Gome shares rise on strong sales growth Shares of Gome, China's second-largest home appliance retailer, rose 6 per cent on Tuesday after the company reported strong sales growth last year. Same-store sales are expected to have grown by more than 12 per cent last year from the year before and gross profit margins are expected to have exceeded 18 per cent, the company said in a filing to the Hong Kong stock exchange late on Monday. The news took the company's stock to a close of HK$1.34, up nearly 40 per cent from its close a year ago. Home appliance retail market analysts said it was too soon to tell whether the company had turned the corner on its recent problems, including net losses of nearly $100m in 2012. Liu Buchen, home appliance and retail industry analyst, said he was not impressed by the company's strategy. "In 2012, Gome suffered big losses and its founder ordered that managers must achieve profits in 2013 by any means," he said. As far as I can see, Gome in 2013 achieved profits purely by cutting their costs rather than creating new revenue, which is therefore not sustainable. Gome's strategy of focusing more on bricks-and-mortar than on expanding its ecommerce business is short-sighted, he said: "It is also dangerous if Gome insists on not expanding its ecommerce business like its competitors are doing. This is the prime age for ecommerce development and investment in this sector is worthwhile. If Gome is not developing its online business, in 10 years its business will stop, and it will lose tomorrow although it's winning today. But Torsten Stocker of AT Kearney said: "It seems investors buy into the story of focusing on retail fundamentals, ie improving operations and driving same-store sales instead of [venture capital and public market financed] expansion through new stores or into new platforms and businesses." Shaun Rein of China Market Research Group in Shanghai said Gome was focusing on "selling higher-margin products that people want to buy in person, like refrigerators and air purifiers, where people want to see the salesperson." Rival Suning, which is heavily focused on ecommerce, has diversified into "trying to sell everything under the sun" through its ecommerce business, he said. Suning has lost its focus [as] the place to go for consumer electronics. Suning said earlier this month it would start selling wealth management products online.