March 2, 2018 / 1:32 AM / 6 months ago

China's GOME warns of 2017 loss on impairment, rising financial costs

HONG KONG, March 2 (Reuters) - GOME Retail Holdings Ltd said it expected to swing to a loss of up to 500 million yuan ($78.7 million) in 2017 due to impairment of goodwill for under-performing business, and impairment of long-term assets relating to e-commerce.

Higher debt costs also would contribute to the estimated loss of 300 million yuan to 500 million yuan for the year, the home appliances retailer said in a filing to the Hong Kong bourse late on Thursday.

Excluding impairments and interest on bonds payable, GOME said it expected 2017 profit to improve.

“During the reporting period, the overall operating performance of the group remained strong,” Chairman Zhang Da Zhong said in the statement.

Total gross merchandise volume for online and offline operations was expected to grow more than 20 percent, the $2.6 billion company said.

Comparable stores sales were set to rise more than 2 percent and consolidated gross profit margin was seen exceeding 18 percent.

GOME posted a 325 million yuan profit in 2016 with consolidated gross profit margin at 16.09 percent. The company is due to announce its yearly results by the end of March.

Bigger rival Suning.Com Co Ltd said its 2017 sales surged 30 percent year-on-year to 243.2 billion yuan, with profit up nearly 500 percent to 4.21 billion yuan amid rapid growth in revenue scale and net profit margin both online and offline. ($1 = 7.8270 Hong Kong dollars) ($1 = 6.3565 Chinese yuan renminbi) (Reporting by Donny Kwok Editing by Stephen Coates)

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