China’s once thriving Gome Retail has been hurt by Covid fallout and tough competition. … [+]
Red ink at Gome Retail, controlled by China’s one-time richest man Wong Kwong Yu, worsened in Jan.-June compared with a year earlier, the company said in a statement after the close of trade in Hong Kong on Wednesday.
Gome’s first-half loss soared by 50% to 2.96 billion yuan, or nearly $430 million, compared with a loss of 1.97 billion yuan a year earlier. Revenue at the struggling electronics appliance chain plunged by 53% from a year earlier to 12.1 billion yuan.
“Major tier-1 cities were materially affected by the recurring outbreaks of the pandemic in China,” Gome said in the report. “Offline business was significantly disrupted by various lockdown and control measures at most regions, and online business was also hit hard since the outbreak of the pandemic as a result of the disruptions to the logistics service.”
Then-billionaire retail entrepreneur Wong topped the Forbes China Rich List in 2006 with a fortune worth $2.3 billion on the strength of the Hong Kong-listed flagship retail chain he founded, Gome Electrical Appliances Holding, now called Gome Retail Holdings.
In 2010, Wong was sentenced to prison for 14 years for insider trading and other offenses. That setback happened at around the same time e-commerce businesses such as JD.com and Alibaba were accelerating the digitalization of the country’s retail landscape. The fusion of social media and e-commerce at business such as Xiaohongshu has only deepened pressure on the old guard. Xiaohongshu co-founders Miranda Qu and Charlwin Mao debuted on the Forbes Billionaires List this year with an estimated fortune worth $1.8 billion.
Wong Kwong Yu, pictured in 2004, topped the Forbes China Rich List in 2006. Photographer: Dennis … [+]
Wong was released on parole in 2020, but the company reported a loss of 4.4 billion yuan in 2021, following another big loss of 6.99 billion yuan in 2020.
Beijing-headquartered Gome’s shares have declined 71% in the past year at the Hong Kong Stock Exchange. Wong, no longer a billionaire on the Forbes Real-Time Billionaires list, is also known as Huang Guangyu.
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