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Q4 FY20 Quarterly Report – Online business set for growth

July 28, 2020 Business News No Comments Email Email

AuMake International Limited (AuMake, AU8 or the Company), a specialist retailer providing a contemporary shopping experience to Asian customers seeking high-quality and authentic Australian and New Zealand products, is pleased to release its consolidated quarterly cashflow and business update for the quarter ended 30 June 2020 (Q4 FY20).Financial Highlights
 Cash at bank of $8.2m (at 30 June 2020), with no debt
 Operational cash outflow of $1.3m for the quarter, including significant investment in online growth and
in-store customer experience on re-opening
 Total group revenue for Q4 FY20 of $4.0m, (down 70% pcp) due to the impact of COVID-19 on
temporary physical store closures and inbound tourism to Australia
 Total group gross profit of $0.73m for Q4 FY20, (down 63% pcp), delivering a gross profit margin of 18.3% (an increase of 25% on the same period last year)
 Online sales of $2.3m with gross profit of $0.47m (up 21% on the pcp) delivering a gross margin
of 20.4% (an increase of 87% on pcp)
Operational Highlights
 Since its launch in February 2020, the Broadway Online platform has experienced growing demand with more than 10,000 unique Asian visitors, driving online purchases from over 1,000 new Asianbased consumers
 The Company is significantly improving its in-store experience as it continues to progress reopening physical stores
 To improve the shopping experience for customers, AuMake’s online payment platforms now support leading Chinese owned Buy-Now-Pay-Later providers Alipay and Tencent
Outlook
 AuMake’s strong financial position allows the business to continue to invest in the acceleration of online growth and to contemporise in-store customer experience with significant changes to store layout, presentation and product category expansion
 The Company will continue to focus on operational readiness ahead of the return of Asian students and tourists

AuMake Executive Chairman Keong Chan said “While COVID-19 has undoubtedly impacted the revenue profile of the business during the June quarter, AuMake has minimised this by materially reducing all non-core expenditure. At the same time, we are increasing our investment in long term growth drivers, enhancing our online offering and in-store customer experience.

“AuMake is strategically positioned to benefit from its growing online presence, leveraging its network of travel agent partners in mainland China to attract repeat purchasers and new customers. We will also benefit from the return of Asian students and tourists to Australia and New Zealand, who along with existing domestic customers, will be greeted with a new in-store experience which exceeds their expectations.

“The safety of our employees and customers remains a key priority for the business. On behalf of the senior management team and Board, I would like to thank all our stakeholders, including employees, suppliers, travel agents, tour guides, landlords and shareholders, for their continued support during these challenging operating conditions. AuMake will emerge as a leaner and more contemporary business as a result of this pandemic.

“AuMake remains committed to providing a premium highly-trusted, native-language physical and online shopping experience for Asian consumers seeking quality Australian and New Zealand products.”

Quarterly Financial Performance Summary

 With the temporary closure of physical stores at the end of March due to COVID-19, offline revenue and gross profit decreased by 85% and 90% pcp respectively

o The Company actively managed its cost position during the quarter. The closure of the physical stores resulted in the company making the difficult decision to reduce its workforce by 70%
o The Company received support for the impact of COVID-19 via Jobkeeper and rent
assistance
 The reduction in gross profitability from physical stores was materially offset by a 21% increase in gross profitability from the online business
o Online gross margin improved 87% vs the pcp as the Company increased the proportion of high margin own-brand goods sold online

Despite the fall in headline revenue, the impact of improving online margins and cost reduction resulted in an operational cashflow outflow of $1.3 million for the quarter, significantly lower than the pcp Whilst managing operational costs, the Company continued to re-deploy resources to increase investment in long term growth drivers, particularly its AuMake and Broadway Online platforms and improving the in-store experience.

Payments made to related parties and their associates shown in the Appendix 4C are as follows:
 Item 6.1: consists of $118,372 directors’ fees and $37,105 rental expenses to a related party; and
 Item 6.2: $132,938 is related to the consideration payment for the Broadway business to a related
party.

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