Central Retail Corporation Public Company Limited (CRC) Earnings Call Transcript & Summary

Good afternoon everybody. Welcome analyst and investor to today meeting. [Foreign Language].

[Foreign Language].

Thank you, Khun [indiscernible]. If you move to the next page, we need to consider that we talk about omnichannel, of course, we always talk about online and the web sales. But in the past few months, we also developed a set of new services and a set of digital and remote channels even before the stores were [ close ]. Some of them -- some of these restarted 1 or 2 years ago because our strategy in Thailand, when it comes to omnichannel is to be ahead of the market and ahead of the competitors. Here, you see the 6 most important channels we launched in the past few months. Again, you know about chat and shop, so you can buy by chatting online, then there's call and shop where basically you call a number, you place your order and we deliver it to you. Then we ask our PC/BA even when the stores were closed, our PC/BA, I mean the people that work for the brands. Normally, they are waiting for the customers in the counters in our store. But because the stores were closed, we asked them to actually call the customers, call the most wanted customers and offered them -- offer the customer to send their products to their home. The fourth one is outbound calls by our staff. Basically, our staff, we have a lot of information about our customers and we call them and we offer them to do the shopping for them and again, to shop -- to send the shopping to their home. And on top of these four, we also launched Facebook Live Sales and brand lines. We have about 100 brands in Thailand that we represent exclusively brands like Tyson, Topshop, Polo and many others. Each of these brands now has a brand line official accounts where customers can buy on the -- and can see all the product catalog underlying official account and can buy through lines. So we call all this new channel Central at Your Home. So basically, we bring Central at Your Home. We launched them before the crisis and they helped us, together with the web to really continue to keep the relationship and continue to serve the customer in the very difficult months of March and April. If we move to the next one, let me talk a little bit more specifically about the online in Q1. So in Q1 2020 compared to Q1 2019, our sales growth was about 100% year-on-year, which is more or less what we expected. And I think also in the previous analyst communication, we normally refer on our aspiration to double the online sales in 2020 compared to 2019. In Q1, it was pretty much in line. In financial, we grew a little bit more [ 7% ]. And now we are very proud to see that in Q1, inflation, our share of sales online is 10%. I mean 10% of more official sales in Thailand than online. In outline, it's 11% but if we take away [indiscernible], which has not yet launched, and we consider [indiscernible] offline sales it would be 4.3%. And in Food, although the share is still small, food also grew a lot to grow more than double and our sharing foods in terms of total sales is 1.7% of our sales have been done online. So I would say Q1 was pretty much in line with our aspiration and maybe a little bit more than that when it comes to -- and to Food. Now the interesting thing I wanted to share with you, which is not about Q1. It is about the month of April is on the next page. And what you see on the next page, if you can move on to the next page, please. Yes. Thank you. What you see on this page, the previous page, we talked about we grew 100% our online sales year-on-year, 2020 versus 2019. But on this page, you see that in April, we grew almost 100% month-on-month. So it means the sales of April, we're 100% bigger than the sales online sales on March, actually 83% bigger than the online sales in March, which were 100% weaker than the online sales of March 2019. So we moved from -- when the reason, the crises started and all people were scared and many of our stores start to be -- most of our stores start to be closed, we moved from a growth of 100% year-on-year to growth of [ 80%, 83% ] month-on-month. The new channels, they grew times 4. So the growth was plus 300%. These are the channel I mentioned to you in the first page, the Chat & Shop, the Facebook Live, the brand line official accounts and so on. Combined -- combining this 2, just to give you an idea, we sold just with these 2 channels. Just with online and the new channels, we sold more than 20% of our normal store sales when stores are open in the month of April, even if most of our stores were closed. This is without counting the sales that we did in a few stores that were opened. Just with this 2, we sold 20% of what we used to sell with all the channels included in the store in a normal month before the crisis. So this shows us that the power and the potential, I would say, of the web and also of these new channels. Italy, if you move to the next page, of course, Italy is one of the countries have been most hit by the crisis was the first country outside of Asia, hit by the crisis was the first country that they stored extreme measure of confinements and they are still pretty much on today. We expect, although this is not confirmed yet, that from Monday, they will allow more stores, including our stores to reopen. But there's not been official -- the official decree has not been signed yet. So this should happen hopefully, next Monday and more certainly by the end of the month. In any case, the good and positive news about Italy and the big opportunity about Italy is that we have completed a project which is Rinascente omnichannel project. And actually, we are ready to launch as soon as the store will be allowed to reopen because it's an omnichannel project where basically we use the store to support the online. So we cannot operate it until the stores will be reopened, which as I said before should happen most likely very soon. This project is very important because it's a game changer in Italy. In Italy, there's no online player in the luxury and the premium segment that is both store and online so what we call omnichannel. All the players today are pure e-tailers or pure e-commerce. And on top of the strategic importance for 2020, we think it's going to be very critical and a very key factor of success for us to serve from now on, the Italian customers in the next months, but there will probably still be quite scared to go outside of their home and to shop in the stores. And finally, the positive development in this period -- in this difficult period are not just about online, but are also about some of our formats. I would say the most interesting one concern in Thailand, and then Philippe will talk about Vietnam. But in Thailand, for sure, the most interesting and also surprising performance was coming from our DIY and Home division. Of course, we opened 2 stores as we planned in the first quarter. Now we have a total of 52 stores. But the most important thing is in Q1, despite all the difficulties this division grew 7% and the same-store sales growth were flat. Despite the fact that 70% of the store were ordered to be closed in -- towards the end of March, we were able to keep flat same-store sale growth and plus 7% growth in the quarter. And even after the stores were closed, what we observed is that the sales from the stores that were still open basically exploded. So we are basically able to sell 70% of the sales even if just 30% of the stores remain open. I'll pass it to Philippe to talk about Vietnam.

