Lianhua Supermarkets has warned of growing losses over the first nine months of the current financial year.
In a warning to investors, the beleaguered retailer said it expects its loss for the period to September 30 to increase by between 20 per cent and 40 per cent year-on-year.
In April, the group reported an operating loss of about RMB149 million (US$23 million) for its 2015 full year.
“[The] expected increase in loss for the nine months ended September 30, 2016 is mainly attributable to shrinking market demand and intensified competition of online and offline retailers due to diversified shopping channels, which led to a decrease in the revenue of the company from sales of merchandise,” the company said in this week’s warning.
“As a result of the above-mentioned factors, it is anticipated that the financial results of the company for the 12 months ending December 31, 2016 is likely to assume the net loss trend.”
Last year, Lianhua’s turnover fell 6.6 per cent, same-store sales by 6.48 per cent and gross profit by 5.2 per cent.
At the time, chairman Ye Yong-ming said the group’s performance had been hit by an “unusually severe” operating environment.
During 2015, the group introduced a strategic investor, Yonghui Superstores, as the second-largest shareholder. It opened 204 stores and shut 612, of which 520 were franchise stores.