Implementation
– Online Channel
Steady Increase in GMV Steady Increase in Consolidated GP Margin
Solid growth in both GMV & consolidated gross profit margin
since first launch in 2011 2H
8
Acceleration Campaign
Omni Channel Strategic Implementation
– Differentiated Product
9
Same Store Sales RMB Million
20141H
32%
50%
2017
Differentiated Products
2009
1.2%
Revenue RMB Million
Consolidated GP Margin
141H consolidated
gross profit margin
18.5%, excl
compensation from
major shareholder
▲ 7.4%
▲ 7.3%
▲0.5p.p.
Acceleration Campaign
Omni-Channel Strategic Implementation
– Low Cost Supply Chain
2013 1H 20141H Change in
p.p.
Selling &
Distribution 13.3% 12.3% (1.0)
Rent 5.5% 5.1% (0.4)
Sales Salary 3.1% 3.0% (0.1)
Advertising 2.0% 1.4% (0.6)
Delivery 0.7% 0.8% 0.1
Utilities 0.7% 0.7% 0
Other S&D 1.3% 1.3% 0
Administrative
Expenses 2.8% 2.9% 0.1
Other
Expenses 1.0% 1.1% 0.1
Total 17.1% 16.3% (0.8)
Operating Expenses / Revenue Expenses Breakdown
Note: Discrepancy due to rounding error 10
Acceleration Campaign
Omni-Channel Strategic Implementation
– IT Supply Chain
Inventory Turnover Days Sustained Increase in Cash & Cash Equivalents
6,484
8,413 7,866
9,016 9,344
13,074
13Q1 13Q2 13Q3 13Q4 14Q1 14Q2
RMB Million
ERP system and store-based planning model contribute to
the management of inventory and cash & cash equivalents
11
Acceleration Campaign
Omni-Channel Strategic Implementation
– Increasing Profitability
RMB Million
14Q2 net profit
325 million,
excl
compensation
approx. 100
million from
major
shareholder
100
325
141H net profit
margin 2.1%,
excl
compensation
approx. 100
million from
major
shareholder
0.3%
2.1%
12
Acceleration Campaign
2014 1H Performance Review 1
2
3
Content Omni-Channel Retailer – Acceleration Campaign
Appendix
Acceleration Campaign
Focus Omni-Channel Supply Chain
GOME’s omni-channel strategy focuses on enabling consumers
to switch freely between bricks-and-mortar & online stores.
(GOME Online + 1,605* stores + store within supermarket, department stores)
*including non-listed GOME Group
Strategic Key Words
14
Acceleration Campaign
Omni-Channel Electronics Retailer in China
Search
Order
Delivery
Payment
Offline Shopping Online Shopping Omni-Channel
Shopping
Pay online
GOME stores
Order online in GOME stores
Home delivery
The rise of omni-channel means shopping is no longer merely ‘offline experience, online order’, channel
integration increases the importance of physical stores and mobile terminals, with continuous
leveraging on the procurement, logistics and IT units of the supply chain. 15
Store pickup
Online
(PC)
Online
(Tablet)
Online
(Mobile)
Online
(PC)
Online
(Tablet)
Online
(Mobile)
Home delivery
Pay in stores
GOME stores Online
(Mobile)
Online
(PC)
Online
(Tablet)
Online
(Mobile)
Home delivery
Online/offline/mobile payment
Acceleration Campaign
Omni-
Channel Tier 1
Stores B2C
Dept.
