Best Mart 360 Holdings Limited announces FY2020/2021 Annual Results

HONG KONG, June 24, 2021 /PRNewswire/ --

Highlights:

• Revenue increased by 32.3% to approximately HK$1,627.9million.
• Gross profit increased by 26.4% to approximately HK$520.2 million.
• Operating profit increased by 300.7% to approximately HK$101.7 million
• Profit attributable to owners of the Company increase by 573.1% to approximately HK$81.4 million.
• As at 31 March 2021, the Group operated a total of 124 chain retail stores, including 4 retail stores in Macau.
• Launched an aggregate of 124 private label products, from which sales increased by 194.9% YOY.
• Strategically expands product range to cover more basic foodstuffs and necessities and increase foothold in residential areas in the time of fighting against pandemic.
• Plans to expand to B2B segment and open retail stores in Shenzhen in the second half of 2021.
• Basic earnings per share was 8.1 cents. The Board recommended the payment of final dividend of HK2.5 cents per share.

Financial Highlights:

Best Mart 360 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 Kong[1], announced its annual results for the year ended 31 March 2021 ("Financial Year"). During the financial year under review, the revenue recorded by the Group amounted to approximately HK$1,627,891,000, representing an increase of approximately 32.3% as compared to approximately HK$1,230,437,000 for the year ended 31 March 2020. The increase was mainly attributed to the significant increase in demand for household foodstuffs and grocery items due to the pandemic, newly added sales of face masks, epidemic prevention products and daily necessities, an increase in the range of private label products and sales, and the increase in the number of retail stores. The Group recorded a 10.1% increase in same store sales performance (2020: approximately 18.6% decrease).

During the financial year under review, gross profit for the year ended 31 March 2021 was approximately HK$520,154,000 (2020: approximately HK$411,492,000). Gross profit margin of the Group was approximately 32.0% (2020: 33.4%). Profit attributable to owners of the Company was approximately HK$81,449,000 (2020: approximately HK$12,100,000), representing an increase of approximately 573.1%. The increase was mainly attributable to (i) the substantial increase in the overall sales of the Group's retail stores as compared to the corresponding period last year; and (ii) the Group received subsidies of approximately HK$31,772,000 in relation to the Employment Support Scheme granted by the Hong Kong and Macau governments for the year ended 31 March 2021.

During the financial year under review, basic earnings per share was 8.1 cents (2020: 1.2 cents). The Board recommended the payment of final dividend of HK2.5 cents per share.

BUSINESS REVIEW

28 new retail stores & Increase foothold in residential areas

As at 31 March 2021, the Group operated a total of 124 chain retail stores, including 120 chain retail stores in Hong Kong (as at 31 March 2020: 102) and 4 retail stores in Macau (as at 31 March 2020:1). During the financial year under review, the Group opened 28 new stores (including 3 new stores in Macau) and closed 7 retail stores upon expiration of the respective lease terms of the stores as a result of adjustment in the Group's store opening strategy.

As at 31 March 2021, the 120 retail stores of the Group in Hong Kong consist of 23 retail stores located in Hong Kong Island, 41 retail stores located in Kowloon and 56 retail stores located in New Territories; while 43 retail stores are street-level stores, 74 retail stores are situated in shopping arcades within community or residential districts and 3 retail stores are situated at traffic hubs that are easily accessible by tourists, spanning over all of the 18 districts in Hong Kong.

Rental expense for retail stores was approximately HK$188,393,000 for the year ended 31 March 2021, representing an increase of approximately 15.7% as compared with approximately HK$162,869,000 for the year ended 31 March 2020. The ratio of rental expense to sales revenue of retail stores for the year ended 31 March 2021 was approximately 11.6%, which was slightly lower than that of approximately 13.2% for the year ended 31 March 2020. 

Strategically adjusted product structure & achieved increase in sales from private label products

During the Financial Year under Review, the Group continued its global procurement policy and mission by sourcing broad spectrum of products worldwide that meet and satisfy market trend and demand. To better cater to the daily needs of the local community in the time of fighting against pandemic, the Group further strengthened the supply of basic foodstuffs such as rice, noodles, flour, canned food, milk and frozen food, daily necessities and basic grocery products, as well as epidemic prevention items such as face masks, to better meet the daily needs of consumers in the local community.

