Business Intelligence on Retailing, Franchising, and Consumerism in China

China's Lianhua Supermarket Profits Up 62% To CNY227 Million

According to the interim results from Lianhua Supermarket Holdings Co, Ltd., the company made net profits of CNY227 million in the first half of 2008, a year-on-year increase of 61.81%.

In the first six months of 2008, Lianhua Supermarket opened 256 new stores, making the total number of stores Lianhua stores across China 3,84. Of these, 2,228 are franchise stores. Wang Zhigang, president of Lianhua Supermarket, said that according to the company's original plan, 400 new stores will be opened in 2008. However, 256 new stores have been opened in the first half. At this rate the number of newly opened stores is expected to exceed that in the plan and by the end of 2008, the total number of Lianhua Supermarkets may be over 4,000.

Lianhua Supermarket said their management performance met the expectation of the company in the first half of 2008. The comprehensive gross profit rate was up 0.7 percentage point to 13.4%; the overall same-store sales increased significantly by 13% compared with the same period last year; the increased rates of Lianhua Supermarket's hypermarkets, supermarkets, and convenience stores were 12%, 15.2%, and 11.4%, respectively.

Referring to the management environment in the second half of 2008, Wang said that Lianhua Supermarket will still be facing pressure from increasing rent and labor costs, but he predicted that the gross profit of the company will maintain its rising trend.

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