Core Viewpoint - Watsons is accelerating its transformation in response to fierce competition from e-commerce platforms and the rise of new beauty retail formats, seeking a "revival strategy" [2] Management Changes - On November 1, 2023, Pan Meiling will succeed Li Jiale as the Managing Director of Hong Kong Watsons, with Li continuing as a business advisor until December 2025 [3] - The new appointee, Pan Meiling, has over 20 years of experience in the fast-moving consumer goods and retail sectors, and is expected to leverage her market knowledge to drive team performance [3] - The Hong Kong Retail CEO, Qu Wenhui, who took office in March 2023, aims to enhance customer experience across over 500 O+O (offline and online) stores in Hong Kong [3] Digital Transformation and O+O Strategy - The term "O+O" has been frequently mentioned in the context of Watsons' digital transformation, which aims to seamlessly integrate offline and online platforms to enhance consumer shopping experiences [5] - Watsons is focusing on digital channels and platforms to establish closer communication with consumers, utilizing its store network and service teams [5] Financial Performance - In the first half of 2025, Watsons' retail division reported total revenue of HKD 98.84 billion, an 8% year-on-year increase, with the health and beauty segment contributing HKD 87.86 billion, accounting for 89% of total revenue [6][9] - The health and beauty segment saw a 4.5% year-on-year increase in same-store sales, while EBITDA and EBIT improved, driven by strong performance in European and Asian markets, although the Chinese market showed weakness with a slight decline of 1% in same-store sales [7] - From 2022 to 2024, Watsons' health and beauty business in China experienced revenue declines of 23%, 6%, and 18%, respectively, with a 15.3% drop in same-store sales in 2024 [8] Store Operations - As of June 30, 2025, Watsons had 3,630 stores in China, down from 3,775 the previous year, reflecting a net closure of 145 stores due to the decision to close underperforming locations [11] - The company is expanding its "back-end stores," which serve as small order fulfillment centers for online orders, increasing from 131 to 394 stores in the first half of the year [11]

Core Insights - Watsons Group announced significant management changes, with current Trade Director Donna Poon set to become the Managing Director of Watsons Hong Kong starting November 1, 2025, following the resignation of the current Managing Director, Li Jia Le, for personal reasons [1] - The frequent executive changes are interpreted as a response to challenges in the Chinese retail market, with the company facing declining performance in its beauty and health product segment [5] Management Changes - Watsons has undergone multiple executive adjustments since last year, including the appointment of Ni Wenling as CEO in April 2024, who has been with the parent company since 2000 [3] - In March 2024, Watsons China appointed Chen Zhihao and Nie Wei as Co-Managing Directors, with the former having played a key role in the company's O+O transformation [3][4] - Chen Zhihao retired in March 2024 after a significant tenure, while Nie Wei has been instrumental in developing the company's online business strategies [4] Financial Performance - In the first half of the year, Watsons China's revenue from health and beauty products totaled HKD 6.666 billion (approximately RMB 6.1 billion), a decline of 3%, marking it as the only segment with a decrease [5] - EBITDA for Watsons China was HKD 117 million (approximately RMB 110 million), down 53% year-on-year [5][6] - The overall retail performance showed a total revenue of HKD 98.84 billion, reflecting an 8% increase compared to the previous year [6] Strategic Adjustments - In response to growth challenges in China, Watsons is accelerating strategic adjustments, including the establishment of "back-end stores" designed for processing online orders to enhance delivery speed [7] - The number of online stores in Watsons China increased from 131 to 394 as of June 30, 2025, indicating a significant push towards online business capabilities [7] - The parent company, CK Hutchison Holdings, acknowledged ongoing challenges in the Chinese health and beauty market and emphasized the importance of optimizing store locations and enhancing online business capabilities [7]

Core Viewpoint - Watsons Group, under Li Ka-shing, is continuously reducing its store count in China, reflecting a strategic shift in response to declining performance in the region [2][4]. Financial Performance - In the first half of 2025, Watsons Group reported a revenue of HKD 6.666 billion in China, a year-on-year decrease of 3% [2][3]. - The EBITDA for the same period was HKD 117 million, down 53% compared to the previous year [2][3]. Store Count and Sales Performance - The number of stores in China decreased by 145, representing a 4% reduction year-on-year [4][6]. - The year-on-year sales growth rate for stores in China improved from -18.6% to -1% [4][5]. Strategic Adjustments - The reduction in store count is part of a strategy to optimize the store portfolio, closing underperforming locations upon lease expiration [6]. - The company is increasing its online fulfillment capabilities, with the number of micro-fulfillment centers rising from 131 to 394 [6]. Regional Performance - Other regions, such as Asia and Europe, are performing well, with significant growth in sales and store counts, contrasting sharply with the decline in China [3][5]. - In Asia, store count increased by 796, with a sales growth rate of 6.4% [5]. Employment Trends - The number of employees in Chengdu Watsons has decreased from 1,582 in 2022 to 1,204 in 2024, indicating a trend of workforce reduction [8]. - Similarly, in Chongqing, employee numbers have also shown a continuous decline from 600 in 2022 to 501 in 2024 [10]. Overall Strategy - The company is adopting a dual strategy of closing inefficient physical stores while expanding its online and warehousing capabilities to enhance competitive advantage amid pressures from e-commerce and local beauty stores [11].