Gome will use cash to fund expansion

Consumer/Retail/F&B

28 June 2007

China's largest electronics retailer, Gome Electrical Appliances, said on Wednesday that it would use a recent US$838 million cash injection to build out its branch network, shorten payment periods to suppliers and boost mobile phone sales. Speaking to the Wall Street Journal, Gome president Chen Xiao said that, in addition to opening 70 new outlets to reach a total of 1,000, the company would introduce 100 stand-alone mobile phone stores this year. Chen said Gome has a 50% share in appliance sales but controls less than 10% of the mobile phone market in China. He said acquisitions were also being considered so Gome can expand sales of computers and related tech products. The Hong Kong-listed company raised the investment capital through a share sale and a convertible bond issue in May, which sent its stock price sliding as investors worried about reduced earnings per share. McKinsey & Company estimates that China will account for a quarter of global electronics sales by 2010.

Bookmark and Share: