A.S. Watson latest results - online store launched in China

Date : 03 April 2013
A.S. Watson has reported sales up by almost 4% for 2012, with revenue growth from both Asia and Europe. Meanwhile the business in China has launched its own online store.

Revenue growth in Europe and Asia

Total retail sales in 2012 grew from HK$143,564m (USD18.49bn) to HK$148,626m (USD19.14bn), an increase of 3.5%. Sales revenue growth for the health & beauty operation in Europe was up by 5% and in Asia by 9%, with encouraging performances from a number of Asian markets, as the luxury division in Europe found trading more challenging. Sales growth, combined with tight cost control and cost saving initiatives, helped EBITDA grow by 8.9% from HK$11,724m (USD1.51bn) to HK$12,765m (USD1.64bn).

High speed development strategy continues

In 2011, A.S. Watson announced that it intended to open 2,000 stores in mainland China. At the end of 2012, store numbers in China had risen to 1,438, across over 200 cities. China is the largest single market in terms of sales, however, sales growth in China in 2012 slowed to 0.6%. A.S. Watson attributed this to consumer spending pressures, plus more newer stores opening closer to existing locations.

Despite the low growth in mainland China, A.S. Watson has said it is happy with the performance of the new stores, which it reports are delivering a payback in less than a year.

For 2013, A.S. Watson sees no slowdown in new store openings and expects to open 1,000 stores, most of them in Asia, including China.

New online store launched

Watsons China has also launched its own online store, following the success of the flagship online store on the T Mall.com trading platform in December 2011. Whilst late to online, this signals the company's intention to bring together both its in-store and online retail operations in the market.

Our view

It's been another busy year for A.S. Watson, not only delivering sales revenue and profit growth, but also a significant number of new store openings. Like other H&B retailers, the group continues to invest and experiment with new store concepts and ideas, enhancing its beauty offering and strengthening its health and wellness credentials with a view to improving the overall shopper experience. Add to that an increasing online and global shopper loyalty programme capability, and this puts the group in a strong position to hold its own amidst competition from other channels and retail competitors.