Gome earnings increase 178pc
Gome Electrical Appliances Holding, the mainland's largest consumer electronics retailer, said underlying first-half profit surged 178 per cent as same-store sales rose and it benefited from the acquisition of a rival chain.
Gome acquired China Paradise Electronics Retail last year for HK$5.27 billion, boosting its position in the competitive market for televisions, telephones and laptops.
Excluding a valuation loss of 411 million yuan on the company's convertible bonds, profit was 806 million yuan, compared with 290 million yuan a year earlier.
Net income reached 395 million yuan, up 14.5 per cent. Sales rose 73.8 per cent to 21.15 billion yuan.
Same-store sales grew 0.59 per cent in the six months to June, compared with a drop of 1.24 per cent posted in the first half of last year.
Gome aimed to improve its same-store sales this year rather than expanding its network aggressively. Adjusted gross margin, which includes sales profit and other income, rose 1.4 percentage to 14.9 per cent.
'We expect same-store sales and margins to continue to grow in the second half of the year,' Gome president Chen Xiao said.
Gome said it would open up to 80 new stores in the second half of the year. It added 67 stores in the first six months, bringing the total to 654 Gome and China Paradise outlets in 168 cities.
'Our aim is to raise market share by eight percentage points to 20 per cent in five years,' Mr Chen said. 'We see potential in information technology and digital communication products and will seek to expand in that area.'
The group plans to increase the number of audio-visual outlets to 100 by the end of this year, from 70 at the end of June, and extend its reach to more tier-two cities in the future.
Mr Chen said there should be a ruling later this year in China Paradise's arbitration hearing against Beijing Dazhong Electronics over a merger agreement. He said Gome might still be able to acquire Dazhong, but at a different price.
Shares of Gome, which have risen 96 per cent this year, gained 4.91 per cent yesterday to HK$11.96 before the release of the earnings.
