China's Gome first-half profit jumps 153pc as it pins hopes on online shop
Electrical appliance chain says first-half profit rose 153 per cent as inventory turnover decreased to 56 days and store numbers rise to 1,073
Mainland home appliance retailer Gome Electrical Appliances said its first-half profit rose 153 per cent year on year to 322 million yuan and that its online business would turn profitable next year.
Sales hit 27.1 billion yuan (HK$34.3 billion) in the period, up 10.2 per cent year on year. About 5 percentage points of that stemmed from its e-commerce business, chief financial officer Fang Wei said, emphasising that the company was focused on profitability and not sales volume.
Gome's online business has yet to turn a profit. In the first half, it lost 120 million yuan, with about 40 per cent of that shouldered by its joint venture partner. The company is pinning its hopes for long-term profitability on its e-commerce business.
"Maintaining mid to high-single-digit growth in gross profit margin for the e-commerce segment should not be a problem," Fang said.
President Wang Junzhou said that prices in the company's bricks-and-mortar shops would be different from those in the online store, in order to remain competitive. "Having the same prices for online and physical stores is not a good strategy," he said. "We have to be competitive in both."
