Gome Forecasts Third-Quarter Loss on China Slowdown, Online Unit
Gome Electrical Appliances Holding Ltd. (493), China’s second-largest electronics retailer, forecast a third-quarter loss as consumers cut spending and costs increased in its e-commerce business.
The company expects a loss of 100 million yuan ($16 million) to 200 million yuan for the three months ended September, according to a statement to Hong Kong stock exchange today.
Gome and bigger rival Suning Appliance Co. (002024) have been hurt by rising price competition after online retailer 360buy Jingdong Mall announced plans to cut prices. Chinese consumers have pulled back and are shopping for bargains as China’s economic growth has slowed to its weakest pace since 2009.
Gome posted a loss of 501 million yuan for the six months ended June from a 1.25 billion yuan profit a year ago.
There was still “an improvement in profitability” in the third quarter from the second quarter, according to today’s statement. Gome expects to announce third-quarter earnings no later than Nov. 30.
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