Parkson Announces the Interim Results for the Period Ended 30 June 2021

Parkson Retail Group Limited (“Parkson” or the “Company”, with its subsidiaries collectively referred as the “Group”, HKEx stock code: 3368.HK), the leading nationwide lifestyle concept retailer in China, today announces the Group’s interim results for the six months ended 30 June 2021 (“Review Period”).

During the Review Period, with the introduction of vaccines for the Coronavirus (COVID-19) and the implementation of economic recovery measures, the global market has been recovering gradually. Especially for China whose economy has largely rebounded from the COVID-19 pandemic and recorded total gross sales proceeds (“GSP”) of RMB6,253.7 million inclusive of value added tax, representing an increase of 27.7% as compared with the same period of last year, which was mainly due to increase in same store sales (“SSS”). SSS in the Review Period increase by 25.9%, reflecting an improvement due to reduce impact from COVID-19. In the Review Period, the Group’s profit from operations increased by 154.5% year-on-year to RMB247.4 million.

Enrich Retail Portfolio

Facing the continuous challenges of market changes and fierce competition, Parkson is focused on expanding its retail portfolio with a flexible and diverse strategy. The Group believes that its tactics of “Multiple Stores in a City” and “Differentiated Market Positioning” can help manage Parkson’s department stores effectively and reach out to more customers at different consumption levels and with different consumption habits. This will enable the Group to gain more market share in the long run.

The Group’s second department store in Datong City, Shanxi Province successfully opened in January 2021. The store operates as a “department store and shopping mall complex”, in order to enhance the retail portfolio of the property.

During the Review Period, the upgrading and renovation project of Suzhou Changfa Commercial Building is still on course and expected to be launched in the fourth quarter of 2021. Its new outlook of “Parkson Changfa Hui” will help to integrate leading fashion lifestyle retail concepts with Suzhou lifestyle to meet the needs of different consumer groups. This collaboration with the well-known Jinjin Changfa Group signifies the entry of Parkson Group in the core market of Suzhou and to capitalised on the strong demand of the Suzhou market. The Group believes that this new fashion lifestyle retail concept will fulfil the needs of surrounding residents, young people, and tourists for shopping, leisure, entertainment, and health purposes.

Another anticipated project of the Group – “Wuzhou Sanqi Parkson”, a large-scale urban complex developed by Wuzhou Sankee Investment Co., Ltd., is on schedule and expected to open in the fourth quarter of 2021. It will serve as the fourth store of the Group in Guangxi Zhuang Autonomous Region, representing a new cultural landmark integrating office, residence, hotel, F&B, retail, and entertainment. The planning and development of Wuzhou Sanqi Parkson Store is in line with the Group’s development strategy in this Region.

On 11 July 2021, the Group’s indirect wholly-owned subsidiary, Jiangxi Parkson Shopping Centre Management Co., Ltd. has signed a Tenancy Agreement with Yichun Hong Lin Hotel Co., Ltd. with the intention of opening a new store in Yichun City, Jiangxi Province. The Group believes that this project will play an important role in the development of the Group’s business in Jiangxi Province, and when opened in 2022, it will be the Group’s third store in Jiangxi Province.

Promoting Differentiation and Pioneering Enhancement

Being one of China’s leading proponents of fashion lifestyle retail concepts, Parkson has been dedicated to developing an excellent reputation, maintaining its customer base, and attracting new customers, by differentiating its products and enhancing consumer experience. During the Review Period, the Group strategically expanded its product portfolio to meet the growing consumer needs.

The Group constantly monitors the development trend of the beauty market, and launches targeted development strategies for the beauty sector. For instance, the Group collaborates with several well-known beauty brands to introduce exclusive products in combination with customised service experiences to draw more consumers from the younger generation. Parkson’s self-operated makeup brands – Parkson Beauty and Play Up have become enormously popular among young consumers after adopting these differentiated product strategies. The Group will continue to raise its brand image and reputation through different marketing promotions, in order to strengthen its image as a trendy retailer and open up more branch stores in the future.

On 28 June 2021, the Group had signed an agreement with Wenzhou WanYing to open a new Parkson Beauty store in Wenzhou city, Zhejiang Province, which is targeted to open in 2022. It is expected that the opening of the store will help the Group to further grow its business in the area.

The asset enhancement project of the north building of Beijing Fuxingmen Parkson Store is expected to be completed in the second half of 2021. Located in Beijing Financial Street, the Group is confident that the office space of Fuxingmen North Building will be taken up due to high demand in that area and contribute stable recurring rental income to the Group.

Enhance Multi-channel Services by “O2O New Retail Strategy”

With the evolution of Internet technology and the impact of COVID-19, offline consumption has been significantly affected. The retail industry has adopted a new “online + offline” business model. As a leading fashion lifestyle retailer in China, the Group has vigorously promoted the “O2O New Retail Strategy” and improved its new sales model to capture the growing prospects of online retail. To this end, the Group has initiated various stimulus actions to boost offline retail business growth through online channels including Parkson’s official WeChat account and mobile shopping mini-programs. At the same time, the Group is seizing opportunities to invite customers to visit Parkson stores for an enhance shopping experience.

Parkson’s management commented, “With the new Biden administration coming to power in the U.S., there is still a lot of ambiguity regarding Sino-U.S. relations. In addition, although vaccines for COVID-19 have been launched, the pandemic is not over with the breakout of mutated variants of the virus. Due to all these factors, the global macroeconomic environment is expected to remain unstable in the coming year. While for China, with the stabilised COVID-19 situation in the country and the gradual recovery of the local retail market, consumers will tend to spend money in the local market because of the inability to travel abroad. In view of this, we remain optimistic about the overall retail market prospects in China in the second half of the year.

We will actively study market trends and consumer demands, broaden the product range of Parkson retail stores, and provide customers with a more diverse collection of high-quality products in the future to fully seize the opportunities brought on by the market recovery. The Group will also put more efforts and resources into online advertising to boost offline retail sales. To this end, the Group will vigorously implement the “O2O New Retail Strategy”, and integrate online and offline retail experience via social media platforms including Douyin, WeChat, mini-programs and customised client services to tap on retail industry changes and growing market demand, and expand market share through high-quality products and services.

In light of macroeconomic instability, we are actively looking for different business partners to explore new business opportunities, in order to diversify the Group’s business portfolio and strengthen Parkson’s position as a leading lifestyle retailer in China.”

About Parkson Retail Group Limited
Parkson Retail Group Limited (“Parkson”) is a leading nationwide lifestyle retail operator in China. As of 30 June 2021, the Group operated and managed 41 Parkson stores (including concept stores “Parkson Beauty”), 1 Lion Mall, 2 Parkson Newcore City Malls, supermarkets, fashion and food & beverage outlets, in 28 major cities.
With over two decades of retail experience in China, Parkson understands market developments and consumer demand. The Group incorporates shopping, dining and entertainment elements, within a combination of offline and online channels to cater to young and middle-to upper-middle-income consumers.

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