Gome looks to e-commerce after posting loss in first nine months

Gome Electrical Appliances, China's second-largest seller of home appliances, is betting on e-commerce to reverse declining sales after reporting a loss in the first nine months.

The Beijing-based retail chain posted a net loss of 687 million yuan (HK$846 million), compared with a profit of 1.79 billion yuan for the same period a year earlier, it said in a filing with the Hong Kong stock exchange.

Revenue dropped 18 per cent to 36 billion yuan for the period, while consolidated profit margin fell nearly 3 percentage points to 15.88 per cent.

Despite the falling revenue and profit, mainland media reported that Gome had budgeted 400 million yuan to advertise its e-commerce business on CCTV, the country's largest television station, making it one of the biggest spenders on television advertising for the next year.

The company warned of a net loss last month, attributing it to rising rental and employment costs, its loss-making e-commerce business and weak consumer sentiment.