China's biggest supermarket chain Lianhua Supermarket Holdings plans to open 1,000 stores this year, according to chairman Wang Zongnan. The company said the fast-paced expansion would not put pressure on its short-term net profit margins despite an increase in start-up costs. 'This year, we will open 1,000 outlets, of which 50 per cent will be invested by ourselves. The remainder will be licensed to franchisees,'' Mr Wang said. The expansion will raise the retail number of outlets under the Lianhua brand to about 2,900. As of last year, Lianhua operated 11 hypermarkets, 504 supermarkets and 740 convenience stores. It also had 324 franchised supermarkets and 305 convenience stores. The company, which is aiming to raise up to $625.5 million through a June 27 listing in Hong Kong, posted a net profit of 128.13 million yuan (HK$120.75 million) last year, up 49.36 from the previous year. The overall operating margin rose to 2.1 per cent from 1.1 per cent previously. However, the operating margin of its hypermarkets fell to 1.5 per cent from about 2.6 per cent as start-up costs increased with the opening of 10 more outlets. Last week, China Resources Enterprise announced it had decided to slow expansion of its mainland retail business to improve its bottom line by trimming start-up and operating costs.