Thank you, Khun Nicolo and [indiscernible]. So obviously, and we have been following that probably in the press the Food has been the big winner in this situation, which was probably much more hard for the nonfood parts. And you can see that both Thailand and Vietnam has actually grown significantly in this operation. Obviously, this has been fueled especially on the last months of the quarter -- the first quarter by the stock file that some of the customers have actually trying to make stocks because they were really afraid. It was the case in Vietnam. It was the case in Thailand. And obviously, we have a bit of panic buying. But what I just want to trigger on the food part is that we have not only served on the construction, which has been accelerated but we have also tried to make sure that we were continuing to maintain our price positioning. We have not raised our price. We have been able also to shift to the online and making sure customers don't have to move home. And you can see that Nicolo has already presented to you what's happening on the Food in Thailand, but on the Food in Vietnam, we actually reach after 1 month, [ 8% ] and especially working with all those partners that you can see at the bottom of the slide. Result is also good in terms of customer -- the customer, basically, acquisition because you can see that in actually the competition on this market, on the Food market, especially in Vietnam, we have seen that the market share has been actually growing. We have gained on the same period last year, especially after [indiscernible] and good March. We have actually gained market share compared to our peer, which means that Big C is actually very healthy and the significant performance of Lanchi and the supermarket as well. So you can see that on the Food in both Vietnam and Thailand, this was actually a very good momentum that we'll continue to maintain. On the next slide, we already told you that we were very selective and probably from Europe and [indiscernible] are going to remind you about how we have done for our CapEx. We really wanted to be sure that this opportunity -- we have opportunity to continue to grow not because of -- and we are not going to stop everything because of the COVID. So you can see that both Thailand and Vietnam has also been very, very selective in their expansion. Where Nicolo has already spoke about Thailand side -- but on the Thailand side, we have actually also continued to tackle -- have some opportunity with the team, which are actually driving sales. That was the case of Supersports, which has been opened, CMG as well [ Bound and Beyond ] and also Power Buy, including FamilyMart. On the right side, you can see that we have opened 1 store, which is a drive-in, we have -- and we, of course, when we have also opened the shopping mall, we have big Central market. We also opened new [indiscernible] stand-alone and [indiscernible] inside the mall and including all our nonfood [indiscernible]. So you have seen -- I mean, this is also a good and [indiscernible] to show you that no matter what happened, we want to maintain our strategy and our plan. But of course, not without any reason, very selective because those [ BU's ] are actually very meaningful to open during these days. To continue on the expansion on the next slide, which is Slide 15, for the team. We have committed, I know you all have asked us a lot of questions about our expansion in Vietnam. So we are continuing. We open [indiscernible], you already see it on the previous slide as a [indiscernible]. [ Chiang Mai ] is actually opening on 22. It's actually opened already, but we have to close it because of the COVID, but we reopened it actually in a few days. [indiscernible] is opening in the beginning of June. So end of May, [indiscernible] basically in the next 2 weeks, you have 2 Go! Mall which are going to open. And we will continue the plan as committed, the 6 Go! Mall altogether another 5 remaining until the end of the year. The construction is going well. And just for you the sake of your information all of that represent roughly 90,000 square meters, which is an acceleration of 20,000 square meters -- sorry 20% on the total GFA of Vietnam, which is a big acceleration for this year. On the next slide, because -- I'd like to share with you a little bit of the situation because you know that Vietnam has actually reopened now, since 3 weeks. We have reopened and Khun Yol has already presented that we were all [indiscernible] on the reopening. I want to share with you a little bit this reopening. It has been actually a little bit slow on the first 2 weeks and weeks, but everything now is going back to normal. So I don't know if the new normal is actually just the normal, but it's true that in Vietnam, [indiscernible] behavior of the people response street traffic is actually coming back to something that we used to have before the COVID period. Obviously, the border are still closed, but obviously, we also try to maintain all the distance measures, mask, et cetera, to make sure that we continue to protect the health of our employees and obviously, our customers and this is really special. But at least, I just wanted also to share with you because it's difficult to come to Vietman during this period. To share with you that actually today, the situation is almost go back to normal. Everything is reopened, as we know, and we are opening now the [indiscernible] in June. So this is just as an update of the Food and also a bit of Vietnam. So I will hand over now to [indiscernible] for the financial results. Thanks a lot.

[Foreign Language]