Retailing, Franchising, and Consumerism Business Intelligence in China

China's Jingkelong Net Profit Down 37% In H1 2013

Beijing-based supermarket retailer Jingkelong published its semi-annual performance report, stating that its net profit decreased by 37.7% from CNY77.632 million in the same period of 2012 to CNY48.365 million.

According to the financial report, Jingkelong's revenue from major businesses was CNY4.7 billion, a year-on-year increase of 4.5%; however, its revenue from major retailing businesses decreased by 2% year-on-year to CNY2.328 billion. Jingkelong said that the main reason for the retailing revenue decrease was due to the 4% same-store sales decrease during the reporting period. At the same time, its two hypermarkets were temporarily closed for renovation and five full-service supermarkets were shut down, which led to the sales decrease.

Compared with international supermarket retailers like Wal-Mart and Carrefour, Jingkelong's store display and operation and management are a little behind. In addition, its business model, which depends on franchised stores to achieve fast expansion, has started to show strain.

Based on the report, Jingkelong currently has 180 hypermarkets, comprehensive supermarkets, and convenience stores, of which 90 are franchised stores.

In June 2013, the company withdrew its application for IPO at the A-share market in China, due to unsatisfactory results. In addition, the company was recently sued by consumers for selling expired food.

In contrast with the retail business, Jingkelong's wholesales business gained rapid development during the first half of 2013. The report showed that its major wholesale businesses reached a year-on-year increase of 12.1%.

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