Retail segment helps PNJ overcome 'headwinds'

PNJ achieved its 2023 profit target, overcoming "headwinds" by focusing on the jewelry retail segment, ready to reinvent itself to take on new challenges.

According to the business report for the fourth quarter of 2023, Phu Nhuan Jewelry Company (PNJ) achieved revenue of VND 9,760 billion, an increase of 18% over the same period. Profit after tax reached VND 632 billion, an increase of more than 34%.

For the whole year, the company achieved revenue of more than VND 33,100 billion, down 2.2% compared to 2022. However, gross profit increased, helping after-tax profit increase by 8.9%, to more than VND 1,970 billion, the highest since its establishment in 1988.

The jewelry segment continues to be the mainstay, accounting for two-thirds of total revenue (58.2% from retail and 8.6% from wholesale), contributing the most to profit growth.

Average gross profit margin is at 18.3% (higher than 17.5% in 2022) thanks to efforts to reduce cost of goods sold. In terms of ROE, last year, PNJ achieved a high index in the industry with 6%. The result comes from a flexible revenue structure, focusing on exploiting the jewelry retail market - which is large in scale and still fragmented.

Despite the challenging general context, PNJ still aims to grow against the 'headwind': considering customer experience as the focus, constantly observing and grasping market fluctuations.

PNJ continuously develops new customers, gaining more market share in retail channels. Photo: Viet Hung

According to SSI Research 's report, PNJ's retail revenue grew again before the market recovered, thanks to gaining more market share from its long-term strategy, typically targeting younger customers and initiating a domestic proposal campaign.

While other units are downsizing, last year, this jewelry retailer opened 48 new stores, increasing coverage (the original plan was to open 20-25 branches).

Over the past year, the company has continuously increased its number of new customers, captured more market share, expanded its network and diversified its product strategy. At the same time, it has improved its customer approach and innovated its business and marketing strategies.

PNJ has had more than 10 years of strong growth thanks to focusing on the jewelry segment (unit: billion VND). Photo: Bao Tran

Specifically, the company hopes to create a new market by turning Valentine's Day into a proposal festival with a long-term vision, creating the premise for future marketing campaigns. PNJ also innovates the way it approaches users by launching a series of new, diverse products. Typically, the "Betel and Areca" collection has dominated the wedding jewelry segment in recent times.

The unit has also been successful with its strategy of expanding its store system in Tier 2 and 3 locations, helping the number of new customers here increase faster than in Tier 1.

Retail marketing programs, breakthrough ideas and creative thinking also attract local customers, typically the "Vietnam Jewelry Journey".

Revenue contribution from new and returning customers is at a positive level. With the overall market demand still weak, PNJ focuses on developing new customer groups to continue maintaining market share.

"Journey of jewelry across Vietnam" received a lot of response. Photo: Bao Tran

On business forums, many consumers highly appreciate PNJ's move to increase coverage and optimize operations. Especially during the peak wedding season at the end of the year, couples can easily choose their favorite jewelry thanks to a series of newly opened stores, including many in remote provinces and cities, without having to travel to big cities or central areas.

"My girlfriend and I bought 'Betel and Areca' wedding rings to prepare for the big day at the end of January right in our home district, no need to go to Ho Chi Minh City. Very convenient", said Nguyen Ha ( Long An ). Customer Le Giang (Quang Binh) commented: "Businesses need to transform like PNJ, innovate their approach to customers as well as business and marketing strategies".

General Director Le Tri Thong predicts that the general market in 2024 will continue to face many challenges, further classifying businesses.

Firms with strong foundations or ready to reinvent themselves can find new advantages and grow stronger, while those with weak starting points or not ready to transform will face a series of challenges.

"PNJ continues to upgrade its re-creation button operations, optimize business operations... to optimize costs and speed of introducing new products and providing the best services to consumers," said Mr. Tri Thong.

Specifically this year, PNJ plans to have many new lines, designed specifically to serve many segments, meeting all needs.

Hieu Chau

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