Suning Profit Surges 24% as Rising Incomes in China Boost Sales - Bloomberg

Suning Appliance Co.’s second- quarter profit rose 24 percent as China’s biggest electronics retailer opened stores to meet demand boosted by rising wages.

Net income climbed to 1.35 billion yuan ($212 million) in the three months ended June 30, from 1.09 billion yuan a year earlier. The results were derived from first-half earnings announced today by the Nanjing, Jiangsu province-based company.

First-half net income rose 25 percent from a year earlier to 2.47 billion and sales advanced 23 percent to 44.2 billion yuan, according to the filing to the Shenzhen stock exchange.

The retailer joins its bigger rival Gome Electrical Appliances Holdings Ltd. (493) in reporting a jump in earnings after adding stores to tap rising incomes in the world’s second- biggest economy. China’s electronics and appliances market is forecast to surge 70 percent to 2.14 trillion yuan by 2015 from 2010, according to London-based researcher Euromonitor International.

Suning rose 0.6 percent to 11.78 yuan in Shenzhen trading before the earnings announcement. The stock has dropped 10 percent this year, compared with a 11 percent decline in the benchmark Shenzhen Composite Index.

Chairman Zhang Jindong established Suning in Nanjing in 1990 as an air-conditioner wholesaler and opened its first retail chain store six years later. Zhang, a Chinese literature major from Nanjing Normal University, was ranked China’s eighth richest person this year by Forbes magazine with a net worth of $5 billion.

Suning added a net of 140 stores in the first six months, bringing the total to 1,451 in China. It operates 37 stores in Hong Kong and Japan, according to the statement.

Per capita urban disposable income rose 13.2 percent in the first half of the year and rural cash incomes climbed 20.4 percent, China’s statistics bureau said in July.

Gome President Wang Jun Zhou said yesterday the appliance merchant plans 260 new shops this year and aims for 2,400 outlets by 2014.

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

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