Grand Ocean Retail eyes revenue growth in China

By Amy Su  /  Staff reporter

Sat, Nov 03, 2012 - Page 13

Grand Ocean Retail Group Ltd (大洋百貨集團), which operates 19 department stores in second-tier and third-tier cities in China, expects next year’s net profits to show 20 percent to 25 percent growth from this year on the back of its new operating strategy of introducing more premium brands to its department stores.

Net profits expanded 2 percent from a year earlier to NT$567.52 million (US$19.44 million) in the first nine months of the year, Grand Ocean’s financial data showed.

The 2 percent growth in net earnings was a significant gap compared with a 15.67 percent growth in sales during the same period due to exchange rate losses, the company said.

Grand Ocean posted earnings per share of NT$2.84 in the first three quarters, from the NT$3.35 recorded a year earlier, after the company expanded its share capital with an initial public offering on the local bourse in May.

Despite slowing private consumption, Grand Ocean chairman Yan Siwen (顏思文) said the company has set a goal to increase net profits by between 20 percent and 25 percent next year.

Grand Ocean’s introduction of more high-priced designer and international luxury brands in its department stores would raise its average customer expenditure and drive up profitability next year, Yan said.

In addition, the department store chain plans to expand its proportion of self-owned stores from 21 percent to 40 percent within five years, while having a more cautious view of opening rented department stores, Yan added.

Yan said the company has been creating a new business model to cooperate with land owners, with the land owner remaining in charge of the department store and Grand Ocean offering management services.

The company’s fourth department store in China’s Fuzhou City (福州) — which is scheduled to open next year — will be the first store to adopt the new business model.

Grand Ocean also plans to open a rented department store in China’s Putian City (莆田), taking its total number of stores to 21, Yan said.

Grand Ocean shares climbed 1.84 percent to close at NT$77.4 yesterday, outperforming the TAIEX’s 0.43 percent rise.