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Gome Electrical warns of profit drop

Gome Electrical Appliances has warned shareholders and potential investors that the group’s profit for the quarter ended March 31 is likely to fall following the implementation of a strategic transformation plan.

Proposed last year, the plan has the philosophy of “omni-channel, new scenario, strong linkage”.

Based on a preliminary review of its accounts, the group’s gross merchandise volume (GMV) for both online and offline is expected to grow by more than 12 per cent over the same period last year, with more than 100 per cent growth anticipated from its eCommerce activities.

Similarly, 90 per cent growth is expected in sales revenue in the B2C eCommerce sector, with a 5 per cent rise overall. The sales revenue from offline stores is expected to be stable, while negative growth of 3 to 3.5 per cent is forecast in overall sales revenue from comparable stores. Sales revenue from comparable stores in the second-tier market is expected to edge up by 1 to 1.5 per cent.

Though the overall gross profit margin was eroded by the continuing high-speed growth of its eCommerce business and the transformation of stores in the first-tier market, the group’s overall

consolidated gross-profit margin is expected to stay at about 17 per cent.

Overall, the adjusted profit is expected to fall 30 to 35 per cent for the quarter.

It is expected the group’s results will improve once the strategic transformation is complete.

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