Chinese retail giant Suning.com (SHE: 002024) has predicted between RMB 400 million (USD 56.7 million) and RMB 600 million (USD 85.1 million) in losses in the first quarter of this year, compared with RMB 135.9 million in net profits obtained during the first quarter of 2019, according to the company’s filing with the Shenzhen Stock Exchange on Wednesday.
Suning attributed these losses to the COVID-19 pandemic as its sales decreased while expenditures increased.
The firm’s shopping malls and department stores shut down or reduced operational time in late January and February, leading to decreases in sales, while travel bans in cities and rural areas led to a reduction in sales of home appliances, as home deliveries and installations forestalled during that time, said the company.
Suning.com had 8,216 stores, including 4,586 franchised stores for lower-tier markets by the end of 2019, according to Suning Holdings, which owns Suning.com.
In addition to decreases in revenue, the company’s expenditures as a result of the public health crisis also increased, said Suning, without further explanation.
Despite the overall gloom in the first quarter, Carrefour China, of which Suning bought an 80% stake last year for USD 700 million, again reported profits in the first quarter. The business turned profitable in the last quarter of 2019, reversing a seven-year trend of losses, KrASIA reported in February.
Carrefour China, which runs 210 supermarkets and 24 convenience stores in 22 provinces, has opened home delivery services in the quarter to meet consumers’ demand to buy online. By the end of March, online sales accounted for 10% of Carrefour China’s sales, said Suning.com.
Amid the backdrop of the pandemic, Suning said the company will focus on its all-category strategy by relying on Carrefour China to expand in the fast-moving consumer goods sector, while speeding up online-to-offline integration in all its business.
In 2019, Suning.com witnessed online commodity transactions reaching RMB 238.8 billion, accounting for 60% of its overall sales, according to the firm.