Despite a fall in revenue, Chinese lifestyle retailer CP Lotus Corporation has turned around a loss into a net profit for the year ended December 31.
Net profit attributable to equity shareholders of the Hong Kong-listed company reached RMB179 million (US$28.3 million) following the previous year’s loss of RMB537.6 million.
CP Lotus says the significant turnaround was largely because of a reduction in distribution and store running costs of RMB184.9 million and administrative expenses of RMB136.1 million.
Revenue fell by 4.3 per cent to RMB9.6 billion because income from seven new hypermarkets and one neighbourhood store opened last year was not enough to offset the 8 per cent drop in same-store sales resulting from the easing economy and intensified competition from online retailers.
Sales were down for all merchandise categories except fresh food, with apparel and electronic appliances being hardest hit with reductions of 17.7 and 18 per cent respectively.
Gross profit margin was 18 per cent of sales, up from 17.2 per cent, although gross profit fell by RMB2 million or 0.1 per cent.
The group opened seven hypermarkets during the year, four of them in third- and fourth-tier cities in Guangdong Province, two in Hunan Province and one in Shaanxi Province. The group also opened a neighbourhood store in Beijing. The new properties increased total sales space by about 43,250sqm.
Including a new store in Xian last month, the group has a network of 70 outlets with total sales space of about 525,000sqm. The group also has two shopping centres, one in Shantou and one in Xian.
CP Lotus says a bigger lease area allowed it to create a community shopping environment by bringing in large-scale tenants such as cinema and gym, and community supporting service merchants.