Lianhua to open 515 new stores on mainland

PUBLISHED : Friday, 11 March, 2011, 12:00am
UPDATED : Friday, 11 March, 2011, 12:00am

Lianhua Supermarket Holdings, one of the largest supermarket and convenience stores operators on the mainland, has pledged to invest 1 billion yuan (HK$1.18 billion) this year to open 515 new stores and improve its distribution and supply networks.

The group, which now owns 5,172 outlets throughout the mainland, said turnover rose 7.78 per cent to 25.89 billion yuan and net profit rose 22.84 per cent to 632 million yuan. Gross profit increased 15.14 per cent to 3.61 billion yuan and gross profit margin rose 0.89 of a percentage point to 13.95 per cent.

Chairman Ma Zinsheng said the group would spend 600 million yuan on opening 300 new supermarkets, 200 convenience stores and 15 hypermarkets. The group hoped to focus in the near term on hypermarkets, anticipating a boom in domestic consumption.

The group said it added 550 new outlets in 2010: 320 supermarkets, 218 convenience stores and 12 hypermarkets. The hypermarket business led in same-store sales growth. Same-store sales for hypermarkets, supermarkets and convenience stores rose 5.64 per cent year on year. But the hypermarket business outstripped the rest of the group, rising 6.86 per cent, compared with 5.46 per cent growth at the supermarket business and 4.37 per cent at the convenience store business.

The 143 hypermarkets under Lianhua reported 14.58 billion yuan in turnover in 2010, up 11.8 per cent, making up 56.3 per cent of the group's turnover. Ma said another 400 million yuan would go into boosting its fresh produce supply chain by building fresh produce supply bases and improving the outlet's operational capability. Currently, fresh produce is being supplied from over 210 primary production sites throughout 16 regions.

Last year, sales of fresh produce sourced from those primary production bases increased 37.5 per cent year on year.

Administrative deputy general manager Liang Wei said the group would work with local governments to raise procurement from the point of origin at vegetable and fruit farms.

The group is looking to expand its primary supplier networks to cover different regions, including Inner Mongolia, Yunnan and Shanxi. It plans to invest 170 million yuan more on its fresh food base in Hangzhou.

The price of Lianhua shares closed at HK$33.55 yesterday, down 15 Hong Kong cents.

Group growth

The Lianhua group now owns this number of stores on the mainland: 5,172