Stores
Super
Markets
Other
Platforms Mobile
Terminals
Local
Chains Platform Tier 2
Stores
Open
Supply
Chain
Business
Model Self-Owned Operation
Omni-Channel Supply Chain
Open Social Platform
Consumer
Interface
Value
Platform
Joint Operation Inventory Supply
16
Offline Channel Online Channel Mobile
Procurement Logistics IT
Manufacturers & Distributors Supplier
Acceleration Campaign
Enhance consumer
experience
Integrate offline IT
& logistics facilities Store optimization
Tier-two market
network expansion
Channel expansion
in supermarkets &
dept stores
Smart
Optimized
Decentralized
Five procurement
units
Overall IT support
Express logistics
services
Structural
Upgrade
Infrastructure
Upgrade
Offline
Acceleration
Online
Acceleration
Omni-Channel Acceleration Campaign
Encourage creativity & innovation in every business unit of GOME
Build Another GOME by 2017– Acceleration Campaign
17
Acceleration Campaign
1. Smart: Leverage on IT system to support online & offline supply chain and operation platform
2. Optimized: Strengthen regional management capacity
3. Decentralized: Flat organizational structure & new incentive scheme to accelerate expansion
in tier-two market
1. Structural Upgrade
*including non-listed GOME stores
131 Affiliated Tier-Two Branches*
Before : Headquarter 4 Regions 54 Independent Tier-One Branches*
Now: Headquarter 7 Regions 54 Independent Tier-One Branches*
75 Independent Tier-Two Branches *
56 Affiliated Tier-Two Branches*
18
Acceleration Campaign
New procurement platform ensures differentiated products
reaching 50% by 2017
98.8%
New Procurement Platform
Brown goods White goods 3C Unit 1 Unit 2 Unit 3 Unit 4
Shared online & offline targets Four specialized procurement units for online/offline
1.2% 50% 50%
2009 20141H 2016-2017 2009 2016-2017
32%
20141H
68%
Regular
Products
Differentiated
Products
Independent Independent Independent Independent Traditional model
2. Infrastructure Upgrade – Omni-Channel Procurement Platform
19
Acceleration Campaign
Comprehensive IT system support online & offline supply chain
2. Infrastructure Upgrade – IT System
Supply Chain
Key Data (Product,
Price) Sales
Inventory
Coordination
Order
Delivery Return
Payment Streamline
procedure
Stakeholders GOME
GOME Headquarter
Beijing GOME
Data sharing
Beijing Dazhong
Shanghai branch
……
Suppliers
3rd Party Logistics
Software Vendors
Horizontal Alliance
Financial services Interface services
20
Acceleration Campaign
2. Infrastructure Upgrade – Logistics Network
428 warehouses covering 398 cities
1,605 stores available for pickup
1.95 million sq.m warehouse
200 cities with 3 deliveries/day
(2014)
400cities with 3 deliveries/day
(2016)
Logistics Network Capacity* Nation Wide Logistics Network
Tianjin
Harbin
Changchun
Hohhot
Urumchi
Xining Lanzhou
Kunming
Guiyang
Nanning
Haikou
Changsha
Hangzhou
Hefe
i
Nanjing
Zhengzhou
Jinan
Shijiazhuang Taiyuan
Shenyang
Guangzhou
Wuhan Chengdu
Fuzhou
Shanghai
Xi’an
Beijing
Yinchuan
Nanchang
Dalian
Qingdao
21
*including non-listed GOME Group
Acceleration Campaign
2. Infrastructure Upgrade – Express Logistics
22
Precise Delivery Accurate
3 Deliveries/Day Fast
Installation of appliances upon delivery
Morning, afternoon & evening
Consumers can specify time of delivery
Installation Specialized with delivery
Acceleration Campaign
3. Offline Acceleration – Physical Store
Price Comparison: Wi-Fi coverage in1,605* stores
Store Experience: consumer experience oriented
Sales Assistance: professional sales team
Wireless Shelf: online/offline SKU available on
mobile App
Accelerate the introduction of new smart retail terminals at 1,605* stores
*including non-listed GOME Group
23
Acceleration Campaign
Tier-One Market Development Strategy
1. Focus on network & cost optimization, flagship store operation
2. Prioritize properties in existing & new business districts and along
metro lines
Tier-Two Market Development Strategy
3. Offline Acceleration – Network Development
1. Flagship store + satellite store: introduced to increase network
coverage in tier - two & tier - three cities
2. Regional development: Logistics services with 500km radius of
central logistics warehouse to stimulate cross-regional sales
3. Focus on the development in middle & western China provinces
with high population density
4. Expand market share in the regions of Shanghai & Nanjing
24
Acceleration Campaign
3. Offline Acceleration – Stores in Dept. Stores & Supermarket
Strategic Alliance : leading supermarkets, department stores in
Beijing, Shanghai, Guangdong, Hebei, Henan, Liaoning & Shandong
* non-listed GOME Group
Supermarkets
Department
Stores
Local Chains
Wumart Stores (74 stores)
Zhejiang Lianhua* (26 stores)
Guangzhou Mopark (4 stores)
Wuhan Guomao (1 store)
