Gome Retail says its revenue last year fell, but it nearly halved its annual loss as its restructuring program continued to pay dividends.
Gome Retail is in the midst of a major transition and restructure from a brick-and-mortar-dominated format into a multichannel digital business anchored around its online platform. It is also expanding its physical store network into low tier cities and rural locations across China.
The company says its gross merchandise volume (GMV) doubled last year. GMV from stores in rural parts of China soared by 61 percent and from new businesses such as home solutions and kitchen cabinets integrating electrical appliances, increased by 86 percent. GMV from smart products increased by 43 percent and from services by 61 percent, the company said.
Despite a 7.57-per-cent decline in total sales to RMB 59.48 billion (US$8.376 billion), the company’s loss attributable to shareholders fell from RMB4.887 billion ($688 million) in 2018 to RMB2.590 billion ($365 million) last year.
“The booming new business indicates that the group’s strategic transformation is progressing well,” the company said in an earnings statement.
During the year ahead, it plans to accelerate its strategy to penetrate into lower-tier markets, using a franchising model.
“This will enable Gome to seize market share with low operating costs.”
The company plans to build 100 franchise stores this year, with a target turnover of RMB100 million ($14 million) for each.