(Yicai) Oct. 18 -- Shares of cash-strapped Gome Retail Holdings plunged after its electrical appliance unit closed its last remaining store in Guangdong province and failed to pay suppliers, Yicai learned from two home appliance suppliers in southern China.

Gome’s stock price [HKG: 0493] sank 16 percent to 4 Hong Kong cents (1 US cent) in Hong Kong today. Its market capitalization was HKD1.96 billion (USD250.4 million).

One of the two suppliers told Yicai yesterday that Beijing-based Gome still owes them money, and the matter has come to a standstill.

“Not only did the firm default on wages and payments, but Gome Electric Appliances also failed to pay the expenses on some properties, leading to lawsuits by the owners, with local courts closing its stores, resulting in some makers’ sample televisions and refrigerators not being returned, and the products being lost,” the person pointed out.

Gome Electric had just one store still open in Guangdong, in the Tianhe district of Guangzhou, the provincial capital. It closed recently. 

Some of Gome's regional branches have not paid wages since last November, a person close to the company told Yicai. “Some branches were paying salaries normally until January, but then they stopped. Gome has very few employees left, and most handle litigation and arbitration matters at the company,” the source said.

Gome, which has been closing offline stores, will step up its live streaming e-commerce business, the firm said earlier this year. Home appliances are still being sold through its app, but if the online video shopping guide service is selected, a salesperson either closes the window or does not respond, Yicai found.

Last May, Gome placed 1.96 billion shares with at least six independent investors priced at 40 Hong Kong cents apiece, raising around HKD776 million (USD99.2 million). It planned to use 60 percent of the funding to expand its online and offline platform business, 10 percent to repay debt, and the rest for general capital. 

But as Gome's liquidity problems worsened from the second half of last year, the money was not used as intended, going instead to repay debt by the end of last year, the company said on Oct. 6. Its stock has fallen over 30 percent since them.

For the six months ended June 30, Gome's operating income shrank 96 percent from a year earlier to CNY414.8 million (USD56.8 million), the firm’s most recent trading report showed. Its net loss widened 16.6 percent to CNY3.5 billion (USD484 million).

Editor: Martin Kadiev