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China's Sun Art Profit Misses Estimates, Store Sales Fall

By Steve Wynne-Jones
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Chinese hypermarket operator Sun Art Retail Group Ltd reported on Sunday a 7.3% fall in 2018 profit, missing market expectations after fierce competition including from online rivals.

The company, which is backed by China's biggest e-commerce company Alibaba Group Holding Ltd, also announced a change of leadership.

Huang Ming-Tuan, currently chairman of Sun Art's subsidiaries operating under the "RT Mart" banner in China, has been appointed chief executive. He replaces Ludovic Frédéric Pierre Holinier who resigned to devote more time to specific operational activities at the company, Sun Art said.

The retailer said its full-year net profit fell to 2.59 billion yuan (€339 million) from 2.79 billion.

That was below the 2.70 billion yuan expected on average by 15 analysts whose estimates were compiled by Refinitiv.


Turnover fell 2.9% to 99.36 billion yuan and same-store sales fell 1.72%, versus a 0.26% decline a year prior.

Increased Digitalisation

"2018 was a year where the digitalization of our retail business began, and also a year to plan future development," the company said in a statement. "Through digital management, supply will be closely tied with demand to provide customers with the right product offering, good prices..."

The group's gross profit margin increased 1.2%age points from a year earlier to 25.3%.

Consumption growth in China is "very likely" to slow further this year as the economy cools, the commerce ministry said on Tuesday, underlining rising risks facing the Asian giant as it navigates a trade war with the United States.


Sun Art has 484 hypermarkets in China, including 24 complexes opened during the year and one closure. Its original plan was to add 35 stores in 2018 to the 461 it had at the end of 2017.

Huang's appointment as CEO needs to be approved by shareholders at the annual general meeting in May.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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