Shares in Gome Electrical Appliances Holdings, the mainland's second-largest home appliance retailer, plunged to an all-time low after it forecast a first-half loss due to lower sales and e-commerce losses.
Gome slumped as much as 18 per cent yesterday before closing at a record low of 65 HK cents yesterday, down 14.5 per cent.
It came after the company, which is backed by private equity firm Bain Capital, said on Tuesday that it may record a net loss for the six months to June because of a drop in sales revenue and e-commerce sector losses.
'The profit warning was expected, but the profit loss exceeded market consensus,' said Elyse Wang, an analyst at Haitong International Research. 'The sales plunge was severe as Gome's network is mainly located in first- and second-tier cities, which have suffered a greater impact from the economic slowdown and an intense price war in e-commerce.'
Gome plans to close stores and cut 10 to 15 per cent of its store areas to reduce operating costs. It's also set to boost sales by enhancing its sourcing and logistics operations and offering pay increases and equity incentives to employees.
