Daigou-focused retailer AuMake is expanding its focus to the lucrative Chinese tourist market with the $14.2 million acquisition of Broadway, which operates eight stores across Australia and New Zealand aimed at Chinese tourists.
If all goes to plan, the China-facing company says it will see a 14-fold increase in exposure to 70,000 Chinese visitors, while FY19 revenue could more than double to $100 million in FY2020.
AuMake announced the Broadway deal on Wednesday after emerging from Monday’s trading halt.
The company’s share price dipped 3.5 cents, or 16.67 per cent, to 17.5 cents on the announcement.
AuMake executive chairman Keong Chan said his company was buying an established network of bricks-and-mortar stores that, importantly, feature on the itinerary of many Chinese tour groups that visit Australia.
“Broadway in the Chinese tourism industry are one of the most well known and respected … they are very good at drawing tourists to stores because they have agreements and commissions in place,” Mr Chan told AAP.
“You see all the Chinese tour groups walking around, generally they don’t go where they want to go, there is an itinerary and they are led around, and now we are on that itinerary.”
The Broadway network includes souvenir, jewellery and cosmetics shops in Melbourne, Sydney, the Gold Coast, Cairns, Auckland and Rotorua.
The move, subject to shareholder approval, would take AuMake’s total retail footprint to 25 stores across Australia and New Zealand.
Mr Chan said the acquisition followed a $7 million capital raising, which was heavily oversubscribed.
He said bringing Broadway into the online market would open significant revenue streams.
“At the moment 30 per cent of our sales are online through WeChat,” Mr Chan said.
“Broadway don’t even use WeChat, so it’s a massive opportunity to expand.”
Mr Chan said AuMake currently had exposure to 5000 Chinese tourists each year.
The Broadway acquisition is expected to increase that number to 70,000 tourists.
In February the company announced it had halved its losses after more than doubling its sales in the space of a year, with its internal sales forecast upgraded 30 to 40 per cent in March after it flagged the expansion of its stores.