China Resources Enterprise (CRE) has placed the blame on Tesco China for its 2014 losses, the first time the company has been in the red in more than 20 years.
The start-up costs for its venture with the UK-based retailer’s China business were cited for its major annual loss, posting a net loss of HK$161m (US$20.75m) in 2014 after reporting a HK$1.91bn (US$246.3m) profit the year before.
“Faced with slower economic growth and challenges from the transformation in the retailing business model, [CRE] will focus on the development strategy of improving internal efficiency. Our partnership with Tesco unleashed significant operational synergies by integrating the parties’ respective strengths and talent resources, along with local expertise and global best practices,” said CEO Hong Jie in a company statement. “Looking ahead, the group’s top priority in 2015 is to improve operational efficiency and reduce losses.”
Since obtaining a majority share of the UK-based retailer’s China business, CRE, which operates Vanguard hypermarkets across China, has taken steps to rebrand Tesco China stores under its own Vanguard banner.
Hopes have been placed on the launch of the retailer’s e-commerce business later this year to turn revenue losses around, with the company announcing a focus on smaller specialty and convenience stores rather than hypermarkets.
