Gome expects earnings improvement
Chinese appliance and electronics retailer Gome is expecting a more profitable business for the remaining year, aided by a new partnership with Alibaba’s Tmall.
It is also expecting its own e-commerce business to break even by the end of the year.
“We will bring up the proportion of our highly profitable goods from 20 per cent to 30 per cent of overall sales,” said CFO Victor Fang Wei.
“With our earlier initiatives to integrate resources of our online and physical shops, we hope to bring our gross profit margin to 18 per cent. While it is likely to stay below the 2011 level, we should see an obvious rebound from last year,” he said.
Fang said Gome will not follow Suning’s strategy of making prices at its physical stores on par with its online stores as it is not feasible, he said.
“If you look carefully, the so-called same pricing in fact applies to two different models of the same product, or, these products are forever out of stock,” Fang said. “It is impossible to apply the same pricing on two entirely different sales platforms.”
Gome plans opening 10 to 20 new stores this year.