Kevin Strategy Research
This article was transferred from the WeChat account “Kevin Strategy Research”. Authors: Liu Gang, Wang Hanfeng
Big expenses:applesIPhoneResuming growth, Greater China6monthiPadRecord demand, with new customers accounting for two-thirds;StarbucksThe performance of the Chinese market was better than the world, improving month by month, promoting digital and online business; Louis Vuitton's business in China grew in the second quarter65%, far better than other regions;coca colaGrowth of soft drinks in China in the second quarter14%, especially Cola Zero,618Strong performance;KimberlyDouble-digit growth in personal care products in China in the second quarter
apples(AAPL.US, China accounted for 15.7% of revenue in 2019),IPhoneResuming growth, Greater China6monthiPadDemand was record, with new customers accounting for two-thirds.The company's net sales revenue for the second quarter was 59.7 billion US dollars, up 11% year on year, with exchange rate factors dragging down 3%. By business, product revenue in the second quarter increased 10% year-on-year to US$46.5 billion, of whichIPhoneresume positive growth, andiPad,MacStrong double-digit growth for both wearables。 In addition, service revenue continued to grow strongly, 15% year over year, and reached a record revenue of US$13.2 billion in the second quarter (22%).
On the Chinese side,The company's revenue in Greater China increased year-on-year in the second quarter2%This includes a 4% exchange rate factor drag, so the growth rate calculated at a fixed exchange rate is 6%. Specifically, both iPad and Mac achieved strong growth in the second quarter, driven by demand for work-from-home and remote learning. In particular, the monthly demand for iPad in June set a record, and the proportion of new customers was as high as two-thirds and three-quarters, respectively. The iPhone 11 is most popular among urban residents in China.
Look ahead,The company expects that the current good performance of the product will continue.Including the strong performance of the iPhone SE. In terms of service business, with the exception of AppleCare, the company expects performance in the third quarter to maintain the same trend as in the second quarter.
Starbucks(SBUX.US, China accounted for 14.4% of revenue in 2019),The performance of the Chinese market was better than that of the world, improving month by month; promoting digital and online business.The company's same-store revenue fell 40% in the second quarter of 2020 (third quarter of fiscal year). Among them, customer unit price increased 23%, but sales volume fell 51%; in the second quarter, 130 stores increased, up 5% year on year.
On the Chinese side, same-store sales declined19%, sales volume declined27%, increase in customer unit prices10%, the number of stores increased13%。 Currently, 99% of stores in China have reopened. Of these, about 90% of stores have normal business hours, and more than 70% of stores are operating completely normally. Based on the positive recovery momentum in the first quarter, monthly same-store sales in China increased month-on-month in the second quarter, which was better than the company's expectations for this quarter. The company also accelerated the promotion of Starbucks Now stores in China, adding 9 new locations in the second quarter, for a total of 15 now. Also, by introducing the Starbucks Now Mobile Order & Pay function, the company andAlibabaSeveral platforms in the digital economy have formed partnerships, including Taobao, digital map and information provider, Amap, etc., to provide customers with innovative digital services. Through these apps, customers will be able to order drinks and food online and then pick them up at most Starbucks stores in mainland China.
Looking ahead, management is satisfied with the progress made in resuming sales in China. Globally, management expects same-store sales to drop by 12% to 17% in the third quarter and fiscal year 2020.Same-store sales in the third quarter in China will be between-5between% and flat, the entire fiscal year will fall by 15% to 20%, including the impact of the 2% VAT concession.
Louis Vuitton Group(MC-FR, China accounted for 6.8% of revenue in 2019),Strong business growth in China in the second quarter65%, far better than the rest of the world.The company's revenue for the second quarter of 2020 fell 38% year on year, a further increase from -17% in the first quarter. Among them, the European and Japanese markets both had a year-on-year decline of more than 50%, with the least decline in Asia excluding Japan (-13%). By product, watches and jewellery declined the most, reaching 52%, while fashion, leather goods, and perfumes declined -37% and -38%.
On the Chinese side, all types of products showed a good recovery momentum, and business growth in China exceeded in the second quarter65%, particularly the Dior and Louis Vuitton brands. The reopening of the Chinese market led to a recovery in cognac sales, and the brand's sales volume fell 15% in the first quarter. Skincare products Abeille Royale and Orchidée Impériale are recovering well in China, and online sales are also impressive. They continue to be an important driving force for the Guerlain brand. Additionally, Guerlain's Fresh brand will open concept stores and provide new services in China; furthermore, the jewelry brand Bulgari made a strong recovery in China in the second quarter. Beauty brand Sephora recently hosted a virtual Sephora Day digital event in China, which had a significant impact on beauty trends.
Looking ahead, management remains optimistic about the company's prospects, but the spread of public health events and the downturn in the travel retail industrySkidding still requires attention. Management believes that the situation in China is healthy and is currently at a stable level of inventory.
coca cola(KO.US, China accounted for 7% of revenue in 2019),The company's growth in soft drinks in China in the second quarter14%, especially Cola Zero;618Strong growth。 The company's internal revenue fell 26% year over year in the second quarter, which was affected by centralized delivery and price/product mix factors by 22% and 4%, respectively. As global restrictions were relaxed, the company's business improved, narrowing from a 25% decline in April to a single-digit decline in July.
On the Chinese side, the company focused its business on soft drink products during the quarantine period of public health incidents.Sales volume increased year-on-year in the second quarter14%, with strong sales growth for Coca Cola Zero。 Furthermore, the company cooperated with a major e-commerce platform in China, and the company's revenue through the platform increased 65% during the recent 618 section period. Looking ahead, the company believes that the fundamentals of the beverage industry continue to grow positively despite short-term challenges.
Kimberly(KMB.US, China accounted for 3.5% of revenue in 2018. The company's main products include diapers, facial tissues, tissues, adult diapers, surgical gowns, and disposable masks),There was a double-digit increase in revenue from personal care products in China in the second quarter.Excluding exchange rate factors, endogenous income increased 4% in the second quarter, with sales volume increasing by 2%, and price and product mix factors contributing 1%. Although the market has been disrupted by public health events in the past few months, the company still has an advantage in global supply management, and the second quarter was not significantly affected. At the same time,The company is actively accelerating e-commerce and digital strategiesto promote the long-term development of the company under the new normal. The company is actively promoting e-commerce and digital strategies drawn from the Chinese and Korean markets to the world. By product, personal consumption of tissues increased by 14% in the second quarter, personal care increased by 2%, and commercial products decreased by 10%. By market, personal products in North America increased by 12% in the second quarter (personal care increased by 5%, personal consumption of tissues increased by 22%), but commercial goods declined by 3%.
In the Chinese market, the company achieved double-digit growth in personal care sales revenue in the second quarter; The market share of key products is flat or rising (among them, the market share of infant care products is flat, while women's care products are rising); according to management, the overall performance of the Chinese market in the second quarter showed a steady upward trend.
Looking ahead, management is optimistic about the company's future performance and has raised its forecast for endogenous sales revenue growth rate and profit growth; currently, the company expects organic sales revenue to grow at a rate of 4% to 5% in the future.
(Editor: Zeng Yingying)