More Retail Store Closings in China As Profits Slump

The article mainly focuses on a beauty chain subsidiary of China Resource Enterprises (0291.HK) that is shuttering, but goes on to discuss the pressure faced by all brick and mortar retailers.
Retail "winter"

In fact, this is not the Resources Department first shut shop, after the acquisition of Tesco, China Resources Department also found that some stores Tesco exist performance problems, the most straightforward way is to shut shop adjustment, therefore, China Resources Department quietly to some regions such as south China Some Tesco stores to close stores, and thus triggered a series of Tesco old staff personnel storm rights.

"But that did not stop China Resources department store stop off the pace, adjust Tesco still going on, but poor management and can not compete with the Watsons, such as mining have been living off the shop. Retail very small profit margins, the support can not afford expensive costs, closed shop is the easiest stop choice. "insiders, the current overall strategy Resources Department is how to stop how to do some of the hard money plate shutting down or peeling, try to make the CRC in the capital market looks" Decent. " Previously listed companies CRE thus stripping the retail business, the food beer as the main industry, the reason is very simple, the poor performance of the retail sector, will be a drag on listed companies' financial performance. CRE proposed even renamed China Resources Breweries, the company abandoned its listed retail business's determination is evident.

Just recently, China Resources Group Investment Ltd. China Resources Shenzhen Investment in Shanghai (REF) United Assets and Equity Exchange listed 21 projects, intended to be a total of about 3.335 billion yuan listing price of 21 Wal-Mart's 35% stake held by the transfer of and related claims. The move also was considered a CRC system is not optimistic about the downturn in the retail business, and the sale to return the funds to move.

Why so difficult retail

Long engaged in the retail industry, Mr. Shen to reporters calculations - the opening of a 10,000 square meters or so stores need tens of millions of cost, plus labor and rents to rise year after year, daily turnover should reach 30 stores million before capital preservation, while daily turnover of a small shop need to reach more than 5,000 yuan before preservation. There are a number of retail property in the past few years have expired, renewal needs up rents, but because of the impact of the electricity supplier, the store revenues are down, part of President Chain Store margin has dropped nearly 5 percent. A large number of stores is difficult to achieve the daily turnover index, closed shop stop inevitable. Today, the "double 11" is coming, but also to estimate the industry has experienced a wave of real "labor pains."

United Business Network statistics show that retail entity is suffering an unprecedented predicament period, closed shop tide surging. In the first half of United Business Network Statistics 2015 revenue of 101 retail enterprises, there are 42 retail business performance of negative growth, nearly half. Among them, the Kunming Baida A [ 7.90% funds research report ] (000560.SZ) sales fell 24.42 percent, the largest decline; in statistics to retail businesses, net profit fell more serious situation, there are 42 companies net profit decline, Xinhua [0.00% funds research report ] (002,264, stock it) (002264.SZ), Smith Barney (002269.SZ) and other companies net profit fell even more than 150%.
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