Best Mart 360 Announces Results for the 9 Months Ended December 2023

Proposed a final dividend of HK6.0 cents per share

Highlights:

• Revenue recorded approximately HK$1,930.8 million.
• Gross profit recorded approximately HK$694.3 million.
• Operating profit recorded approximately HK$213.6 million.
• Profit attributable to owners of the Company recorded approximately HK$168.3 million.
• As at 31 December 2023, the Group operated a total of 167 chain retail stores, including 159 retail stores in Hong Kong, 7 retail stores in Macau and 1 retail store in Mainland China.
• Basic earnings per share was approximately HK16.8 cents. The Board recommended the payment of final dividend of HK6.0 cents per share.

Financial Highlights:

HONG KONG SAR 24 March 2024 – Best Mart 360 Holdings Limited (“Best Mart 360” or the “Company”, together with its subsidiaries, the “Group”; stock code: 2360.HK), a leisure food retailer in Hong Kong, announced its results for the nine months ended 31 December 2023 (“the Financial Period under Review”). As the Company changes the financial year end date from 31 March to 31 December, which is different from the length of the previous reporting period, the audited comparative figures may not be fully comparable.

During the Financial Period under Review, the revenue recorded by the Group amounted to approximately HK$1,930,831,000, representing a period-on-period increase of approximately 17.3% as compared with the unaudited revenue of same nine-month period in 2022. During the Financial Period under Review, the Group recorded an approximately 3.4% growth in same store sales performance (for the year ended 31 March 2023: approximately 2.5% growth).

During the Financial Period under Review, gross profit was approximately HK$694,258,000, compared with the gross profit of approximately HK$817,263,000 for the year ended 31 March 2023. The Group’s gross profit margin for the nine months ended 31 December 2023 was approximately 36.0%, representing an increase of 0.6 percentage points compared with 35.4% for the year ended 31 March 2023.

Profit attributable to owners of the Company was approximately HK$168,335,000 (for the year ended 31 March 2023: approximately HK$200,997,000). The Group’s net profit margin was approximately 8.7% for both the nine months ended 31 December 2023 and the year ended 31 March 2023.

During the Financial Period under Review, basic earnings per share was approximately HK16.8 cents (for the year ended 31 March 2023: HK20.1 cents).

BUSINESS REVIEW

19 new retail stores & increase footprint in residential areas

As at 31 December 2023, the Group operated a total of 167 chain retail stores (31 March 2023: 154 stores), including 159 chain retail stores (31 March 2023: 145 stores) in Hong Kong, 7 chain retail stores (31 March 2023: 7 stores) in Macau and 1 chain retail store (31 March 2023: 2 stores) in Mainland China, respectively. During the Financial Period under Review, the Group opened 19 new retail stores, and closed 6 stores upon expiration of their respective lease terms in alignment with the optimisation of the Group’s store opening strategy.

Rental expense (cash basis) for retail stores was approximately HK$183,154,000 for the nine months ended 31 December 2023 (for the year ended 31 March 2023: approximately HK$220,230,000). The ratio of rental expense (cash basis) to sales revenue of retail stores for the nine months ended 31 December 2023 was approximately 9.5%, which was lower than that of approximately 9.6% for the year ended 31 March 2023.

Kept optimising product mix & enhancing the development of private label products

During the Financial Period 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 needs of the local community and the international travellers, the Group further strengthened the supply of basic foodstuffs such as cereals, noodles, canned food, milk, chilled and frozen food, daily necessities and basic grocery products. In addition, the Group continued to strengthen its private label sales in retail stores, including nuts and dried fruits, organic grains, wet tissues, canned food, biscuits and snacks, etc., providing consumers with more diversified choices.

For the nine months ended 31 December 2023, the Group offered a total of 3,724 stock keeping units (“SKUs”) of products (for the year ended 31 March 2023: 3,770 SKUs) from suppliers principally from overseas markets, and brand owners or importers in Hong Kong, with product origins mainly from, among others, Japan, Korea, the United States, Europe, Australia, Vietnam and Thailand, as well as other Asia-Pacific countries. The Group sourced the most popular and trendy food products from these countries or regions to offer a globally-diversified, multi-brand and multi-category selection for every customer.

As at 31 December 2023, the total amount of inventories of the Group amounted to approximately HK$276,691,000 (31 March 2023: approximately HK$244,219,000), representing an increase of approximately 13.3%. The increase in the Group’s total amount of inventories was mainly due to an increase in the number of retail stores and preparation for increased demand during the peak sales season in the coming quarter.

