Best Mart 360 Holdings Limited announces 2018- 2019 Annual Results

June, 27/2019 - 03:45
Best Mart 360 Holdings Limited announces 2018- 2019 Annual Results

Revenue and net profit¹ increased by 19.8% and 34.0% YoY respectively Proposed a final dividend of HK6.0 cents per share

 

Hightlights:

  • Revenue increased by19.8% to approximately HK$1,288.5 million.
  • Gross profit increasedby 26.9% to approximately HK$434.4 million, gross profit margin increased by1.9 percentage point to 33.7%.
  • Netting off one-offnon-recurring listing expenses, profit attributable to owners of the Company increaseby 34.0% to approximately HK$780 million.
  • As at 31 March 2019,the Group operated a total of 89 chain retail stores in Hong Kong (as at 31March 2018: 70).
  • Basic earnings per sharewas 7.4 cents. The Board recommended the payment of final dividend of HK6.0cents per share.


Financial Highlights:

 

For the year ended 31 Mar

HK$'000

2019

2018

Change

Revenue

1,288,479

1,075,930

+19.8%

Gross profit

434,440

342,289

+26.9%

Gross profit margin

33.7%

31.8%

+1.9 p.pt.

Profit attributable to owners of the Company (Netting off one-off non-recurring listing expenses)

78,013

58,235

+34.0%

Basic earnings per share (HK cents)

7.4

7.1

+4.2%


HONG KONG, CHINA - Media OutReach - 27 June 2019 - Best Mart360 Holdings Limited ("Best Mart 360" or the "Company", together with its subsidiaries, the "Group";stock code: 2360.HK), the second largest leisure food retailer in Hong Kong² ,announced its annual results for the year ended 31 March 2019 ("Financial Year").During the financial year under review, the revenue recorded by the Groupamounted to approximately HK$1,288,479,000, representing an increase ofapproximately 19.8% as compared to approximately HK$1,075,930,000 for the yearended 31 March 2018. The increase was mainly attributed to the combined effectsof same-store sales growth and the increase in the number of retail stores, aswell as the improvement in the Group's procurement capabilities in sourcingproducts with competitive prices that are attractive to the customers.


During the financialyear under review, profit attributable to owners of the Company was approximatelyHK$59,728,000 (2018: approximately HK$53,599,000), representing an increase ofapproximately 11.4%. Netting off the incurrence of the one-off non-recurring listingexpenses, the profit attributable to owners of the Company for the year ended31 March 2019 would be approximately HK$78,013,000, which represented an increaseof approximately 34.0% as compared with approximately HK$58,235,000 for theyear ended 31 March 2018.


During the financialyear under review, basic earnings per share was 7.4 cents (2018: 7.1 cents). TheBoard recommended the payment of final dividend of HK6.0 cents per share.


BUSINESS REVIEW


Same-Store SalesPerformance


The growth in revenueof the Group was not only driven by the increase of the number of the Group'sretail stores, but also by the Group's capability to grow its sales within theexisting retail stores. The Group assesses its growth within the existing retailstores by calculating the same-store sales growth, which compares revenuederived from the retail stores that were in operation throughout the financialperiods compared. The Group consecutively achieved same-store sales growthduring the past three financial years. During each of the three financial yearsended 31 March 2019, the management had taken cautious approach in regulatingand controlling the balance between realizing same-store sales growth andprocuring the growth of gross profit margin in accordance with market trend andcondition so as to achieve optimal business performance and operating resultsfor the Group.


 

For the year ended 31 Mar

 

2016

2017

2017

2018

2018

2019

No. of same-store

18

26

45

Same-store sales (HK$'000)

268,034

271,461

400,656

435,722

751,335

802,265

Same-store sales growth rate

1.3%

8.8%

6.8%


Gross Profit and GrossProfit Margin


Gross profit of theGroup for the year ended 31 March 2019 was approximately HK$434,440,000, whilegross profit of the Group for the year ended 31 March 2018 was approximatelyHK$342,289,000. During the financial year under review, gross profit margin ofthe Group was approximately 33.7%, representing an increase of approximately1.9 percentage points as compared with approximately 31.8% for the year ended31 March 2018. The increase in gross profit margin was mainly attributed to (i)the Group's continual effort in sourcing products directly from more upstreamsuppliers; (ii) the discount from suppliers as a result of bulk purchase whichwas benefited from better economy of scale with the Group's continuousexpansion of retail network and hence the scale of purchases; and (iii) theeffective pricing policy implemented by the Group.


Chain Retail Stores


As at 31 March 2019,the Group operated a total of 89 chain retail stores in Hong Kong (as at 31March 2018: 70). During the financial year under review, the Group opened 28 newstores and closed nine retail stores due to consolidation of business of storesin proximity or upon expiration of the respective lease term.


As at 31 March 2019,the 89 retail stores of the Group consisting of 17 retail stores located inHong Kong Island, 33 retail stores located in Kowloon and 39 retail storeslocated in New Territories and 32 retail stores situated at street-level, 50retail stores situated at shopping arcades of community or residentialdistricts and seven retail stores situated at various traffic hubs that areeasily accessible by tourists, which spanned over all of the 18 districts inHong Kong.


Rental expense forretail stores was approximately HK$132,919,000 for the year ended 31 March2019, representing an increase of approximately 18.2% as compared withapproximately HK$112,472,000 for the year ended 31 March 2018. The percentageof rental expense of retail stores to sales revenue for the year ended 31 March2019 was approximately 10.3%, which was slightly lower than that ofapproximately 10.5% for the year ended 31 March 2018.


