Gome?Electrical Appliances Holdings Ltd, China's No. 2 electronics retailer by market value, said yesterday first-half profit almost tripled after it added stores.
Net income rose to 1.15 billion yuan (US$168 million) or 0.089 yuan a share, from last year's 395 million yuan, or 0.032 yuan, Hong Kong-listed Gome said yesterday in a statement to the city's stock exchange. Sales increased 18 percent to 24.9 billion yuan, Bloomberg News reported.
The Beijing-based retailer, with 828 stores at the end of the first half, planned to open 160 in 2008, Company President Chen Xiao said yesterday. Gome has also acquired rivals. The company has grown as consumer spending has surged in China, where retail sales rose 23 percent on the year in June, the fastest pace since at least 1999.
"There will be consolidation in consumer companies because smaller retailers can't compete with the larger ones," said Sophie Fan, an analyst at CSC Securities HK Ltd. "Gome will continue to buy out smaller companies as acquisitions are the quickest way to achieve growth."
The company said it would pay an interim dividend of 8.1 Hong Kong cents (10 US cents ) a share. The China earthquake in May, flooding in June and lower-than expected temperature in the northern provinces had a negative impact on same-store sales, which rose 0.5 percent in the period.
Barring no further natural disasters, same-store sales in the second half would be higher than the first, Chen said. There have been "some increase" in sales during and in the run-up to the Beijing Olympics but they were lower than expected, he added.
The Beijing-based retailer, founded by billionaire Huang Guangyu, has earmarked at least 2 billion yuan this year for upgrading outlets and setting up new stores. Gome competes with Suning Appliance Co, China's largest electronic retailer by market value, and Best Buy Co.
(Shanghai Daily August 13, 2008)