109 Stores within dept.
stores & supermarket
Nanning Baise Electronics
Stores* (4 stores)
25
Contribute to GOME revenue growth
Acceleration Campaign
4. Online Acceleration – Strategic Positioning
Goal: Omni-channel products & service platform with
core competitive advantage in direct home appliances retailing
26
Self-owned Operation + Market place + Virtual Mobile App + Big Data
Logistics Service
3 Deliveries/day
Precise delivery
Installation with delivery
Share traffic
Share products
Share services
Maximize number of SKU to
offer choices
Supply Chain support price
competitiveness
Differentiated products
support specialization
Online/Offline Integration
Mobile App accelerate
development
Big data support precise
marketing
Actively develop Internet
finance
Acceleration Campaign
Focus on both value & price: to create value for consumers &
increase market share with price competitiveness
Price: Low-price benchmark
online/offline
Service: Service benchmark with ‘3
deliveries/day, precise delivery &
installation with delivery to enhance
consumer experience
Products: Increase number of SKU to
10 million, provide one-stop shopping
Small Appliances
3C
Traditional Appliances
General Merchandize
Automobile
Virtual
Core:
self-owned
operation
Loyalty:
Market
place
… …
… …
27
4. Online Acceleration
– Self-owned Operation + Market place + Virtual
Acceleration Campaign
4. Online Acceleration – Online & Offline Integration
Procurement
Online/offline sharing of 100 billion capacity
Inventory
Complete sharing of inventory online/offline
IT
Sharing of ERP System & co-ordinate supply chain
Logistics*
428 warehouses in 398 cities
1,605 store pick-up points
Membership
Sharing of 120 million members online/offline
28
Consolidate online/offline resources,
streamline online/offline channels
Internet Mobile
Internet
Online
Offline
GOME Store: Sales/experience/pick-up/delivery service centre
App&PC
Search
* Including non-listed GOME Group
Acceleration Campaign
4. Online Acceleration – Mobile APP + Big Data
Omni-channel big data analysis support supply chain & financial business
Internet
Finance
Business district
Location
Foot traffic
Hotspot
Traffic based on LBS
Layout
Marketing
VIP
Consumer behavior
Product trend
Communication
Network Internet Logistics
Network
Online+Offline
Data Source Business district traffic Store traffic Regional traffic Movement Consumer focus Window display Consumer satisfaction
Online traffic Consumer demographics POS ERP CRM VIP Online/offline product & traffic
Big Data
Analysis
29
Supply chain
finance
Microfinance
GOME Pay (Meifubao)
Prepayment
card
(Meitong Card)
Consumer
Credit
Fund & Wealth
Management
Acceleration Campaign
4. Online Acceleration – Logistics Network
3 deliveries/day, precise delivery &
installation with delivery available both online/offline
—To Build Trust Through—
3 Deliveries/Day Your choice to schedule delivery in the
morning/ afternoon / evening time
—To Build Trust Through—
Precise Delivery We deliver based on your preferred timing
—To Build Trust Through—
Installation with Delivery Available A one-stop delivery and installation service
We Work Hard to Earn Your Trust 3 Deliveries/Day, Precise Delivery &
Installation with Delivery Available
Trust is a pleasure Inspired to be trusted Trust is a pleasure Inspired to be trusted
Trust is a pleasure Inspired to be trusted Trust is a pleasure Inspired to be trusted
30
Acceleration Campaign
31
2011-2013 2014-2015
Foundation
Building
Accelerated
Development
Specialized
Platform
Fast Expansion
Leading Platform
2016-2017
4. Online Acceleration
Acceleration Campaign
Build Another GOME by 2017
2013 2017 2014
Omni-Channel Retailer Strategy
Same Store Sales Growth
Tier-Two Market Share Growth
E-commerce
Supermarkets, department stores
Low-Cost, Highly-Efficient
Supply Chain
32
Acceleration Campaign
2014 1H Performance Review 1
2
3
Content Omni-Channel Retailer – Acceleration Campaign
Appendix
Acceleration Campaign
RMB Million 2013 1H 2014 1H Increase
Revenue 27,114 29,124 7.4%
Consolidated gross profit 4,973 5,484 10.3%
Consolidated gross profit margin 18.3% 18.8% 0.5 p.p.
Operating profit 349 738 111.5%
Operating profit margin 1.3% 2.5% 1.2 p.p.
Profit before tax 432 846 95.8%
Profit attributable to owners of the parent company
322 693 115.26%
Net profit margin (attributable to owners of the parent company)
1.2% 2.4% 1.2 p.p.
