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Lianhua Supermarket Holdings, the mainland's biggest supermarket operator, aims to strengthen its partnership with French retail giant Carrefour and open more hypermarkets in Shanghai.

Chairman Wang Zhi-gang said Shanghai Carhua Supermarket, Lianhua's joint venture with Carrefour that operates 11 hypermarkets, would expand 'step by step'.

'We want to strengthen our partnership because we have been co-operating for a long time,' Mr Wang said. While declining to elaborate, he said more hypermarkets would be opened in Shanghai. Lianhua owns 45 per cent of Carhua.

Last year, Lianhua ended a discount foodstuff chain alliance with Carrefour by selling its 45 per cent stake in the 120-outlet Shanghai Dia Lianhua to the French retailer, which had a 55 per cent stake. Lianhua explained then that the venture had lost more money than it had invested.

The company yesterday reported a 1.5 per cent increase in first-half profit to 140.2 million yuan, or 23 fen a share, from a year ago, less than it expected. Meanwhile, sales rose 20.7 per cent to 8.98 billion yuan.

Mr Wang said earnings were crimped by a 70 million yuan one-off loss from the closure of three prime hypermarkets to make way for city planning and the restructuring of five non-performing hypermarkets.

Lianhua, which ran 103 hypermarkets, 1,660 supermarkets and 1,886 convenience stores at the end of June, plans to open 90 supermarkets and 90 convenience stores in the second half.

Mr Wang said the retailer would continue to expand in eastern China, mainly in Jiangsu and Zhejiang provinces and Shanghai. Such expansion plans will face competition from Jiangsu Times, operator of 35 hypermarkets in Jiangsu and Zhejiang, as well as Chia Tai Enterprises International, a mainland hypermarket operator controlled by Thailand's Chearavanont family, which has bought 18 Shanghai Lotus stores for HK$2.8 billion this year.

Jiangsu Times raised HK$880 million this year to fund expansion and repay debt, while Chia Tai has said it will expand in Shanghai and second-tier mainland cities.



Lianhua to strengthen alliance with Carrefour