Gome outshines expectations in Q1

Gome Electrical Appliances Holdings Ltd, one of China's largest home appliance retailers, reported Thursday a better-than-expected business performance in the first quarter of this year, turning a loss of 13.1 million yuan ($2.13 million) in the same period last year into a net profit of 76.33 million yuan.

Its total sales revenues reached 12.34 billion yuan in the first quarter, up 18.2 percent year-on-year, the company reported.

The appliance retailer closed 43 stores and opened 16 new ones in the first quarter, and it has a current total of 1,624 stores nationwide, it said.

Gome had closed all its Hong Kong retail stores before this April, a move analysts said was an effort to cope with losses caused by previous blind expansion.

Analysts chalked up the better profit performance in the first quarter to the recovery of China's appliance sector as a whole and a rise in e-commerce business.

Gome posted a 597 million yuan loss last year, its first yearly loss since it was listed in 2004, mainly due to rising operation costs and losses in its e-commerce business.

Its total online sales revenue reached 714 million yuan in the first quarter this year, up 51.3 percent year-on-year, the company reported.

"The quarterly report indicated that there is still big potential for growth in the offline business, and the online business could also earn profits and enjoy a sustainable development if the offline and online platforms coordinate well," Gome President Wang Junzhou said in the report.

Last December the company announced a three-year plan to coordinate the development of its online and offline businesses, expanding its offline business into small cities and establishing a profitable online shopping platform in 2013.

Gome rival Suning Appliance Co reported a net profit of 493 million yuan in the first quarter this year, a 48.19 percent decline year-on-year.