Business Intelligence on Retailing, Franchising, and Consumerism in China

Nepstar Drugstore Closes 59 Outlets Across China

Chinese pharmacy chain Nepstar Drugstore says it opened 38 new stores during the first half of 2015, while it closed 59 existing stores.

At present, the company has 1,948 directly-owned chain stores.

According to the company's recently published financial report for the second quarter of 2015, by June 30 Nepstar Drugstore's operating revenue was CNY775 million, a year-on-year increase of 12.9%. Meanwhile, its net profit reached CNY8.7 million.

Nepstar Drugstore explained that the revenue increase was contributed by sales increases of individual stores and the reasons for the increase were promotion campaigns and sale of pharmaceutical products. However, the large number of promotions also led to its gross margin decline. Nepstar Drugstore's gross profit increased from CNY290 million to CNY310 million, marking a year-on-year increase of 5.7%; while its gross margin decreased from 42.7% to 39.9%.

In addition, the number of Nepstar Drugstore chain stores continued to decrease. During the first half of 2015, the company opened 38 new stores and shut 59 existing stores. In 2014, the company opened 130 new stores and closed 216 stores.

Nepstar Drugstore said that the company currently focuses on productivity of stores and achieving higher operational efficiency by reducing administrative expenses and optimizing store management.

Image Credit: Vitezslav Valka

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