Tourist drought hits AuMake’s bottom line
AuMake, the Australian retail chain selling local goods to Chinese, has reported a 70-per-cent decline in sales for the fourth quarter to just $4 million, with Covid-19 curtailing inbound tourism and closing stores in Mainland China as well.
In a stock-exchange filing, the company reported a gross profit of $730,000, down 63 per cent, but did not specify a net profit, referring only to an “operational cash outflow” of $1.3 million for the quarter.
“While Covid-19 has undoubtedly impacted the revenue profile of the business during the June quarter, AuMake has minimised this by materially reducing all non-core expenditure,” said executive chairman Keong Chan. “At the same time, we are increasing our investment in long-term growth drivers, enhancing our online offering and in-store customer experience.”
The company laid off about 70 per cent of its staff due to store closures.
A greater focus online helped maintain some level of sales that would otherwise have been lost due to shops being shuttered. The lower gross profitability from physical stores was partially offset by a 21-per-cent increase in gross profit from the online business,
Launched in February, AuMake’s Broadway Online platform attracted more than 10,000 unique Asian visitors during the quarter, with more than one in 10 buying products.
The company has taken advantage of the closure of retail outlets to improve the in-store experience.
Meanwhile, in China it has introduced support for Buy-Now-Pay-Later providers Alipay and Tencent.
“AuMake is strategically positioned to benefit from its growing online presence, leveraging its network of travel agent partners in Mainland China to attract repeat purchasers and new customers,” said Chan. “We will also benefit from the return of Asian students and tourists to Australia and New Zealand, who along with existing domestic customers, will be greeted with a new in-store experience which exceeds their expectations.”