Lianhua issues profit warning

Date : 17 October 2016

Chinese retailer Lianhua Supermarket has warned that its net loss for the nine months ended 30 September 2016 is expected to increase by approximately 20% to 40% compared to same period last year.

Tough trading environment

The expected increase in loss is mainly due to the shrinking market demand and intensified competition of online and offline retailers, which has led to a decrease in the revenue of the company from sales of merchandise, according to the company’s statement.

As a result of the factors mentioned, it is anticipated that the financial results of the company for the 12 months ending 31 December 2016 is likely to assume the net loss trend.

Downward trend likely to continue

Last year, Lianhua’s turnover fell 6.6%, same-store sales by 6.48% while the group reported an operating loss of about RMB149 million (US$23 million) for its 2015 full year. At the time, chairman Ye Yong-ming said the group’s performance had been hit by an “unusually severe” operating environment.

In 2015, the group introduced a strategic investor, Yonghui Superstores, as the second-largest shareholder. It opened 204 stores and shut 612, of which 520 were franchise stores.

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