Year of growth for Gome Electrical Appliances

Sales revenue grew by 18.73 per cent last year to about RMB76.7 billion (US$11.15 billion) for Gome Electrical Appliances Holding.

Gome says it profit was impacted by the temporary closure of some stores for reconstruction and renovation work in the first half of the year, but there was “phenomenal improvement” in the second half of the year following the store upgrades.

During the year, the group’s online-offline total gross merchandise volume (GMV) grew 31 per cent, with a 110 per cent leap in e-commerce. Online sales rose 59 per cent to about RMB10.7 billion while comparable store sales declined by 9.4 per cent.

Sales revenue from the Beijing, Guangzhou, Shanghai and Shenzhen regions accounted for about 36 per cent of total revenue, compared to 42 per cent the previous year, indicating an increase in revenue from the second-tier market.
Gross profit was about RMB10.4 billion, up 9 per cent, while the gross profit margin fell by 1.2 points to 13.5 per cent.

Gome’s store transformations in the first-tier market and the continuing high-speed growth in its e-commerce business lowered the consolidated gross profit margin by 1.7 points to about 16 per cent. However, the profit attributable to the owners of the parent company slid to about RMB325 million from RMB1.2 billion in 2015.

On March 31, the group acquired appliance and electronics retailer Artway Development and its subsidiaries. The purchase consideration was in the form of HK$1 billion of cash, issuance of 5.5 billion shares at a market price of HK$1.12 each, and 2.5 billion company warrants at fair value of RMB227 million. Transaction costs for the acquisition were RMB21.9 million.

Since the acquisition, Artway has contributed revenue of RMB14.5 billion and profit of RMB135 million.

On July 25, Gome also acquired Tengda Electrical Appliances, which has 62 retail stores in Jiangxi province, for a cash consideration of RMB215 million.

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