Gome sees net loss widen amid slowing growth on mainland

Gome Electrical Appliances yesterday warned that the company was expected to record a net loss of up to 700 million yuan (HK$867 million) for the nine months to September.

Shares in Gome declined 2.17 per cent to close at 90 HK cents yesterday before the announcement. The stock has plunged 40 per cent from HK$1.51 on April 26.

The second-largest home appliances chain on the mainland said it had recorded a net loss of 501 million yuan in the first half. The company forecast the loss would reach 100 million yuan to 200 million yuan in the third quarter, bringing the net loss for the nine months to September to between 600 million yuan and 700 million yuan.

The loss was due to the significant fall in Gome's sales revenue and a loss incurred by its e-commerce business. An increase in staff and rental expenses were also blamed for the result.

Gome said in the announcement that the slowdown in the mainland's economic growth and the end of stimulus policies had led to poor consumer sentiment and confidence.

The electrical appliances industry suffered a setback in the first half of this year as the central government ended a number of schemes to subsidise consumer purchases of home appliances. The fact that the company's e-commerce business was still in the initial investment stage also contributed to the poor result.