Tourism-led business: AuMake hits record growth with gross profit up 440%

27-Jan-2020 - Last updated on 27-Jan-2020 at 01:18 GMT

AuMake's business growth was largely driven by tourist consumption. ©Getty Images

Related tags Australia China South korea

AuMake - the Australian daigou specialist which operates a chain of retail stores and also produces its brand of health and nutrition products - saw its gross profit hit a new high as Asian tourists’ appetite for Australia’s health foods continues to grow.

Its gross profit in the last quarter was 440% higher than the same period in 2018, reaching a figure of $13.5m.

On the other hand, gross margin was up 144% to 51.9%, the ASX-listed health and nutrition supplement brand owner and retailer said.

The company attributed tourism as a key growth factor.

Tour group visitation to its ‘Broadway’ retail stores grew 120% last quarter as compared to the previous corresponding period. Revenue from its ‘AuMake’ retail stores was also up 22%.

The strong turnout in its retail stores has in turn beefed up the sales of AuMake’s own brand of products by 112% to $1.8bn.

The company expects ‘further strong growth in inbound tour group visitation’ due to a significant pool of untapped travel agents in China.

Besides China, it is also engaging Korean travel agents to organise trips to its network of Broadway stores.

Broadway is the company’s network of retail store located along Australia’s East Coast. AuMake, its other retail brand which shared the same name as the company, has stores across Australia’s East Coast and one in Auckland.

These stores sell a mixture of products from established brands, as well as branded products owned by AuMake.

Another Australian company, Reach China, is also banking on tourism to sell Australian health and nutrition products.

Last year, the firm set up an experiential retail store at Queenland’s Sunshine Coast to target the cruise ship tourism market.

Retails strategies

The company’s growth was also led by a focus on high margin products in its retail stores.

Last October, it closed four ‘AuMake’ community stores in Sydney, which it said had led to improved total gross margins as it reduced the sales of items with lower margin products. Such products include infant formula and popular health supplement brands.

The company added that following the shutdown, the loyal customers have since migrated to its online store while the remaining AuMake stores delivered a 22% pcp revenue growth.

‘The company’s online strategy is focused on migrating sales of lower gross margin products from offline to online to improve EBITA performance, while also providing customers with a more streamlined and convenient ordering experience to encourage repeated purchases,’ the company said in the report.