Parkson Announces the Annual Results for the Year Ended 31 December 2020
2020 had been full of challenges and uncertainties for the global market. The global outbreak of COVID-19 at the start of the year had caused significant reduction and suspension of social and economic activities which inevitably caused the global economy to face downward pressure. In addition to this, the continuous tension of Sino-US trade relations brought many uncertainties to the global economic and political environment. Hence, the overall performance of the Group declined as a result of the negative impact brought upon by the COVID-19 coronavirus pandemic which the Group has actively adopted cost control measures to reduce its impact. Meanwhile, the Group is committed to strengthening its position as a leading retailer of fashion and lifestyle concepts in China through a diversified development strategy.
During the year under review, the Group recorded total sales proceeds ("Total Sales Proceeds") of RMB11,225.6 million (including value-added tax); a decrease of 20.8% from last year, mainly due to the decline in same-store sales. Same-store sales decreased by 18.7% during the year under review, mainly due to the impact of the COVID-19 pandemic. During the year under review, the total operating revenue of the Group decreased by RMB597.9 million or 11.9% to RMB4,428.3 million, and the overall gross margin for sales fell to 15.3%, compared with 16.0% in 2019. Operating profit was RMB349.0 million, a decrease of 26.5 % over the same period last year.
Strong alliance and collaboration for new opportunities
To diversify and strengthen its base, the Group has been actively seeking different business partners, using flexible business cooperation models to achieve strong alliances, and exploring new markets and new business opportunities. The Group sealed its cooperation with Jinjin Changfa Group, a well-known commercial brand in Suzhou City to comprehensively upgrade and renovate Suzhou Changfa Commercial Building, which has a long history and is located in the core business district of Gusu District, Suzhou City in May 2020. The strong attraction of the Suzhou market, the conducive business environment in Gusu District, and the huge development prospects of the local consumer service market provide a strong impetus for the Group to locate in Suzhou. Combining Jinjin Changfa Group's huge customer base with the Group's rich commercial retail management experience, the Group is confident that the project will become a new benchmark for "business, tourism and culture" in Gusu District.
In addition, the Group build a large-scale urban complex - "Wuzhou Sanqi Parkson" with Wuzhou Sanqi Investment Company Limited, a new cultural landmark integrating office, residence, hotel, F&B, retail, and entertainment in June 2020 and is scheduled to open in the coming year. Since Guangxi Zhuang Autonomous Region is a crucial gateway for the "Belt and Road" Initiative and an important stop for the "New International Land-Sea Trade Corridor", the advanced structure of the Guangxi market is significant for the Group to drive the overall development of the retail business into the southwest region. It will be able to generate regional synergies and expand its influence to the surrounding areas.
Promoting diversified and innovative development
As one of China's leading advocates of fashion lifestyle retail concepts, Parkson has been committed to building an outstanding reputation, maintaining its customer base, and attracting new customers through diversifying its products and improving consumer experience. During the year under review, the Group strategically expanded its product categories to meet growing consumer needs.
Parkson's self-operated makeup brands namely Parkson Beauty and Play Up have become immensely popular among young consumers through differentiated product strategies. Parkson hopes to deepen its image as a trendy vendor and explore the possibility of more branch stores.
The Group is also actively adopting a variety of modes to improve the shopping experience for customers. For example, the Group's Lion Mall, together with its boutique supermarkets, Parkson Supermarket and Hogan Bakery, had participated in the "Singaporean Night Market" held in Shanghai. This event not only broke away from the traditional sales model, it also narrowed the gap between the vendor and its customers, allowing them to interact more closely, and creating a whole new experience. During the year under review, the Group continued to promote the renovation project of the North Building of Beijing Fuxingmen Parkson Store, which is expected to be completed in the middle of 2021. The Group believes that Fuxingmen North Building, being part of Beijing Financial Street, can meet the demand for office leases in this area and is expected to bring stable rental income to the Group.
Expanding multi-channel services with "O2O New Retail Strategy"
In recent years, advancement of the Internet has accelerated the development of online retail, with the retail industry having entered a new business mode of "online + offline" interoperability. In order to seize the growing opportunities of online retail, the Group vigorously promoted the "O2O New Retail Strategy" and improved the new sales model for online and offline interoperability. To this end, the Group has introduced various stimulus measures to promote offline retail business growth through online channels such as Parkson's official WeChat account and mobile shopping mini-programs. In tapping customers' enthusiasm for consumption, the Group seizes the opportunity to encourage customers to visit Parkson stores in order to enhance their shopping experience.
Parkson's management commented, "Along with the ongoing COVID-19 crisis and Sino-US relations, the macroeconomic environment is expected to be unsettling in the coming year. Nevertheless, we remains optimistic about the performance of China's retail industry. As the COVID-19 situation in China stabilizes and the local retail market moves forward to gradual recovery, consumers are beginning to regain their inclination to spend. The inability to travel abroad due to the pandemic has in turn benefited local consumption. We will actively study and understand market trends and customer needs, broaden the product range of Parkson retail stores, and provide customers with a more diverse array of high-quality products in the future."
"We will also strengthen online marketing to attract offline retail sales. To this end, we will vigorously implement the "O2O New Retail Strategy" and strengthen the integration of online and offline retail experience, through social media networks (such as Douyin, WeChat), VIP projects and personalized customer services to satisfy retail industry changes and market demand, and expand market share through high quality products and services. We believe that with the Group's effective business strategies and extensive experience in the retail market over the past two decades, we can achieve sustainable stable performance in a challenging environment and create long-term value for shareholders."
About Parkson Retail Group Limited
Parkson Retail Group Limited ("Parkson") is a leading nationwide lifestyle retail operator in China. As of 31 December 2020, the Group operated and managed 40 Parkson stores (including the concept store "Parkson Beauty"), 1 Lion Mall, and 2 Parkson Newcore City Outlet in 28 cities in China; with its supermarkets, apparel and F&B outlets having evolved into a mature and complete retail industry landscape.
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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