Retail chain Wumart Stores, Inc. (WUMSF, 1025.HK) reported Wednesday a profit for the year ended December 31, 2013 that declined from last year, despite sales growth, reflecting higher expenses.
The company said the decline in profit was attributable to "the extended initial incubation period for new stores; the loss on one-off disposal of assets resulting from closure of certain stores; the pace of rising staff cost exceeded the sales growth; the expedited increase in rental rates under the adjustments on straight-line basis due to the increase in both the number of new stores and the higher rental rates for new stores."
The Beijing, China-based company reported net profit attributable to owners of the company of RMB 459.03 million or RMB 0.36 per share for the full year 2013, lower than RMB 601.71 million or RMB 0.47 per share in the prior year.
Revenue for the year increased 9.0 percent to RMB 18.89 billion from RMB 17.33 billion in the previous year.
However, sales of goods totaled RMB 16.99 billion, higher than RMB 15.36 billion last year. Comparable store sales grew about 3.0 percent.
Consolidated gross profit margin for the year improved 60 basis points to 20.1 percent, due mainly to the increase in gross profit margin of fresh items and the increase in rental income.
However, distribution and selling expenses, primarily comprising staff costs and operating expenses, expanded 430 basis points to 19.4 percent as a percentage of total revenues, from 15.1 percent last year.
The company carried out its business expansion in Beijing, Tianjin, Hebei and Zhejiang markets under its persistent implementation of national expansion strategy with regional prioritization during 2013 and ended the year with a retail network of 547 stores, compared to 538 stores last year. The company opened 54 new stores during the year.
The noted that its board has recommended the payment of a final cash dividend of RMB 0.25 (before tax) per share for the year ended December 31, 2013.
WUMSF last traded at $1.13 on March 5.
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