Sun Art’s loss widens in first half of its fiscal year

Supermarket operator Sun Art Retail Group Ltd. (6808.HK) on Sunday warned it expects to report a loss of 500 million yuan ($75 million) to 550 million yuan for the six months to September, the first half of its fiscal year, compared with a 123 million yuan loss in the year-ago period. Its net cash generated from operating activities during the period stood at around 1.75 billion yuan to 1.8 billion yuan, up more than 30% from the 1.32 billion yuan it recorded a year earlier.

The wider loss owed mostly to a drop in foot traffic amid stiff competition. Meanwhile, merchandise and supply chain adjustments, alongside the revamp of physical storefronts and shopping galleries, remained in a transitional phase. Compounding the pressure on its bottom line, the company said certain locations slated for closure continued to incur losses.

On the merchandising front, Sun Art said it has been building a national joint procurement network, developing private label products, rationalizing SKUs, and optimizing its product mix. The retailer is also adjusted its store footprints to free up retail space for expanded shopping galleries. Additionally, it continues to optimize its store rental costs and make adjustments at underperforming locations.

Shares of Sun Art opened flat on Monday, but moved steadily downward through the morning to close at HK$1.075 by the midday break, down 6.1%. The stock is down 40% from its 52-week high.

By Lau Chi Hang

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