(Yicai Global) July 4 -- China's Yonghui Superstores is closing its first Tencent-backed Super Species outlet, a two-year old offshoot brand of small grocery stores, in Shanghai today, aiming to reduce the costs that the parent's large expansion into New Retail has caused.
Since Yonghui Yunchuang Technology, the operator of Super Species, achieved its goal of opening 100 Super Species outlets nationwide last year it has started taking a closer look at each of these stores' profitability, shutting down every outlet that cannot reach its sales goals, news website 36Kr reported.
This year has proven tough for Chinese offline-to-online grocers as Alibaba Group Holding closed its first supermarket Hema store in May and a unit of Chinese retailer Suning.Com bought French Carrefour's waning China business last month.
Fuzhou-based Yonghui said at the end of last year that it will exclude Yunchuang from its financial reports to reduce the impact on the parent's performance. For the first three quarters of 2018, the unit logged CNY1.5 billion (USD218.2 million) in revenue, but its net loss was CNY617 million (USD89.8 million), causing its parent's profit to decline by 18.5 percent.
Tencent Holdings owns 15 percent of Yunchuang's equity after a deal penned in 2017, which involved an investment of CNY187.5 million.
Editor: Emmi Laine