Consumer China

Renrenle – struggling to conquer the lower tiers

  • Published 20 Oct 2011

A series of closures of recently opened stores has blighted the company’s progress and weighed on profit margins.

Renrenle (002336:SZ) has achieved steady revenue growth on the back of a strong presence in less competitive inland provincial capitals. However, attempts to accelerate growth are being met with mixed success. A series of closures of recently opened non-performing stores in lower-tier cities has weighed on margins and hurt profit growth. Although revenues may pick up around 20% YoY this year, driven by same store sales growth and some expansion, profits are unlikely to pick up significantly.

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