Note: Discrepancy due to rounding error
Income Statement Summary
34
Acceleration Campaign
Balance Sheet & Cash Flow Statement
RMB Million As of
31st Dec 2013
As of
30th Jun 2014 Change
Balance Sheet
Cash & cash equivalents 9,016 13,074 45.0%
Pledged deposits 6,407 4,409 (31.2)%
Pledged deposit ratio (excl DGPOL) 32.9% 29.8% (3.1)p.p.
Inventories 8,221 9,235 12.3%
Inventory turnover days 61 64 3 days
Trade payables 5,992 7,802 30.2%
Trade payables turnover days 48 51 3 days
Bills payable 12,085 13,673 13.1%
Bills payable turnover days 89 94 5 days
RMB Million 2013 1H 2014 1H
Cash Flow Statement
Operating activities 1,509 3,277
Investing activities (132) (300)
Financing activities (25) 1,077 Note: Discrepancy due to rounding error 35
Acceleration Campaign
141H
consolidated
gross profit
margin 18 5%,
excl
compensation
approx. 100
million from
major
shareholder
0.3% 18.3%
18.8%
4,973
RMB Million
Note: Discrepancy due to rounding error
Non-recurring item
RMB Million 2013 1H 2014 1H
Revenue 27,114 29,124
Consolidated Gross Profit 4,973 5,484
Consolidated Gross Profit
Margin 18.3% 18.8%
Gross Profit Margin from
Suppliers 15.3% 15.2%
Other Income 3.0% 3.6%
Income from suppliers, net 1.1% 0.6%
Mgmt & purchasing services
fees from the Non-listed
Gome Group
0.5% 0.5%
Income from air conditioner
installation 0.2% 0.2%
Gross rental income 0.5% 0.5%
Government grants 0.2% 0.1%
Income from telco. service
providers 0.2% 0.6%
Warranty Sales 0.2% 0.3%
Compensation - 0.3%
Others 0.1% 0.5%
5,484
36
Consolidated Gross Profit Margin
Acceleration Campaign
Store Indicators
Period-end Sales Area Average Sales Per Store 1,000 sq.m.
RMB Yuan
RMB Million
No. of
comparable
stores
Average Sales Per Sq.m Same Store Sales Growth
3,873
971 947 911 897 963 942 37
Acceleration Campaign
Tier-One* & Tier-Two* Market Revenue
81.2%
18.8%.
79.9%
20.1%
一二线城市 三四线城市
2013 1H 2014 1H
Tier-1&2 cities Tier-3&4 cities
22,018
5,096
23,256
5,868
一二线城市 三四线城市
20131H 20141H
*Tier-one market: tier-one & two cities
*Tier-two market: tier-three & four cities
2014 1H revenue ▲ 7.4% Y-o-Y, tier-two market proportion ▲ 1.3p.p. to 20.1%
Tier-1&2 cities Tier-3&4 cities
RMB Million
38
Acceleration Campaign
2014 1H Revenue: RMB 29.12 Billion
2013 1H Revenue: RMB 27.11 Billion
Revenue by Region
18%
10% 8% 8%
7% 6%
5%
38%
18%
10% 9% 9%
6% 6% 5%
37%
Beijing Guangzhou Shenzhen Shanghai Chengdu Xi'an Tianjin Others
2014 1H 2013 1H
39
Acceleration Campaign
Gross Profit Margin by Category Revenue by Category
40
Revenue & Gross Profit Margin by Category
Acceleration Campaign
As of 30th June 2014 Group GOME ChinaParadise Dazhong Cellstar
Flagship stores 223 162 33 28 -
Standard stores 342 288 37 17 -
Specialized stores 523 383 89 9 42
Total: 1,088 833 159 54 42
T1 Market 680 480 113 50 37
T2 Market 408 353 46 4 5
Net store increase/(decrease)
in 2014 1H 13 11 4 (2) -
Number of stores opened: 55 42 13 - -
T1 Market 21 14 7 - -
T2 Market 34 28 6 - -
Number of cities accessed: 264 225 59 1 6
T1 Cities 26 20 9 1 1
T2 Cities 238 205 50 - 5
Number of cities newly
accessed 4 4 - - -
41
Store Network
Acceleration Campaign
Top Five Suppliers in 2013 1H
Top Five Suppliers in 2014 1H
42
Top Five Suppliers
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