Maoye International Holdings Ltd. (00848.HK), which operates department stores in mainland China, has a lackluster outlook for the retail sector amid the slowdown in economic growth there.
“The fundamentals of the overall Chinese economy are slowing down,” said the firm’s chief executive, Huang Maoru.
“For the retail sector, we aim to maintain the current rate of sales growth this year.”
Huang said: “The retail sector has entered a normalized consumption stage. No matter whether it is the blow from the e-commerce operators or other competition, it is already normalized.
“Consumers will be more rational, so we expect sales in 2015 to remain at the same level as in 2014.”
Net profit for 2014 at the Shenzhen-based retailer rose 70 percent from the year before to 1.36 billion yuan (US$220 million).
However, excluding non-operating gains, net profit dropped 28.9 percent to 487.9 million yuan, a regulatory filing late Monday night showed.
Huang said that it is because Maoye International unlocked more than 1 billion yuan after spinning off Maoye Logistics, previously a subsidiary, as an affiliate.
Total operating revenue fell 4.8 percent to 4.4 billion yuan.
Same-store sales growth dropped 10 percent at Shenzhen Huaqiangbei, the concessionaire that generates the biggest sales.
Despite the unimpressive financial results, Huang said Maoye plans to add 11 stores in the coming five years, about two or three stores each year. It now operates 41 stores in 17 mainland cities.
The company will continue to speed up the transformation of department stores into shopping malls by adding supporting facilities, such as food outlets, recreation and entertainment, Huang said.
Maoye International’s stock price fell as much as 5 percent to HK$1.14 during trading Tuesday. The shares closed 0.83 percent lower at HK$1.19. The broader Hang Seng Index rose 0.24 percent.
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