Profits up as Circle K Hong Kong owner reinvents itself

As the retail sector finally rebounds, the CEO of Circle K Hong Kong owner Convenience Retail Asia (CRA), Richard Yeung, says the company has reinvented itself.

He says profits have grown over the past year, while strong customer loyalty and marketing initiatives and an O2O business strategy have positioned the group for long-term growth.

By moving its convenience store and bakery businesses toward an O2O-centric business strategy has led to a highly sustainable business model. “The strategy has been a resounding success in terms of driving customer engagement, foot traffic and sales.”

Despite a challenging business environment, the group’s convenience store and bakery businesses had achieved satisfactory comparable-store sales growth in Hong Kong.

Core operating profit and net profit increased by 7.4 and 7.7 per cent respectively, mainly attributable to the effectiveness of the CRM program and strong marketing campaigns by Circle K together with improved performance from Saint Honore cake shops.

Growth has been driven by the group’s digital initiatives, led by its O2O CRM programs that saw its “OK Stamp It” and “Cake Easy” memberships exceeding 1 million and 300,000 respectively.

During the year the group obtained the franchise for Japan’s fast-fashion eyewear chain Zoff, opening the brand’s first store in Hong Kong.

Group turnover grew 4.6 per cent to HK$5 billion.

Turnover for the Circle K Hong Kong business was HK$4 billion (US$5 billion), representing growth of 5.4 per cent. Turnover for the Saint Honore Cake Shop business across Hong Kong, Macau and southern China was $1 billion, an increase of 1.9 per cent.

Core operating profit increased 7.4 per cent to $183 million while net profit grew 7.7 per cent to $150 million.

Satisfactory comparable-store sales growth in the group’s core market of Hong Kong and improvements to the Saint Honore factory business led to a rise in gross margin and other income as a percentage of turnover from 36.6 to 36.9 per cent, despite intense retail market competition and high manufacturing costs, says the group.

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