For the year ended 31 March 2021, the Group offers a total of 3,603 SKUs of products (2020: 3,341 SKUs) from suppliers principally from overseas markets, such as Japan, Europe, the United States, Korea and countries in the South East Asia, and brand owners or importers in Hong Kong. Approximately 55.0% of the products were procured from suppliers and brand owners or importers in Hong Kong (2020: approximately 43.8%), while the share of import products from Japan, Europe and Vietnam represented approximately 11.9%, 6.3% and 5.1% of the whole procurement respectively (2020: approximately 14.5%, 13.8% and 4.7% respectively).

During the period under review, the Group continued to actively develop private label products. For the year ended 31 March 2021, sales derived from private label products was approximately HK$140,564,000 (2020: HK$47,658,000), representing a significant increase of approximately 194.9% from that of last financial year and accounted for approximately 8.6% of the revenue of the Group for the year ended 31 March 2021(2020: approximately 3.9%). As at the Financial Year under Review, the Group has launched aggregate 124 private label products, including nuts and dried fruits, organic grains, wet tissues, canned food, biscuits and snacks, etc.

A breakthrough of number of members & promoted consumer loyalty

Given that the retail business of the Group is a consumer driven business, the Group placed substantial efforts in developing and reinforcing its customer base. As such, the Group has established a membership scheme since April 2015 in order to promote consumer loyalty, stimulate sales and expand customer base. In order to further deepen customer stickiness and expand customers' coverage, the Group used big data analysis and reformulated its marketing strategy to launch a new three-tier membership scheme and a second generation mobile app in mid-June 2020. The new membership scheme helps to elevate brand positioning and market recognition, and the membership rewards have been fully optimised and enhanced, with more member benefits such as multiple items purchase stamp reward, special offers for selected products and access to latest market information.

During the financial year under review, the number of the Group's members was increased to approximately 1,673,000 as at 31 March 2021 from approximately 1,379,000 as at 31 March 2020, representing an increase of approximately 21.3%. Since the launch of the mobile app, approximately 538,000 members had been registered through the Group's mobile app up to 31 March 2021.

OUTLOOK

The Group will continue to strive to reinforce its core competitiveness in the Hong Kong market by optimizing its product mix to cater for the needs of the local market amidst the uncertain economic and retail environment, including exploring the possibility of further expanding the Group's product range to cover more basic foodstuffs and necessities, and further developing the Group's private label products to enrich customers' choices. The management will continue to monitor the development of the pandemic and review the geographical distribution of the Group's stores, especially increasing its foothold in residential areas. In addition, the Group is actively exploring the launch of food brands and target the high-end market to meet the demands of a wider range of consumers, in an effort to diversify its business.

Meanwhile, the Group is actively exploring the formation of a new company to further expand its business from business-to-customer (B2C) segment to business-to-business (B2B) segment, including wholesaling the Group's private label products and other imported products to other retailers in Hong Kong, online stores and even merchants or enterprises in other overseas markets, with a view to generate more revenue streams for the Group.

The Group has established a wholly foreign-owned enterprise in Shenzhen. Although the relevant development and expansion was temporarily suspended due to the outbreak of the novel coronavirus pandemic, the Group has revived such plan in April 2021 by sending our Hong Kong-based staff to set up a formal office in Futian District, Shenzhen, and to commence preliminary work for staff recruitment and opening of retail stores in Shenzhen in the second half of 2021 as the Group's first presence in the Mainland China Market, and with the objective to expand its operating model to other cities in the Greater Bay Area, thereby extending the sales network of the Group to the whole nation. 

Mr. Hui Chi Kwan, Chief Executive Officer of the Group, said, "Despite the sluggish retail environment, we managed to maintain sustainable growth in both revenue and profit, especially the satisfactory operating results in the Macau market, which strengthened the Group's confidence in going beyond the Hong Kong market and established the operating model for expansion into other markets. Looking ahead, we will continue to closely monitor the development of the various unfavorable factors affecting the operation of the Group, so as to promptly implement necessary and appropriate business measures to minimize the adverse impacts on the Group's business operation. We are committed to strengthen our core capabilities to keep on improving business performance and operating results so as to maintain sustainable growth of the Group and to present satisfactory results and bring favourable returns to our shareholders."

About Best Mart 360 Holdings Limited

Best Mart 360 Holdings Limited, the second largest leisure food retailer in Hong Kong for the year ended 31 March 2018, mainly operates chain retail stores under the brand "Best Mart 360˚". It offers wide collection of imported prepackaged leisure foods and other grocery products, principally from overseas. The Group's business objective is to offer "Best Quality" and "Best Prices" products to customers through continuous efforts on global procurement with a mission to provide comfortable shopping environment and pleasurable shopping experience to customers. As at 31 March 2021, the Group operates 124 retail stores that are strategically located at 18 districts in Hong Kong.