By the first seven months of 2024, the company reported a substantial reduction in losses, with a forecast of its overall positive net profit by year-end. Vua Nệm’s success in managing its cash flow and optimizing its store network has beautifully positioned it for continued growth, even as it faces industry-wide challenges.

Despite an anticipated loss-making status in 1H2024, Vua Nệm has effectively managed its cash flow, improved financial health, and refined its business strategy. The company believes that all its stores will achieve positive EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) by the end of 2024.

As the largest mattress retailer in Vietnam, Vua Nệm has reported encouraging financial indicators following a year of comprehensive restructuring. By the first seven months of 2024, the company recorded a post-tax loss of approximately $360,000, significantly less than the $640,000 loss projected.

Remarkably, Vua Nệm achieved a positive post-tax profit starting in June 2024, continuing into July, suggesting a strong likelihood of achieving a positive net profit for the entire year.

The company's ongoing efforts to optimize business operations have been pivotal in its turnaround. Vua Nệm has strategically closed underperforming stores while opening new ones throughout 2024. This approach has strengthened its market presence and improved its ability to serve consumers more effectively.

In 2024 alone, six new stores were launched, each characterized by smaller sizes and prime locations, resulting in lower rental costs and significantly reduced initial investment compared to earlier stores.

These new outlets have achieved record-high EBITDA margins so far, with payback periods halved compared to older stores.

By the end of July 2024, 91.5% of Vua Nệm's 130 stores reported positive EBITDA, a 20.1% increase from the 71.4% recorded in the same period the previous year.

The percentage and number of stores with cumulative negative EBITDA have steadily decreased since the beginning of the year, and Vua Nệm expects all its stores to achieve cumulative positive EBITDA by year-end.

The expansion strategy has proven financially effective, cutting rental and initial investment costs significantly. Moreover, Vua Nệm's sales growth has been notably driven by its affordable product strategy. Amidst economic downturns and shifting consumer preferences, the company swiftly adapted by launching products that align with consumer priorities—affordability, quality, and variety.

A NielsenIQ Vietnam report from Q1 2024 indicated that 62% of Vietnamese consumers have tightened spending on non-essential items, and about 50% have reduced luxury purchases.

Similarly, another survey by Vietnam Report in August 2023 found that consumer purchasing decisions are largely influenced by product quality (53.4%), variety (47.2%), and retailer reputation (41.5%).

Vua Nệm’s budget-friendly products, such as the Goodnight Magic, Goodnight Hachi, Goodnight Rena, and Gummi Lite - priced under $200 - have consistently been well-received by consumers, driving strong sales and contributing to the company’s overall growth.

In the first seven months of 2024, Vua Nệm's store-level EBITDA margin as a percentage of revenue increased by an absolute 5% year-on-year and by 3% compared to the company’s plan.

At the company level, EBITDA is now 2.1 times higher than the budgeted target and 2.8 times higher than that of the whole 2023. However, the company’s total revenue saw a slight year-on-year decrease of 6.5% due to a 15% reduction in total store operating days.

Explaining this decline, Vua Nệm noted that the closure of underperforming stores was a proactive strategy to optimize new openings. While overall sales dropped, operational efficiency improved significantly: sales per store per day increased by 6% year-on-year, and revenue from online and e-commerce channels surged by more than 30%.

“Our strategy is not to follow market trends blindly but to develop products with high-quality materials, eliminating intermediaries, and delivering products directly from the factory to the store at the most competitive prices for consumers,” a Vua Nệm representative stated.

Looking ahead, Vua Nệm plans to focus on optimizing the performance of its 130 stores and online channels, maintaining its focus on the stable price segment, and enhancing the shopping experience to ensure customer satisfaction. Additionally, the company is considering several proposals from foreign investors to raise capital, supporting the expansion of its business activities.

PV