HONG KONG, March 27 (Reuters) - GOME Electrical Appliances Holding Ltd said on Monday its profit for 2016 plunged 73 percent as it revamped stores, which boosted its selling costs and operating expenses.
GOME had warned in February that it expected its annual profit to fall by 65-75 percent from a year ago due to a strategic shake-up which has seen some of its main outlets undergo renovation, but that it expects results to improve upon completion of its strategic transformation..
The home appliance retail chain, which has a market value of $2.9 billion, said its net profit dropped to 325 million yuan ($47.3 million) in 2016 as it temporarily closed some of its stores for renovation, from 1.21 billion yuan a year ago.
“GOME will be transformed from an appliance retailer to an integrated provider of products and services,” Chairman Zhang Da Zhong said in an earnings statement. “GOME will continuously upgrade the new retail strategy.”
GOME’s revenue last year rose 18.7 percent to 76.7 billion yuan, boosted by strong growth in online sales.
Consolidated gross profit margin fell to 16.09 percent from 17.81 percent a year ago.
GOME shares fell 1.9 percent prior to the results statement, lagging a 0.7 percent drop in the benchmark index. ($1 = 6.8749 Chinese yuan renminbi) (Reporting by Donny Kwok; Editing by Himani Sarkar)