Gome Expects 2012 Loss on China’s Economic Growth Slowdown

Gome Electrical Appliances Holding Ltd. (493), China’s second-largest electronics retailer, said it probably posted a loss last year after rents rose and slowing economic growth in China damped consumer demand. The stock dropped.

More investment in the company’s e-commerce business also contributed to the loss, Beijing-based Gome said in a filing to the Hong Kong Stock Exchange yesterday. The company said an economic rebound in China is expected to create new market opportunities.

The company reported a net loss of 686.7 million yuan ($110 million) for the first nine month of last year, compared with a profit of 1.79 billion yuan a year earlier, on sales of 36.1 billion yuan, down from 44 billion yuan. China’s economy expanded 7.8 percent in 2012, the least in 13 years. Growth is expected accelerate to to 8.1 percent this year, according to analysts polled by Bloomberg in December.

“Gome now has greater visibility of its future after a difficult transition in 2012,” Chief Executive Officer Wang Junzhou said in a separate e-mailed statement.

The company shut nine stores in Beijing, or 15 percent of its presence in the city, in the third quarter last year in an effort to regain profitability, the 21st Century Business Herald reported on Oct. 24. Gome also closed stores in Shanghai and Guangzhou.

Gome fell as much as 5.3 percent to 90 Hong Kong cents before trading at 91 Hong Kong cents at 9:48 a.m. today. Suning Appliance Co. is China’s largest electronics retailer.

To contact the reporter on this story: Benjamin Haas in Hong Kong at bhaas7@bloomberg.net

To contact the editor responsible for this story: Nicholas Wadhams at nwadhams@bloomberg.net

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