Employees


Employees are crucialto the sustainable development of the Group's business, in particular,front-line staffs constituted material labour force to the Group's retail business.The staff costs (excluding the Directors' emoluments) for the year ended 31March 2019 amounted to approximately HK$119,373,000 (2018: approximatelyHK$87,676,000).


The Products


For the year ended 31March 2019, the Group offers a total of 3,261 SKUs of products (for the yearended 31 March 2018: 3,427 SKUs) from suppliers principally from overseasmarkets, such as Japan, Europe, the United States, Korea and countries in the SouthEast Asia, and brand owners or importers in Hong Kong.


For the year ended 31 March2019, approximately 41.5% of the products were procured from suppliers and brandowners or importers in Hong Kong (for the year ended 31 March 2018: approximately41.0%), while the share of import products from Japan, Europe and the UnitedStates amounted to approximately 16.4%, 13.9% and 10.7% respectively of the wholeprocurement (for the year ended 31 March 2018: approximately 16.1%, 11.8% and15.6% respectively).


As at 31 March 2019,the total inventories of the Group amounted to approximately HK$132,839,000(2018: approximately HK$100,162,000), representing an increase of approximately32.6% which was mainly due to the increase in the number of retail stores inthe financial year under review resulting in the increases in both in-storeinventories and inventories in warehouses.


Besides, the Group alsoactively pursues suitable opportunity in developing private label products thaton one hand allow the Group to capture advantages of pricing and   exercise higher level of quality control onits products and on the other hand further uplift its brand awareness andmarket visibility. As at the date of this announcement, the Group has launchedseven private label brands of products, including wet tissues, chestnuts, cannedabalone, dried fruits, aloe gel and pork jerky.


Membership Scheme


Given that the retailbusiness of the Group is a consumer driven business, the Group placedsubstantial efforts in developing and reinforcing its customer base. To thisend, the Group established and maintained a membership scheme since April 2015in order to promote consumer loyalty, stimulate sales and further expandcustomer base. During the financial year under review, the number of theGroup's members was increased to approximately 1,268,000 as at 31 March 2019from approximately 792,000 as at 31 March 2018, representing an increase ofapproximately 60.1%.


To further populariseand elevate the Group's brand positioning and brand recognition the market andfurther expand members' coverage of the Group, the Group launched its mobileapp in March 2019 to strengthen its capability in instant messaging as communicationchannel with the public and its members. By the Group's mobile app, the generalpublic is allowed to receive instant information through mobile devices for theGroup's promotional offers, selective products promotion, retail shops networkand member privileges and its members are able to check their reward pointsrecorded and redeem their reward points through mobile devices instantly andthereby enhance customer shopping experience and purchasing pleasure with theGroup. Since the launch of the mobile app in March 2019, approximately 93,000members had been registered through the Group's mobile app up to 25 June 2019.


OUTLOOK


Looking ahead, theGroup is prepared to expand its business scope and market influence and tofurther uplift its market position by (i) expanding the Group's business scaleby opening additional retail stores in Hong Kong; (ii) exploring theopportunity to penetrate into other retail markets in the Greater China regionshould suitable opportunity arises; (iii) continuously optimizing the Group'ssupply chain and further refining the Group's procurement capabilities byidentifying additional suppliers for products with quality and uniqueness andby lowering procurement costs through sourcing from more upstream suppliers forincreasing the Group's competitiveness in the sector; (iv) accelerating thepace of developing additional private label products that intensifies proprietarinessof the Group's products which provide both costs advantages and quality controland maximize customers' loyalty and uplift the competitive strengths of the Group;(v) expanding the dimension of the Group's marketing efforts to further enhancethe Group's corporate image and to promote the Group's products; (vi) pursuingdigital transformation of the Group's retail operation with a view to providecustomers with progressive shopping experience accustomizing digitaltransformation in New Retail Era; (vii) continuously improving the Group'soperational efficiency by upgrading existing information technology systems andadopting new information technology systems for streamlining operation processand reducing operational costs; (viii) pursuing higher level of systematicalmanagement of retail stores; and (ix) increasing staff training for enhancingservice quality.


Mr. HuiChi Kwan, Chief Executive Officer of the Group, said, "During thefinancial year under review, the Group managed to maintain sustainable growthin both revenue and profit and had demonstrated our resilience in operating satisfactorilywith pressure despite sailing under the midst of economic uncertainties that affectedoverall consumption sentiment due to the outburst of US-China trade tension in thesecond half of year 2018. We are committed to strengthen our core capabilitiesto keep on improving business performance and operating results so as tomaintain sustainable growth of the Group and to present satisfactory resultsand bring favourable returns to our shareholders."




[1]Netting offone-off non-recurring listing expenses

[2] Interms of revenue for the year ended 31 March 2018


About Best Mart 360 Holdings Limited

Best Mart 360 Holdings Limited, the second largest leisure food retailerin Hong Kongfor the year ended 31 March 2018, mainly operateschain retail stores under the brand "Best Mart 360˚". It offers wide collectionof imported prepackaged leisure foods and other grocery products, principallyfrom overseas. The Group's business objective is to offer "Best Quality" and "BestPrices" products to customers through continuous efforts on global procurementwith a mission to provide comfortable shopping environment and pleasurableshopping experience to customers. As at 31 March 2019, the Group operates 89retail stores that are strategically located at 18 districts in Hong Kong.

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