Sydney-based AuMake International Limited (ASX: AU8) reports that its online business is growing significantly due to the cultural changes being created by concerns related to the Novel Coronavirus (COVID-19).
The company has reported a surge in its online sales, particularly in China, following the heightened awareness of COVID-19 in late January.
AuMake Executive Chairman, Keong Chan, said that while the company’s physical store-front operations have been significantly affected, the company has experienced a positive material shift in China-based consumer purchasing behaviour to its online channels.
He said this is primarily due to restricted physical movement of people in China and consumers having less opportunity to visit offline stores to purchase products.
Mr Chan said that despite the challenging macro environment, AuMake’s existing online stores are continuing to perform exceptionally well with equal record online sales recorded in February 2020 of $1.7 million (December 2019 $1.7 million).
In response to the shift to online purchasing, the company recently brought forward and launched Broadway’s online store (WeChat) in late February.
This online store was developed in collaboration with influential travel agents in China and is designed to meet the product needs of China’s affluent tourism demographic.
Mr Chan said that since February, the company has been adapting the AuMake offline store operations by reducing trading hours, improving store rostering and temporarily closing certain stores, whilst also maintaining flexibility to ramp up quickly when trading conditions improve in the future. As a result of these measures and robust domestic customer visitation, the AuMake store network is currently breaking even, despite the challenging macro environment.
However, it is a different story for the company’s regular business, with Broadway stores being temporarily closed until the China imposed tour group travel ban is lifted, however rental commitments are not onerous for its store network in Australia and New Zealand.
We are very confident that demand from Chinese consumers for Australian products remains strong and will significantly accelerate once bans are lifted and physical channels to the Chinese market open again,” Mr Chan said.
“From the latest information received from our network in China, an increasing number of people are returning to work and businesses are starting to resume trading, which bodes well for increased product demand and consumption.
“As a Board and management we are completely focused on managing through the impact of COVID-19 with the utmost diligence, while at the same time continuing to innovate and assess opportunities for growth such as the collaborative co-creation of the Broadway online store with our tourism partners.
“In light of the company’s strong cash position, implementation of previously announced cost mitigation measures and close working relationships with its trading partners, AuMake has adequate financial resources available and contingency plans in place to navigate the remainder of calendar year 2020.