AuMake to take profit hit as daigou trade reels from coronavirus

AuMake, which sells to Chinese tourists, will shut some stores or stand down staff as it rides out the impact of the coronavirus.

Shoppers in an AuMake store in Sydney. Picture: Hollie Adams

Publicly listed daigou specialist AuMake, which only last year spent $14.2 million to buy a portfolio of stores that cater to the inbound Chinese personal shopper market, is the latest company to warn it will take a profit hit from the coronavirus outbreak.

The company said Wednesday that since its market update in late January restrictions had been placed on travel by Chinese visitors to and from Australia and New Zealand.

The company depends heavily on the personal shopper, or daigou, trade as Chinese travellers fill their suitcases with infant milk formula, soap and honey to take home.

AuMake, which uses the personal Chinese shopper or Daigou distribution channel to sell Australian products, said these temporary restrictions will materially impact its earnings.

“At this stage, the company is unable to provide a definitive time frame as to when these restrictions will be lifted.

“However, based on industry consultation, including an understanding that a proportion of travel bookings to Australia and New Zealand will not be cancelled but rather deferred, the company believes that the situation will only have a temporary impact on the AuMake business.”

AuMake said while travel restrictions are in place, the company will implement cost mitigation measures including closing or reducing trading hours in certain stores, sending some staff on leave or standing them down, deferring all non-essential expenses and working with strategic partners to manage the company’s cash position.

The implementation of these measures gave the company sufficient scope to await a return to usual business conditions, it said.

In April last year AuMake executed a binding agreement to acquire 100 per cent of the business assets of affiliated inbound Chinese tourist retail network Broadway for a total consideration of $14.2 million.

Broadway is a leading group of retailers with eight store locations across the east coast of Australia and New Zealand focused on inbound Chinese tourists. Broadway primarily focuses on the sale and distribution of products similar to AuMake, including health supplements, infant formula, wool, food products (including honey) and other consumables. Broadway predominantly service Chinese tourists.

AuMake is one of many Australian companies with large exposures to the Chinese market and Chinese tourism.