Growing network lifts profits at Chinese hypermarket firm Sun Art
Hong Kong-listed mainland hypermarket operator Sun Art Retail reported first-half profit of 1.71 billion yuan (HK$2.15 billion), up 8.5 per cent from the same period last year, in line with analysts' forecasts.
Turnover rose 7.9 per cent to 48.04 billion yuan. However, management advised that same-store sales growth would not increase this year due to the decelerating economy and an anti-graft campaign on the mainland.
The group failed to record any increases for same-store sales growth in the first half, while it posted a 4 per cent gain a year ago, and said it does not expect to see the rate rise this year.
"China's economic environment has not been very good for the growth of same-store sales these few years," executive director Peter Huang said, according to Bloomberg.
The firm opened four new hypermarket complexes in the first half bringing its total to 327, and said it plans to open about 50 stores for the entire year. It added it had secured 162 sites to open hypermarkets, keeping the company on track for its network expansion up until 2016.
Sun Art, which operates Auchan and RT-Mart, is one of the mainland's biggest hypermarket operators. Last year it tied with China Resources Enterprise for largest market share, each holding 14 per cent, according to Euromonitor.
In March, the firm announced an aggressive plan to increase market share by expanding its store network, mainly in lower-tier cities.
It said its e-commerce platform feiniu.com - which launched in January and delivers to Shanghai and the provinces of Jiangsu, Zhejiang and Anhui - had grown to 750,000 members and would be a main driver of growth in the future. More delivery areas would be added in the rest of the year. However, the website has yet to make a profit.
Shares of Sun Art Retail fell 2.68 per cent to finish yesterday at HK$9.44.