China's Sun Art says 2013 profit up 15 pct, plans many more stores

HONG KONG, March 2 Sun Mar 2, 2014 2:20am EST

HONG KONG, March 2 (Reuters) - Sun Art Retail Group Ltd , China's largest hypermarket chain by market capitalisation, posted a 15.2 percent rise in net profit for 2013, with an expanding store network helping it shrug off an economic slowdown.

"Looking ahead, we will continue to maintain steady new store expansion by leveraging the opportunities arising from accelerating urbanization and prudently selecting the location of new stores to ensure their quality," chief executive officer Bruno Robert Mercier said in a statement.

Net profit rose to 2.78 billion yuan ($451.6 million) for year ended in December, from 2.41 billion yuan a year ago, it said in a statement over the weekend. That matched an average forecast of 2.79 billion yuan from analysts polled by Reuters.

Revenue surged 10.7 percent to 86.20 billion yuan. Gross profit margin increased 0.9 percentage points to 21.6 percent.

Sun Art, a joint venture between Taiwan conglomerate Ruentex Group and privately held French retailer Groupe Auchan SA , also competes with Wal-Mart Stores Inc, the world's biggest retailer that bought control of Chinese online store Yihaodian in 2012.

Sun Art said it continued to open new stores at a steady pace, adding 50 hypermarket complexes in 2013. It operated 323 hypermarkets across China under Auchan and RT-Mart banners at the end of 2013, of which 10 percent were in first-tier cities.

Same-store sales growth slowed to 2.0 percent during the year, compared to 3.3 percent for 2012.

Pushing into e-commerce as competition in the hypermarket sector heats up, Sun Art established Uitox E-commerce as one of its e-commerce business platforms and it launched a shopping website www.feiniu.com in January 2014.

"We will continue to improve and develop e-commerce business, enhance consumer shopping experience and explore new shopping channels," Mercier said.

A tie-up announced last October between the world's No.3 retailer, Tesco, and China Resources Enterprise , potentially poses a challenge to Sun Art's lead.

Sun Art shares fell 19.4 percent so far this year, lagging a two percent slide in the benchmark Hang Seng Index. ($1 = 6.1450 Chinese yuan) (Reporting by Donny Kwok; Editing by Simon Cameron-Moore)