China’s retail giant Suning.com Co (002024.SZ) experienced a 17% drop in its 2019 net profit as the company has further expanded its offline business in an attempt to salvage its money-losing online storefronts, according to the company’s latest financial results.
Suning, which acquired an 80% stake in Carrefour China for RMB 4.8 billion (USD 700 million) last September, booked RMB 270 million (USD 38.6 billion) in revenue in 2019, a 10.4% increase year-on-year (YoY). Net profit attributed to shareholders of the parent company was RMB 11 billion (USD 1.57 billion) in 2019, 17.3% lower than in 2018, according to the company’s press release.
Started as one of China’s leading home appliance chain stores in 1990, Nanjing-based Suning had its online shop, Suning.com, set up as early as 2009, but until now, it is still generating losses. The firm still mainly counts on its brick-and-mortar stores to gain profits, as Zhongtai Securities pointed out in their analysis.
In 2019, Suning gained a gross merchandise value (GMV) of RMB 379.7 billion (USD 54.2 billion), but online sales only reached RMB 238.8 billion (USD 34.1 billion, including tax), while China’s three major e-commerce platforms, Alibaba, JD.com, and Pinduoduo, have all hit the threshold of a trillion yuan annual GMV.
However, Suning still has the biggest market share when it comes to China’s home appliance retail sector.
After it has acquired Wanda department store and Carrefour China, which gained its first quarterly profit in seven years after the deal, Suning achieved a total of 8,216 stores in China in 2019.
As offline shops are taking the hit from the coronavirus outbreak, Suning has started on March 15 a nationwide promotional campaign, where it will release vouchers worth RMB 500 on its app and mini-program to boost online sales. In total, the firm destined 500 million RMB for the initiative.