Business Intelligence on Retailing, Franchising, and Consumerism in China

GOME Reports Revenue Growth In 2005

In 2005, the group's gross profit rose by 35.7% to RMB1.65 billion and the board proposed a dividend of HK$0.04.3 per share.

The good performance was attributed to the fast expansion of the group's retailing network dominating the Chinese market, GOME Chairman Wang K Wong Yu said at a press conference here.

GOME opened 143 new retailing shops over the past year, pushing the total number of its outlets to 259 in 68 cities across China's mainland.

The large number of newly-opened branches, more than doubling the existing 116 outlets in 2004, is part of GOME' s four-year expansion plan to solidify its dominance in China's electronics market.

However, not all the new outlets were able to achieve ideal sales results, especially those located in the second-tier cities with a relatively low income level.

The fast expansion pace therefore cut down GOME' s profit marginin 2005.

Gross profit margin, profit margin before tax, net profit margin before and after minority interest all slide, varying from 0.43% to 1.60%.

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