MOBILE WORLD INVESTMENT CORPORATION BUSINESS UPDATE AND CONTINGENCY PLAN IN RESPONSE TO COVID-19 www.mwg.vn
Mobile World Investment Corp (MWG) AGENDA I. BUSINESS PLAN IN 2020 II. CONTINGENCY PLAN IN RESPONSE TO COVID-19 OUTBREAK III. APPROACH TO COST CONTROL IV. BUSINESS UPDATE V. OPPORTUNITIES AND CHALLENGES OF EACH CHAIN/SEGMENT VI. FINANCIAL STATUS UPDATE VII. OTHER ISSUES 2
Mobile World Investment Corp (MWG) I. BUSINESS PLAN IN 2020 ▪ Reality of what happens in the 1H20: • Business environments in 1H20 have been both fast-changing and unpredictable. • Practically impossible to ascertain how this outbreak may develop. ▪ Therefore: • Our strategies needed to be continually updated. • All estimation at this point have a high degree of fluctuation and limited accuracy. • As such, MWG’s business plan will now be commitment of the following goals: 1. Gaining market shares in all 3 main segments: i. 50% market share for mobile phone and 45% for CE by end of 2020 ii. Attaining Top-of-mind awareness for both BHX and BHX online for housewives. 2. Delivering the best business performance among Vietnamese listed retailers in 2020 3. Overcoming this difficult time with the best approach to cost control. 4. Preparing for potential explosive growth post COVID-19 outbreak. 3
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN RESPONSE TO COVID-19 MWG is always ready to serve and ensure the safety of our customers and our staffs ▪ Level 1 : the Government does not require the closing of stores. ▪ Level 2: The Government requires the closing of stores but no restriction on people’s movement ▪ Level 3: The Government requires the closing of stores and restriction on people’s movement 4
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN REPONSE TO COVID-19 ▪ Level 1: the Government does not require the closing of stores. • Dependent on local authority requirements, limit the number of customers in the store at any given time. • Posters at the front of the store requiring customers to have facemask on when entering the premises at the area declared “outbreak status” • New approach to conducting a sale (take-away or home delivery): Displaying the phone number of the store manager at the store front, allowing for customer to be served through phone without entering the store or arranging for home delivery without direct contact with customers. • 1-on-1 procedure: reduction of direct contact-points • Adjusting working hours of TGDD and DMX staffs given the actual Sales at each store. 5
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN REPONSE TO COVID-19 Announcement posters at location that have been declared “outbreak status” Take-away service at DMX stores 6
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN REPONSE TO COVID-19 ▪ Level 2: The Government requires the closing of stores but no restriction on people’s movement • Websites are being updated regularly which stores that are still opened for service. • MWG is still able to serve our customers via various channels: i. Call-center and websites for online shopping ii. take-away/home-delivery: call directly to store managers at each store. • Reallocating staffs temporarily to BHX which is experiencing surge in traffic and demand i. To works at Distribution Centers and BHX stores. ii. Shopping on behalf of customers. • Beside the BHX online, MWG is also preparing to launch: “Shopping on behalf of customers” service , including fresh items i. ii. Internal application that enables TGDD/DMX staffs to receive and accept delivery requests from BHX stores; after which, the TGDD/DMX staffs can come to BHX store and act as deliveryman for that particular order. iii. The TGDD/DMX staffs will receive a fees of VND 30,000/delivery. 7
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN REPONSE TO COVID-19 Announcement banner and poster at a store that was required to be closed down 8
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN REPONSE TO COVID-19 ▪ Level 3: The Government requires the closing of stores and restriction on people’s movement except for essential purposes. • Call-center and website can still serve customers who pre-order products to be delivered as soon as movement restriction is lifted by the Government. • TGDĐ & ĐMX staffs will be either reallocated to BHX stores or temporarily entering furlough status in accordance with the company’s policy. • Further expanding on “Shopping on behalf of customers” and “Take away/Home delivery” services. • Re-purposing TGDD/DMX’s Distribution Centers for the logistics and warehousing of BHX’s inventories. • Utilizing the transportation vehicles of TGDD/DMX to support the logistics of BHX. 9
