Wangfujing disclosed a quarterly report: In Q1, the company achieved revenue of 3.308 billion yuan/-1.74% year over year, net profit margin of 6.31% /-0.6 pct, net profit margin of 41.22%/-1.58pct.
On the revenue side, commodity consumption recovered slowly, and revenue declined slightly year over year, but tax-free, Ole, and shopping malls performed well:
Olay and shopping centers met experiential and cost-effective needs, showing strong resilience: 1) 24Q1 Olay achieved revenue of 588 million yuan/ +9.45%, gross profit margin of 64.63%/-5.29pct; opened at the end of '23, Olay Uptown in Wangfujing, positioned as a young hybrid Olay, which is expected to gradually climb the slope and contribute to growth during the year; 2) 24Q1 Shopping Mall achieved revenue of 674 million yuan/YoY +3.52%, gross profit margin of 45.23% /-4.15pct, and Beijing Jinyue Street at the end of 23 Shopping center opened, It also lays out new properties in Guiyang.
The duty-free business continued to climb, and the second and third phase of construction accelerated: 24Q1, the duty-free business achieved revenue of 121 million yuan/ +116.78%, and a gross profit margin of 18.04% /+3.37pct. Wangfujing International Duty Free Port's sales and passenger flow reached record highs in the first quarter. Revenue (taxable rents+duty-free revenue) was +81% compared to the same period, and passenger flow was +33%. In the future, it will maintain the deep integration of “tax+tax exemption” and accelerate project construction adjustments.
The transformation of one department store at a time is still under pressure in the short term: due to a relatively single business category and insufficient functional experience, department store business performance showed a downward trend. In Q1 of '24, it achieved revenue of 1,449 billion yuan/ -11.25%, and a gross profit margin of 35.39%/-1.81 pct. The company adopted a store-by-store approach to implement transformation and adjustments to department stores. The operating performance of some stores that have completed the transformation has been improved, and adjustments will be increased; 2) specialty stores: 24Q1 revenue of 378 million yuan/ -4.98%, gross profit margin 18.25% /+0.20pct; 3) Supermarkets: 24Q1 revenue of 81 million yuan/ -31.06%, gross profit margin of 16.97% /+1.66pct. The supermarket closed 4 stores compared to the same period in '23. Excluding closing factors, the supermarket business revenue was -18.88% compared to the same store.
On the profit side, new projects and new business formats are still being nurtured. Under the influence of fixed costs and new leasing standards, the profit decline was higher than the decline in revenue: in Q1, 24, the company achieved gross sales margin of 41.22% -1.58/pct, net sales margin 6.31% /-0.6pct, sales rate 13.34% /+0.07pct, management rate 15.21% /+1.21pct, financial rate 0.51% /-1.76pct.
Profit forecast: The company insists on deepening the retail business, improving the retail ecosystem, and gradually realizing a tax+duty-free two-wheel drive business pattern. We expect net profit to be 917/10.84/1,214 million yuan respectively for 24-26, and PE corresponding to the closing price on April 26 is 17/14/13X, respectively.
Risk warning: Consumption power is weak, duty-free business is falling short of expectations, and the market competition pattern is intensifying