Profit falls as QKL Stores buys market share

QKL Stores  a regional supermarket chain in Northeastern China and Inner Mongolia, has announced improved sales, but lower profit in the second quarter.

Zhuangyi Wang, chairman and CEO, said the company had boosted its promotional activities in existing stores to strengthen its competitive position.

Second quarter sales rose 9.2 per cent to US$56.4 million and gross profit decreased 4.3 per cent to $9.1 million.

“The decrease in gross profit relative to net sales was due to competitions arising from the increasing challenge from the online shopping that have significant pricing pressure on our selling of high margin products.”

Wang said QKL plans to slow down the pace of its new store openings this year.

“Currently, we expect to open two new supermarket stores this year. We maintain confidence in our strategy of strengthening our store presence in Tier 4 and 5 cities in northeastern China as well as in our core region of operation around Daqing where the majority of our older stores are based.”

Based in Daqing, QKL Stores sells a broad selection of merchandise, including groceries, fresh food, and non-food items, through its 40-odd retail supermarkets, hypermarkets and department stores; the company also has its own distribution centers that service its supermarkets.

“As QKL expands its market presence in northeast China, we are uniquely positioned against our local competitors through our large product offering, strong supplier relationships, efficient distribution network and state-of-the-art IT system,” said Wang.

“We are comfortable with our opportunities in the second half of the year and believe we’ll see an improvement in operating expenses and net result from the current quarter.”