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN REPONSE TO COVID-19 “Shopping on behalf of customers” and “Take away/Home delivery” services. 10
Mobile World Investment Corp (MWG) II. CONTINGENCY PLAN IN REPONSE TO COVID-19 WHENEVER THERE IS CUSTOMER DEMAND, MWG IS READY TO SERVE IN ALL CIRCUMSTANCES 11
Mobile World Investment Corp (MWG) III. APPROACH TO COST CONTROL 1. HUMAN RESOURCES: • Re-allocate staffs among the chains and among departments per demand • Limit on new recruitment (only new hires for IT Dept and BHX after deducting the staff reallocation) • Work with local authorities for support of labor related fee deferral/exemption program • Adjust sales staff working hours based on actual revenue condition • Prepare the company- wide salary adjustment scheme linking to the company’s actual performance and will be applied in accordance with each level of the outbreak. 2. RENTAL: • Negotiate for a 50% discount or free rental during store closing time. • For lessors that are not willing to compromise, MWG will consider nearby locations with more reasonable cost 3. SCALE DOWN MARKETING AND PROMOTION ACTIVITIES 4. REDUCE UTILITIES SERVICES COST AT STORES AND HEAD OFFICE 12
Mobile World Investment Corp (MWG) IV. BUSINESS UPDATE • Net revenue in March was recorded ~VND 8,500bn, equivalent to positive YOY growth, thanks to the significant contribution of BHX. • Online revenue showed an increasing trend, making up 10% of March total revenue. In which, online sales portion of TGDD and DMX is roughly 13% of their respective top lines, similar to the levels as at the end of 2019. • Total TGDD and DMX store closure by the end of March per government requirement is about 10% of these chains’ combined store-count – equivalent to 10% of revenue in normal business operation. The majority of closed stores are located in Hanoi. • Even in store-closing days, these stores still serve online orders. • During this period, products include Grocery, FMCG, laptop, refrigerators, home entertainment devices (speakers, karaoke), and home appliances are in high demand. 13
Mobile World Investment Corp (MWG) V. TGDD AND DMX CHAIN ▪ CHALLENGES • Vietnam’s total demand for Mobile Phone and CE in 2020 will decline due to Customers’ disposable income negatively impacted by the outbreak. i. ii. Major sporting events are delayed until 2021. ▪ OPPORTUNITIES • Online channel is fully supported by a strong IT platform, call-center team, in-house installation team, and tens of thousands of staff doing home delivery to customers • Employ powerful ERP system to direct inventory from surplus to shortage locations, avoid circumstances where customers have demand but there is no goods to sell • Utilizing MWG’s customer-centric culture to win market share, ensure product reliability and accuracy when serving customers, provide superior warranty and return policy compared with small shops and other online platforms. • Having solid cash flow, strategic partnerships with suppliers secures MWG’s prioritized access to inventory. 14
Mobile World Investment Corp (MWG) V. TGDD AND DMX CHAIN ▪ SUPPLY CHAIN AND INVENTORY • Closely work with suppliers, develop contingency plan for worsening scenarios: i. Delay delivery time; ii. Partial order cancellation; iii. Extend payable period if necessary. • Major items have been ordered since end of 2019, so there is no goods shortage • Production of accessories and private label products are coming back • In fact, manufacturers now focus on Asia market as Covid-19 became more severe in the EU and US • Closely monitor procurement activities, optimizing inventory day for every SKU. ▪ EXPANSION PLAN AND SALES STRATEGY • Conversion plan, layout upgrade, and new openings for DMX are temporarily postponed • It will restart as soon as the government announces the outbreak is under control • MWG will deploy extensive promotion campaign to support sales when normal business condition resumes 15
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