Chinese household appliance retailer Gome Electrical Appliance Group (Gome Group) confirmed to the Global Times Monday that all its Hong Kong retail stores will be closed by March 16, 2013, and analysts said the move is an effort to cope with losses caused by previous blind expansion and fierce domestic competition.
The operation in Hong Kong "will shift from being retail-oriented to wholesale-oriented," Gome said in an e-mail sent to the Global Times Monday.
Hong Kong-listed Gome Electrical Appliances Holdings announced Sunday evening that the shutdown will not influence its financial position, given that the operation of the six Hong Kong stores was not being counted in the financial results.
Its shares dropped by 4.04 percent at Monday's close.
Gome Group (divided into Gome Electrical and other unlisted subsidiaries) was expected to lose at least 900 million yuan ($145 million) for the nine months through September 2012, given that the listed Gome Electrical suffered losses worth 687 million yuan, which is believed to be double the losses of the unlisted operation, said Liu Buchen, a home appliance expert with consultancy Jiachunqiu Media Institute.
Although not all of Gome's stores have been profitable, the company has continued to open new stores around the country, Liu told the Global Times Monday, adding that Gome opened some 480 new stores in 2011.
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