Vua Nem expects to achieve positive profit in 2024 thanks to loss reduction exceeding plan

Thanks to good cash flow control, improved financial health and adjusted business strategy, Vua Nem's loss reduction plan has exceeded the plan. The company expects all stores to achieve positive EBITDA by the end of 2024.

According to a recent financial report, Vua Nem - Vietnam's leading mattress retail chain has made positive changes after a year of drastic reform and restructuring.

It can be mentioned that the accumulated profit after tax in the first 7 months of 2024, Vua Nem only had a negative 9 billion VND, reducing the loss by 16 billion VND compared to the plan. From June 2024, the company had a bright spot with positive profit after tax and continued to maintain it in July. The above information shows that the company is highly likely to achieve positive profit this year.

130 stores optimize operational efficiency

Not only improving and optimizing cash flow, Vua Nem also aggressively closed ineffective stores and continued to open many new stores to ensure business operations and increase revenue. With the above strategy, Vua Nem has both achieved efficiency and gotten closer to the goal of nationwide coverage, consolidated market share, increased accessibility and improved service quality for customers.

Up to now, Vua Nem has opened 6 new stores. These stores have in common a moderate area, lower rental locations, and lower initial investment costs than before. As a result, the store-level EBITDA/revenue ratio of the 6 new stores reached an all-time high and the payback period was halved compared to the old stores.

Vua Nem also aggressively closed ineffective stores and continued to open many new stores to ensure business operations and increase sales.

Cumulatively by the end of July 2024, 91.5% of Vua Nem's total 130 stores achieved positive EBITDA, 20.1% higher than the rate of 71.4% in the same period last year. The rate and number of stores with negative cumulative EBITDA decreased, with 100% of stores expected to achieve positive EBITDA by the end of the year.

Breakthrough growth with low-cost product strategy

Along with that, the low-priced product strategy also contributes significantly to the sales growth of Vua Nem.

Vua Nem has promptly adapted to changes in customer tastes during the economic recession. Products are carefully researched, meeting consumer criteria in terms of price, quality and product variety.

Vua Nem expects to achieve positive profits in 2024.

Vietnam Report's August 2023 survey showed that consumers' purchasing decisions are influenced by factors such as product quality (53.4%), product variety (47.2%), and retailer reputation (41.5%)... According to NielsenIQ Vietnam's report, in the first quarter of 2024, about 50% of consumers reduced their need to buy luxury items, and 62% tightened spending on unnecessary items. It can be seen that consumers have become more and more practical in making purchasing decisions.

Understanding that psychology, Vua Nem launched products in the price segment under 5 million VND such as Goodnight Magic (spring mattress), Goodnight Hachi (foam mattress), Goodnight Rena (foam rubber mattress), especially Gummi Lite (foam rubber mattress). These products have brought back good signals that are loved by many consumers, bringing in good revenue and contributing to the overall growth of the business.

Compared to the plan, the cumulative EBITDA ratio at the store level/revenue in the first 7 months of the year increased by 3% in absolute terms and increased by 5% in absolute terms compared to the same period last year. At the corporate level, EBITDA is currently 2.1 times higher than the budget plan and 2.8 times higher than the whole year of 2023. Vua Nem's total revenue decreased slightly by 6.5% compared to the same period due to a 15% decrease in the total number of store operating days.

Responding to the question about the decline in total revenue, Vua Nem said that although total revenue decreased, sales efficiency/store/day increased by 6% compared to the same period; online and e-commerce channel revenue increased by more than 30%. This is part of the plan to proactively cut down ineffective stores, focusing on optimizing stores with good sales and newly opened stores.

In the near future, Vua Nem plans to focus on optimizing the efficiency of 130 stores and promoting online channel activities. The price stabilization segment continues to be developed, aiming at the goal that all customers can choose the product they like and be satisfied with the service. In addition, the company is also planning to boost business activities by considering proposals to join foreign funds/investors to increase capital scale.

Vua Nem confidently sets a target of achieving positive profits for the whole year of 2024 with the impressive growth rate mentioned above.

Source: https://baodautu.vn/vua-nem-du-kien-dat-loi-nhuan-duong-nam-2024-nho-giam-lo-vuot-ke-hoach-d223666.html