Streamlining Transformation Focuses on Main Business, Multiple Measures to Resolve Debt

In 2023, the global economy remained in a trough, and the external geopolitical environment remained unstable. At the same time, the domestic economy faced both cyclical and structural adjustments, and the recovery of domestic demand was slow. In terms of industries, real estate and other related upstream industries have not yet emerged from the trough, the overall recovery in retail was not as expected, and the demand for the home appliance industry also decreased. In 2023, the Group recorded revenue of approximately RMB647 million; and loss attributable to owners of the parent of approximately RMB10,057 million.

In 2023, under the macroeconomics and the slow recovery of the industry, GOME Retail continued to implement streamlining transformation, officially launched the class franchise cooperative joint venture model, to achieve low-cost and high-efficiency business expansion to the greatest extent, while focusing on the main business of home appliance retail, and continued to provide high-quality home appliance and consumer electronics retail services in a vertical mode. In addition, in the past year, GOME Retail actively resolved issues with creditors, successfully reached an agreement in December 2023, successfully introduced JD.com, Inc. as the investor, and also provided a successful reference for other debt resolutions.

Live Streaming & Class Franchise Facilitate Corporate Optimization, Continued Operational Enhancement

GOME Retail Holdings Limited has been actively optimizing the business model to facilitate successful transformation. The company has focused on initiatives such as live streaming, short videos, and class franchise business models,investing more resources and effort and enhancing quality. Notably, GOME has continued to strengthen its own GOME APP platform while also exploring and integrating with external platforms like Douyin, Kuaishou, and WeChat short videos. In July 2023, GOME officially joined the Kuaishou Life Service platform, becoming the first large-scale 3C (Consumer Electronics, Computers, and Communication) home appliance chain brand to do so. Additionally, GOME has collaborated extensively with MCN companies and internet influencers (KOLs) to increase its influence and attract more businesses and users, accumulating rich experience in user engagement and scene creation.

The formal launch of the class franchise business model has strengthened GOME’s operational capabilities and facilitated corporate optimization and transformation. By leveraging brand empowerment and other strategies, GOME collaborates with franchisees to jointly establish companies. This collaboration spans open commercial platforms, brand resources, and supply chains, fostering mutual growth. Since launching the class franchise business model in May 2023, GOME Retail has rapidly expanded discussions and cooperation nationwide. In cities such as Shenyang, Jilin, Harbin, Dalian, and Tianjin, the model has already entered substantial operational phases, and achieved rapid development with booming sales. Leveraging both Douyin’s “Craftsman” +“Influencer” channels, the class-franchise company’s performance exceeded expectations. Meanwhile, the class-franchise company’s in cities like Shanghai, Xi’an, Chengdu, and Chongqing have strengthened their market presence by promotion and live streaming on external platforms such as Douyin, Kuaishou, and WeChat Short Video. These efforts contribute to GOME’s transformation and upgrade in the retail landscape.

Proactively exploring new build a new Gome ecosystem

During the reporting period, while focusing on its main business, the Group also actively expanded into three new businesses: vehicle showroom, unmanned retail and overseas home appliances. These new businesses maintain independence from the original electrical appliances business, constructing a new GOME ecosystem. The vehicle showroom includes three existing systems of GOME, building two major digital systems, fully penetrating the upstream and downstream, and achieving rapid payment, delivery, and landing of vehicles nationwide. At present, unmanned retail is gradually developing towards scale, and its rapid market development will bring new business opportunities to GOME Retail and provide an important supplement to the GOME retail ecosystem. In addition, GOME is considering pushing home appliance products to the overseas market, seizing the new opportunities brought by the “Belt and Road” initiative, using the resources and advantages of the retail platform, expanding the high-quality supply chain to emerging markets, and helping domestic high-quality goods reach the global market, creating new growth opportunities.

Looking ahead, the internal environment is gradually improving, the real estate industry is stabilizing step by step, and the implementation of national policies should be more proactive than last year. At the recently concluded “two sessions”, it was once again emphasized to increase macro-control efforts, and it was proposed to “Encourage and promote consumer goods trade-in programs and boost spending on intelligent connected new energy vehicles, electronic products, and other big-ticket items”. It is believed that the development of the industry in the new year will meet more benefits with the support of national policies.

Gome Retail management said: “In the future, the retail industry will face more new opportunities and challenges. GOME has never forgotten the original intention to serve the people’s better life and its responsibility as a listed company. The company’s management will still strive actively, carry out structural reforms, actively resolve debts by dividing the electrical business and establishing a new management system. In terms of strategy, it will accelerate the development of innovative formats such as home decoration, vehicle experience halls, and leasing businesses, and focus on the layout and expansion of unmanned retail. In addition, GOME will promote the integration of unmanned retail with existing business sectors, jointly develop three warehouses in urban areas, improve logistics efficiency and consumer experience, and meet the pursuit of a better life for Chinese families."

About GOME RETAIL HOLDINGS LIMIT

GOME RETAIL HOLDINGS LIMITED was listed on the Hong Kong Stock Exchange in July 2004 (Stock Code: 493HK). Founded in 1987 in China, GOME is committed to building China's leading technology-based, experiential, entertainment-oriented and socialized home-life technology retailer. With the strategy of "Home-Life", Gome Group focuses on retailing of electrical appliances and consumer electronics products, and builds a closed-loop ecosystem for the entire product line.

Please visit our website for more information www.gome.com.hk