Net profit at Suning.com tumbled nearly two-thirds in first half
Aug 1, 2019
Net revenue at Suning.com slid by nearly two-thirds in the first six months despite a 21.6% rise in operating income, according to the Chinese online retailer’s mid-year report released on Tuesday.
Why it matters: Suning.com’s result is in line with expectations and is indicative of the lackluster consumer market in China this year. As a major appliance seller and e-commerce platform, the company has also been aggressively pushing its offline expansion covering convenience stores, supermarkets, and department stores.
- Retail sales growth fell 1% year on year, according to the National Bureau of Statistics. Online sales slowed significantly by 8.2%.
- Suning acquired 37 department stores from the Chinese conglomerate Wanda Group at the beginning of the year and then paid RMB 4.8 billion (USD695.7 million) for an 80% stake in Carrefour China last month.
“The retail industry as a whole continues to face a downward trend, the external environment for enterprise development is still weak and business operations face greater challenges.”
—Suning.com H1 2019 performance report, according to Southern Metropolis Daily
Details: The Nanjing-based retailer’s operating income increased by 21.6% to RMB 134.6 billion over the same period last year, but net profit fell by 64.4% to RMB 2.1 billion.
- The company runs 7,503 self-operated and franchised stores, as well as 5,368 locations for its Suning Xiaodian neighborhood stores and discount chain Diatiantian, according to the report.
- Suning.com continued its investment in logistics, finance, technology, and infrastructure to lay a foundation for growth, the company said
Context: Suning.com has been pushing its O2O strategy by operating numerous offline stores nationwide, including shopping centers, consumer electronics outlets, and community shops.
- Partnering with Chinese real-estate developers such as Wanda and Evergrande, the retail giant seeks to further expand its businesses in lower-tier Chinese cities.
- The omnichannel retailer, which now operates a network upwards of 12,000 stores, aims for 15,000 offline stores this year.