In 2019, China has faced multiple fronts of downward pressure, which somewhat dampened the country's consumption sector as well. Amid risks, however, the retail market demonstrated remarkable resilience compared with other sectors. During the Year under Review, the Group has achieved stable performance, by continuing to diversify its retail formats, focus on expanding certain specific consumption sectors and enhance product offerings. The Group recorded total gross sales proceeds of RMB14,181.2 million inclusive of value-added tax, a decline of 6.7% compared to last year, which was mainly due to the closure of underperforming stores in 2019 and the decline in same store sales. Total operating revenues of the Group increased by RMB178.2 million or 3.7% to RMB 5,026.0 million, profit from operations increased by 179.3% year-on-year to RMB474.5 million. Same store sales decreased by 3.9% in 2019.
Differential Positioning Creates Synergies
Following a period of business transformation, Parkson is expanding its retail portfolio while flexibly applying various operating models and financial arrangements to strengthen the Group's position as a leading lifestyle retailer in China. In June 2019, the Group secured the usage right of a property above Bayi Guan Station of the Rail Transit Line 1 in Nanchang City, Jiangxi Province, China, with a total gross area of 42,900 square meters, and this new Nanchang Bayi Guan Store saw its grand opening on 16 January 2020. The new department store is located on the prosperous Zhongshan Road in the old city of Nanchang, above the intersection of two subway lines and is just across the road from Nanchang Zhongshan Road Store. The Zhongshan Road Store is a hub for high-end brands while the Bayi Guan Store focuses on young and fashion brands. The tactics of differential positioning along with close collaboration of the two stores have created synergies and attracted a wider customer group, allowing the Group more flexibility while leveraging on its diversified retail formats.
Strategic Business Expansion
In terms of the department store business, the Group's second department store in Datong, Shanxi Province, China is expected to open in the second quarter of 2020. It is expected that this retail space will be a "Complex of department stores and shopping centers", which will further diversify the product mix within the facility. It also fits into the Group's Differential Positioning tactics for "Multiple Stores in a City", which aim to serve more customers with different spending habits. In addition, preparation work for the Group's department store in Tongren city, Guizhou Province, China is well under way and the store is expected to welcome guests in the second quarter of 2020.
Strong Performance of Beauty Segment
In recent years, the Group has been actively exploring the beauty segment, and has recorded ideal performance. The Group also focuses on the innovation and exploration of business model in this field. "Parkson Beauty", the Group's beauty concept store, has been performing well and received positive response from customers. It has attracted various international beauty brands and created a brand-new beauty upgrading experience for consumers. Up to now, "Parkson Beauty" has set up three retail outlets in Changsha, Qingdao and Nanning, and has become a leading collection store of high-end beauty brands. In order to enhance the brand image and popularity of the Group's beauty segment, the Group has made a number of promotions actively. It is worth mentioning that, Malaysia's Lee Chong Wei, who is inducted into the Badminton Hall of Fame, was invited to "Parkson Beauty" as a "one-day manager" in its Changsha IFS store in November 2019. The event attracted a large number of customers and fans of Lee Chong Wei.
Fast Fashion Segment with Bright Prospects
In addition to the beauty segment, the fast fashion segment has become another new business direction of the Group. In 2019, Parkson has launched its self-owned fast fashion brand "evry-D" and set up sales counters in five retail stores within a short period. With its unique brand concept and business model, "evry-D" has attracted the attention of consumers and the industry. It is also a new trend of Parkson in business transformation and innovation. In view of the growing consumption power of the younger generation, the Group will continue to expand the scale of "evry-D" counters in 2020, so as to enhance its brand influence and enlarge its market share. Besides, the Group has also actively discussed with other brand operators to seek feasible cross-border cooperation, and is committed to promoting the long-term development of the Group's fashion sector through a variety of operation modes.
Parkson's management commented, "Whilst the macroeconomic environment is expected to be uncertain in the coming year, we remain optimistic about China's retail industry. Furthermore, our strategic business transformation has brought significant benefits to the Group through our practice in the past few years. To catch the rising opportunities, we will expand our business scale to cater to the fast pace of modern life and customers' needs for pleasant shopping experience. With a number of one-stop comprehensive retail premises, we are poised to take advantage of our product sales, logistics and data collection capabilities to create a comprehensive and relaxed shopping experience for customers."
"Parkson will continue to carry out its strategy of upgrading brands and product categories by diversifying retail formats and further exploring omni-channel marketing. It will also be devoted to developing its various business segments, including the beauty segment led by 'Parkson Beauty' and the fashion segment led by its own fast fashion brand 'evry-D'. The Group will actively strengthen the cooperation between its own brands and other brands, create more interactive effects, and constantly improve brand awareness and product quality. We believe that by virtue of the Group's diversified business strategy and its leading position in China's retail market, the Group is able to provide customers with the best quality services constantly, achieve outstanding performance amid challenging retail environment and drive the Group's long-term development."
About Parkson Retail Group Limited
Parkson Retail Group Limited ("Parkson") is a leading nationwide lifestyle retail operator in China. As of 31 December 2019, the Group operated and managed 38 Parkson stores (including concept stores "Parkson Beauty"), 1 Lion Mall, 2 Parkson Newcore City Malls, supermarkets, fashion and food & beverage outlets, in 27 major cities across China.
With over two decades of retail experience in China, Parkson understands market developments and consumer demand. The Group incorporates shopping, dining and entertainment elements, within a combination of offline and online channels to cater to young and middle-to upper-middle-income consumers.
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