AuMake’s online business booms as COVID-19 impacts China’s retail industry

AuMake International online business COVID-19 coronavirus China retail industry ASX AU8
AuMake International equaled its previous online sales record in February 2020 with $1.7 million.

Retail business AuMake International (ASX: AU8) has reported a material shift in China-based consumer purchasing behaviour across its online channels, due primarily to coronavirus isolation procedures and consumers having less exposure to offline stores.

The company said its online stores are providing an “undisrupted source of revenue” which is partially offsetting the financial impact of COVID-19 and delivering improved financial performance relative to its offline store sales.

Its online business performed “exceptionally well” in February, with record sales of $1.7 million.

Since February, AuMake has been reducing trading hours for its offline stores, improving store rostering and temporarily closing some outlets, while maintaining flexibility to ramp up if and when trading conditions improve.

Broadway acquisition

Part of AuMake’s strong performance was due to the launch of an online store for tourism brand Broadway, acquired in July for $14.2 million.

Broadway has over 20 years’ experience in China’s tourism industry and has a track record of attracting Chinese tour groups to its retail stores where consumers are able to purchase brands and products from Australia and New Zealand.

The online store was developed in collaboration with travel agents in China and is designed to meet the product needs of China’s affluent tourism demographic.

It will allow a network of tourism-related partners to promote Broadway’s mix of new and high-margin products directly to customers who have visited or are planning to visit Australia and New Zealand, and provide a revenue opportunity while travel restrictions are in place.

Adaptability

AuMake said its ability to adapt to a changing market was paying off.

“As a result of these measures and robust domestic customer visitation, the AuMake store network is currently breaking even, despite the challenging macro environment,” it said.

“A strong cash position, implementation of cost mitigation measures and close working relationships with [our] trading partners, mean we have adequate financial resources available and contingency plans in place to navigate the remainder of [this] calendar year.”

AuMake said it was focused on managing through the impact of COVID-19 with the “utmost diligence”, while assessing opportunities for growth such as the collaborative co-creation of the Broadway online store with its tourism partners.

The company is currently building a database of more than 120,000 Broadway customers from China for direct and indirect marketing opportunities.