GOME Retail Holdings Ltd. is one of the largest privately owned appliance retailers in mainland China and Hong Kong. The company caught public attention when its founder was sentenced to 10 years for illegal business operations, insider trading, and bribery to weak business results and most recently, laying off employees and delaying wages.
There is an increasing number of Gome employees who said on the Maimai platform that their company hasn’t paid salaries for August yet. Some received a prior notice that no wages will be forthcoming for the next three months and they might be able to get August payment by the end of October. The company even owes compensation for the staff laid off in July.
In response, Gome said the company has indeed encountered unprecedented difficulties and severe challenges. To maintain normal operation, temporary and emergency adjustments to the salary payments have been made. As of June 30, Gome Retail had a total of 25,701 employees, compared to 32,278 on December 31 2021. And a further staff reduction plan is likely to be implemented amid high operation costs.
The interim report shows that the total revenue for the first two quarters of 2022, was about 12 billion yuan ($1.67 billion), a decrease of more than 50% compared to the previous year, and realized nearly 3 billion yuan in losses.
The net cash outflow was also triple at 2.3 billion yuan and the asset-liability ratio was 78.65%.
On August 19, Huang Guangyu, the founder of Gome, released a “letter to friends of Gome” mentioning that the long-term disturbance of the pandemic led to some missed targets. It will now focus on its main business. On the same day, Gome Retail acquired all shares of Pengrong Real Estate from Gome Real Estate Holdings and it plans to acquire part of Anxun Logistics from its controlling shareholder at a substantial discount.
Despite the announcement, Huang and his wife have reduced their holdings to more than 5 billion shares this year.