Masan reaps success in WinCommerce retail business

WinCommerce currently operates nearly 3,700 Winmart, WinMart+ and WiN stores nationwide. — Photo courtesy of Masan

HCM CITY — Masan’s financial results for the second quarter of 2024 show that WinCommerce, its retail arm, continued its sustainable growth trajectory.

The company achieved positive net profit after tax (NPAT) in June, marking a significant milestone for Masan, which had taken over this retail chain in late 2019.

Profit after 10 years of operation

In 2014 Vingroup entered the retail market by acquiring a 70 per cent stake in Ocean Retail Company (owner of Ocean Mart supermarket chain) and renamed it VinMart Supermarket JSC. Vingroup also launched two new brands, VinMart supermarket and VinMart+ convenience stores. However, under Vingroup, the VinMart and VinMart+ chains failed to make profits since their focus was mainly on growth and expansion.

At the end of 2019 Masan acquired VinCommerce (and renamed it WinCommerce) from Vingroup.

In the following years Masan implemented drastic changes in the WinCommerce system through three key strategies: closing inefficient stores, improving the product portfolio and amending pricing policies.

In Q2 2020 Masan completed the acquisition of an additional 12.6 per cent stake in The CrownX (an integrated consumer-retail platform that consolidates Masan Consumer Holdings and WinCommerce) for a total cash value of US$862 million to establish the “Point of Life” offline-to-online ecosystem to better cater to the diverse needs of consumers.

After the transaction, Masan held an 82.6 per cent stake in The CrownX, increasing its holding in WinCommerce to 69.17 per cent.

WinCommerce delivered positive NPAT in June. The increased ownership in WinCommerce has been fruitful for Masan, consolidating the company’s consistent strategy of focusing investment on the consumer-retail business.

Expansion goes hand in hand with profits

WinCommerce (WCM) reported a 9.2 per cent rise in revenues in Q2 to VNĐ7.84 trillion ($314million) across its network, mainly driven by new store formats for WiN (catering to urban shoppers) and WinMart+ Rural, which saw 6.3 per cent and 10.7 per cent like-for-like growth year-on-year.

The company has completed its restructuring and aims to retain its status as Việt Nam’s largest retail chain.

Business expansion is a goal that companies always aim for. When they have enough resources, expansion will help them improve their revenues, profits, brand reputation, and others.

WCM plans to expand its store network while still ensuring profit growth, which is not an easy task for any business.

However, WinCommerce’s management is confident of achieving this since it has specific plans in place.

Customers shop at a WinMart supermarket. — Photp courtesy of Masan

At 2024 annual general meeting in April, Masan Group’s CEO, Danny Le, shared the development plans for WinCommerce, saying: “We have a clear plan in place to unlock shareholder value for WinCommerce in the medium term. We are not only focused on ensuring growth but also on increasing profits in the next 18 – 24 months.”

To this end, “Network Growth” and “Membership Growth” are WinCommerce’s strategic focuses.

In the second quarter WCM reported EBITDA of VNĐ172 billion ($6.9 million), up 11.1 per cent year-on-year. Excluding the one-off profit from financial product distribution pilot in 2023, the EBITDA increased by 33 per cent.

Also, during the period retail operating profit margins continued to improve, driven by increased sales and negotiations with more banking partners to leverage WCM’s extensive retail network across the country as a distribution platform for financial products.

As of June 2024, WCM operated nearly 3,700 WCM stores after net openings of 40 stores since December 2023 as management exercised prudence amid uncertainty in the operating environment and a focus on refining the store model.

WCM expects to speed up new store openings in the second half of 2024.

Continue to improve profitability

In the second half of 2024 WCM will continue to focus on improving profitability and achieving breakeven by accelerating LFL growth to 8-9 per cent year-on-year while enhancing the pace of opening to achieve ~100 new stores per quarter.

It will continue to strengthen its position in rural areas with the WinMart+ Rural model.

The WiN Membership programme will be optimised to create value for Masan’s ecosystem and partner brands.

WCM expects to achieve net revenues of VNĐ32.5-34 trillion ($1.3-1.36 billion) this year, a year-on-year increase of 8-13-per cent.

The growth is mainly driven by accelerated LFL growth, store network expansion and positive results from new stores.

According to economists, most retail businesses view the end of the year as a prime time for consumption, and this period can contribute 30-40 per cent of annual sales.With positive results in the first half of the year and a vibrant retail trend at the end of the year, WCM is poised to achieve impressive results and continue to “bring money to Masan.” — VNS