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China's Gome Gross Margin Declines While Closing 43 Stores In Q1 2013

June 12, 2013
Business | Gadgets & Electronics

Gome Electrical Appliances Holding Limited published its performance results for the first quarter of 2013, stating that its sales reached CNY12.338 billion, a year-on-year increase of 18.2%; and its net profit was CNY76.33 million while it made losses of CNY13.1 million in the same period of last year.

However, the company's gross margin decreased from 19.97% in the first quarter of 2012 to 17.58%.

According to Gome, the company's performance started improving from the fourth quarter of 2012. Statistics showed that during the entire year of 2012, Gome's sales were CNY47.867 billion, a year-on-year decrease of 20%. At the same time, the company lost CNY597 million, which was the first time for the company to make annual losses over the past ten years. During the first three quarters of 2012, Gome's losses reached CNY687 million; while in the fourth quarter, the company realized net profit of CNY90 million.

For outlet distribution, in the first three months of 2013, Gome's listed unit opened 16 new stores and closed 43 stores, and the number of its stores, including those under Dazhong brand, was 1,081. The total area of its stores decreased by about 12,300 square meters. In addition, Gome had 543 non-listed stores in mainland China, and the total number of the group's stores was 1,624.

For he e-commerce sector, Gome's e-commerce business realized sales of CNY714 million, a year-on-year increase of 51.3%.

Wang Junzhou, president of Gome, said that in the future the offline physical chain stores are still the focus of the development within the group. In first-tier markets, they will continue to optimize network and improve profit ability of individual stores; and in second-tier markets, they will continue to adopt the model of combining central stores and satellite stores, aiming to accelerate network expansion.

Tags: Dazhong | e-commerce | Gome | Internet shopping | online shopping | retail | Wang Junzhou

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