Suning Commerce Halts Losses in First Half Year Thanks to Strong Growth in Online Sales
Guan Jian
/SOURCE : Yicai
Suning Commerce Halts Losses in First Half Year Thanks to Strong Growth in Online Sales

(Yicai Global) July 31 -- China's major new retail dealer, Suning Commerce Group [SHE:002024], made up the deficits and got surpluses in the first half year. One of the largest retailers in China, Suning owes it to the rapid increase in its online sales, insiders point out. The online sales volume is equivalent to sales in its offline stores, which appears to be the main reason to stop losses, they added.

Suning Commerce Group has initially started as a major chain retailer of home appliances in China. But its online retail business has developed rapidly. The internet giant, Alibaba Group Holding Ltd. [NYSE:BABA] currently holds 19.99 percent shares of Suning Cloud, being its second largest shareholder.

Suning Commerce released its business performance report for the first half year of 2017 yesterday. The Group realized operating income of CNY83,5 billion (USD12,2 billion) in the first half year, increasing 21.64 percent year-on-year. The net profit attributed to shareholders of listed companies is CNY292 million (about USD43 million), compared to CNY121 million (about USD18 million) losses in the same period last year.

In the first half year, the sales revenue of Suning Commerce is CNY104.5 billion (USD15,3 billion), in which online platform realized scales of CNY50 billion (USD7,3 million), surging 52.76 percent year-on-year. In the same period, the comparable income growth of Suning offline stores was smaller, with an annual growth rate of 4.54 percent.

Among online transactions, the number of clients through mobile platforms rose substantially. In the first half year, the average daily active users of Suning e-commerce app realized a year-on-year growth of 80 percent. In June, over 80 percent of online orders were placed via mobile devices, the same ratio as that of Taobao Mobile Terminal. These figures suggest that the company which started off as offline retailer has made a favorable progress in transforming its business into online operations.

During the report period, Suning Commerce shut down a total of 65 offline stores, while opening 13 new online cloud stores, and reconstructed and upgraded 50 cloud stores. As more stores with low operating efficiency and higher costs are being shut down, Suning further channels its resources to "flagship stores" with internet functions.

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Keywords: MSCI , Retail , E-COMMERCE , Alibaba , Earnings