Suning appliance reaps rewards

Suning Appliance Co, the nation's biggest home electronics' retailer by market value, saw its net profit last year surge almost 40 percent over the previous year, according to its 2010 annual performance report released Monday.
Total business income of the Nanjing-based company reached 75.5 billion yuan ($11.49 billion) last year, up 29.51 percent from the previous year, while net profit reached 4 billion yuan ($608.48 million), an increase of 38.80 percent, according to the report published on its official website.
Total assets hit 43.9 billion yuan ($6.68 billion) by the end of last year, while net assets came in at 18.3 billion yuan ($2.78 billion).
The company attributed the profit surge mainly to favorable government policies that helped boost domestic demand as well as its expansion in chain shops.
Last year, Suning expanded into 31 new cities at the prefecture level, opened 396 new stores and closed or replaced another 26.
It also cracked overseas markets, raising its stake in Japanese retailer Laox, helping it open four new outlets.
The company plans to open 370 new stores this year, bringing the total number of stores in China to 1,700, the company's Vice President Sun Weimin said last week.
Meanwhile, Suning rival Gome Electrical Appliances Holding Ltd has some 400 new stores in the works, which will bring that firm's total outlets to 1,800 by year end.
Struggling to deal with the aftermath of internal strife between Huang Guangyu, Gome's founder and its current management team, Gome lagged behind Suning in the first three quarters last year, with its three-quarter revenue making up no more than 70 percent of Suning's figure and its net profits only accounting for half of the latter's data.
Although Gome's fourth quarter performance has not been published yet, analysts predict that Gome will not outperform Suning.
Li Xuerong, a senior analyst with CIC Industry Research Center, told the Global Times that Suning will gain an even larger edge over competitors.
"The retreat of Best Buy shows that foreign appliance retailers still cannot challenge their domestic counterparts in the short term, (while) mergers and acquisitions in the industry are expected to be in full swing this year," she said.
Shares of the Shenzhen-listed company closed higher at 14.10 yuan ($2.15) per share, up 2.47 percent compared to the previous close on the earnings report.