During the Financial Period under Review, the Group continued to actively develop private label products that on one hand allow the Group to capture advantages of pricing and exercise higher level of quality control on its products and on the other hand further uplift its brand awareness and strengthen customers’ loyalty. For the nine months ended 31 December 2023, sales derived from private label products was approximately HK$305,520,000 which accounted for approximately 15.8% of the revenue of the Group for the nine months ended 31 December 2023, as compared to approximately HK$346,352,000 for the year ended 31 March 2023, which accounted for approximately 15.0% of the revenue of the Group for the year ended 31 March 2023, representing an increase of approximately 0.8%. During the Financial Period under Review, the Group has launched an aggregate of 11 private labels, and the products for sale included nuts and dried fruits, organic grains, wet tissues, canned food, biscuits and snacks, etc.

Expanded the customer base & Launched marketing activities timely

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 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. Through diversified marketing strategies, the Group aims to internally strengthen the membership core from within and attract new customers through external expansion, so as to effectively and purposefully foster the ties between members and the Group, thereby driving recurring business from members and promoting sustainable growth of the Group’s business.

During the Financial Period under Review, the number of the Group’s members increased from approximately 2,059,688 as at 31 March 2023 to approximately 2,123,356 as at 31 December 2023, representing an increase of approximately 3%.

The year 2023 marked the 10^th anniversary of the Group’s establishment. The Group conducted various marketing and promotional activities during the Financial Period under Review, including the “Super Best Price (超級至優價)” promotional campaign, which provided customers with a series of special offers for selected quality products to express our gratitude for our customers’ support over the years and to enhance customer loyalty. Meanwhile, the Group continued to advertise through television, newspapers, social media platforms and other media, which successfully obtained repeat customers, attracted new customers and greatly promoted the discussions about the Group in the market.

PROSPECTS

In order to enhance business operational profits, the Group will continue to review the regional distribution of its brand stores, adjust its store mix through appropriate expansion policies and appropriate leasing strategies, and look for suitable opportunities to expand the store network of its major retail brands “Best Mart 360° ” and global gourmet store “FoodVille” in Hong Kong and Macau, with a target of achieving a net increase of 15 retail stores each year to satisfy the demand of different customer segments for quality food products with the pattern of dual-brand. The “Best Mart 360° ” brand will focus on serving residential areas, and the Group will continue to optimize the geographical distribution of its stores, review the spatial layout and store expansion opportunities of its existing retail stores, enhance store sales efficiency and provide customers with a more comfortable shopping experience; while “FoodVille” targets large and medium-to-high-end shopping malls in Hong Kong as well as stores with larger area and high customer traffic and density so as to further differentiate the two brands.

The Group introduced China Merchants Hoi Tung Trading Company Limited (“CMHT”) as a substantial shareholder during the Financial Period under Review, providing substantial strategic support to the Group and synergy maximization for the sustainable growth of the Group. The Group will continue to uphold its business mission in offering products with the “Best Quality” and “Best Price” to its customers, adhere to the concept of global sourcing. Through leveraging the extensive cooperation network and resources of CMHT, the Group is committed to explore more upstream suppliers, thus endeavoring to improve its supply chain, optimise its sales categories and maintain its price competitiveness. Furthermore, the Group will proactively source a diversified range of food products worldwide as well as step up the development of its private label products, aiming not only to satisfy market demand for daily necessities but also to provide customers with a broader range of choices.

On the other hand, the Group has entered into a sales and procurement framework agreement with CMHT and will sell products to and purchase products from CMHT and its subsidiaries in FY2024. The Board believes that through CMHT’s robust network of food importers and distributors, the Group will strengthen its procurement and business-to-business (B2B) operations, and provide a more diversified range of imported products and private label products of the Group to customers and other retailers in Hong Kong, online stores and even merchants or enterprises in overseas markets, enriching the Group’s streams of revenue and expanding its potential customer base.

Mr. Hui Chi Kwan, Chief Executive Officer of the Group, said, “Along with the change in the consumption pattern of tourists after pandemic, the retail industry is still facing the unpredictable business enviornment. We will continuously optimize our products mix and retail shop distribution to align with consumer needs so as to make the peaks higher and bring greater returns for the shareholders of the Group.”