Revamped Gome still in the black

Gome Electrical Appliances Holding Ltd has managed to remain profitable amid a major restructuring plan to boost its e-commerce business.

The company - one of the country's largest privately owned electrical appliance retailers - said on Monday that its sales revenue was 41.6 billion yuan ($6.83 billion) in the first three quarters, up 8 percent year-on-year, as costs went down.

In the past nine months, Gome achieved net profit of 582 million yuan while its third-quarter net profit was 260 million yuan.

Earlier this year, the company shut low-performance stores, cut costs and started a plan to go digital.

According to its third-quarter report, the company's business expenses dropped 1.6 percent annually while its integrated gross margin reached a record high of 18 percent.

The sales revenue of the company's brick-and-mortar stores for the third quarter rose 8.8 percent year-on-year, the report said.

"The growth in profit and sales revenue of Gome has been very impressive amid the tough period for the appliance retail industry, which is suffering a downturn at the moment," said Luo Qingqi, an analyst at Pale Consulting, a market research firm specialized in electronics retailers.

Luo added that Gome has adopted a successful business strategy and is obtaining gradual returns by supplying suitable products to its target customers in both physical stores and its online platform.

Gome has tried to build up its e-commerce business and create synergies with its brick-and-mortar stores.

"Led by a multi-channel strategy with the combination of its e-commerce platform and stores, Gome is trying to make use of its advantages in the market and improve sales performance continuously with higher returns," said Wang Junzhou, Gome's president.

In addition, Gome started selling fast-moving consumer goods in August, including food and beverages, cosmetics, and mother and baby products. The move indicates that Gome has entered into a full-blown competition with e-commerce services such Taobao and Yihaodian.

"The combination of its e-commerce business with a variety of products and physical stores with its home appliances will be the solution for Gome to stand out and expand its business further," said Luo.