Daniel Chen

Daniel Chen of JPMorgan Chase & Co asked about the home renovation and furnishing business, seeking to understand the key drivers behind its revenue growth and margin improvement, the potential for more cost optimization, and future expansion plans.

Answer

Executive Director and CFO Tao Xu attributed the strong performance to significant operational efficiency enhancements. He detailed cost reductions achieved by consolidating brands, increasing centralized material procurement to over 60%, and improving labor efficiency through optimized order dispatching. He also noted that sales costs decreased due to organizational streamlining and digital tools, leading to a substantial rise in the operational margin at the city level, as demonstrated by the Beijing model.