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Tag: artway

  • Gome Electric issues profit warning

    Gome Electric issues profit warning

    Electrical appliance retailer Gome Retail has issued a profit warning despite a strong year, the result of impairments and financial costs.

    During the 12 months to the end of December the group launched its “Home Living” strategy, a blueprint aimed at helping it evolve into a one-stop provider, going beyond the traditional home-appliance retailer.

    Based on a preliminary review of the latest management accounts, the group’s total gross merchandise volume (GMV) both online and offline is expected to grow by more than 20 per cent year on year. Sales from the comparable stores of the group are expected to increase by more than 2 per cent with the consolidated gross profit margin expected to exceed 18 per cent.

    With the e-commerce business entering the online/offline integration stage, its direct sales revenue decreased by about 7 per cent. However, the GMV from the e-commerce business is expected to more than double.

    With more than 200 million members in its loyalty program, the group is speeding up expansion of its services while expanding into China’s fourth- and fifth-tier cities.

    Despite the strong trading, Gome impaired the goodwill for some of its under-performing business units and long-term assets related to the e-commerce business. That, together with rising financial costs related to the increased debts, is likely to produce a loss attributable to the owners of the company during the year of between RMB300 million (US$47.2 million) and RMB500 million, compared to a net profit 12 months earlier.

    The financial data also covers Artway Development and its subsidiaries from April 1, following its acquisition on March 31.

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  • Gome Electrical Appliances in transformation

    Gome Electrical Appliances in transformation

    A drop in profit resulting from the implementation of a strategic transformation plan is predicted by Gome Electrical Appliances Holding for its latest six months.

    The group says it expects its results will improve once the “Omni-Channel, New Scenario, Strong Linkage” strategic transformation has been completed.

    Based on a preliminary review of the latest management accounts of the group (including the data of Artway development and its subsidiaries), its total gross merchandise volume (GMV) for both online and offline is expected to grow by more than 15 per cent, with that of the eCommerce business expected to more than double.

    Sales revenue during the period is expected to grow by about 10 per cent, with a more than 60 per cent boost in revenue from the B2C sector of its online business. Revenue from offline stores is expected to grow by about 5 per cent.

    As some of the group’s major stores were under renovation, sales revenue is expected to decrease fall about 10 per cent.

    “The consolidated gross profit margin was lowered as a result of the continuing high-speed growth of the eCommerce business and the transformation of stores in the first-tier market,” says the group. This is expected to be about 16 per cent.

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  • Artway sales surge

    Chinese electrical retail giant Gome says sales by its takeover target Artway during the first half year rose 7.85 per cent year on year, to RMB10.858 billion.

    Same store sales rose 3.66 per cent overall, while in second tier cities same store sales rose 5.93 per cent, demonstrating the success of Artway’s focus on smaller centres.

    Gross profit margin rose by 0.85 percentage points to 20.28 per cent.

    Profit for the period was RMB256 million, up 75.34 per cent compared to the same period last year.

    Gome Electrical Appliances, the Hong Kong-listed Chinese electrical appliances retailer – is planning to spend US$11.268 billion acquiring rival Artway, allow it to expand its presence from 269 cities to 436 cities across Mainland China.

    As at June 30, Artway operated 590 stores, including eight self-owned stores, covering 17 provinces in China (including Jiangsu, Zhejiang, Shanghai, Fujian, Jiangxi, Hunan, Hebei, Henan, Liaoning, Jilin, Heilongjiang, Inner Mongolia, Shanxi, Guizhou, Guangxi, Shaanxi and Xinjiang). It opened 56 stores and closed 22 in the six month period, representing a net increase of 34 stores.

  • Gome in $11.3bn bid for Artway

    Gome in $11.3bn bid for Artway

    Gome Electrical Appliances, the Hong Kong-listed Chinese electrical appliances retailer – is planning to spend $11.268 billion acquiring rival Artway Development.

    Buying Artway, wholly-owned by Gome’s controlling shareholder, will allow Gome to expand its presence from 269 cities to 436 cities across Mainland China.

    More importantly, it will significantly boost Gome’s distribution and supply chain operations and bolster its buying power with suppliers.

    Wang Junzhou, Gome’s CEO, said the acquisition will further strengthen Gome’s total retail value chain and fuel its expansion in second and third-tier markets, and eCommerce development in particular.

    In a statement, Gome said its leadership in the electrical appliances and consumer electronic products retail market in the PRC will be strengthened further upon the acquisition,” Gome said in a statement.

    “With the injection of quality retail stores and creation of synergies in supply chain, Gome will take advantage of the growth potential offered by both the online and offline platforms to bring forth a better total retail experience to consumers.”

    Gome says it expects the acquisition to reap synergies from the integration and sharing of resources in retail sales operations, procurement, logistics, after-sales services, warehousing, information technology infrastructure and human resources.

    “Other benefits include facilitating a more flexible fulfilment management, as well as cost savings in warehousing and distribution.”

    Gome says Artway’s stores are largely located in fast-growing second and third-tier cities, which are highly complementary to the group’s existing retail store network.

    “Concurrently, the empowerment of the retail store network will accelerate the Group’s eCommerce development, promoting full integration online and offline.”

    Artway has 578 stores in 181 Chinese cities. Most are located in Central and Western China, Bohai Bay and the Beijing-Tianjin-Hebei region forming part of China’s Economic Zones with significant governmental support. The latter includes the Silk Road Economic Belt, Greater Northeast Economic Area, Yangtze River Economic Belt and Beibu Gulf Economic Zone.

    The merger of the logistics networks will give the company full nationwide reach, a significant boost to its eCommerce potential.

    “The acquisition will enable Gome to upgrade its existing logistics network which covers 21 regional and 407 city distribution centers, by bringing together the listed and non-listed logistics arms. With the support of its 1714 retail stores, the group is poised to successfully complete its national logistics coverage deployment, forming a multi-dimensional logistics network with regional and city warehousing as well as national last-mile distribution coverage spanning more than 600 cities, 2500 counties and 45,000 towns that can enjoy localised distribution and installation,” Gome said.

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