Closing underperforming stores helped Gome Electrical Appliances Holdings post a 35 percent gain in net profit in 2009, the retailer said yesterday. [More 2009 earnings releases]

Net income rose to 1.4 billion yuan (US$207 million) from 1.1 billion yuan a year earlier, Gome said in a statement filed to Hong Kong stock exchange.

Last year's profit also exceeded the 1.38 billion-yuan estimates of nine analysts in a Thomson Reuters survey.

Revenue fell for the first time in five years to 42.7 billion yuan in 2009, down 7 percent annually, after it closed 189 unprofitable stores to optimize the distribution network. However, same-store profit jumped 60.99 percent to 1.96 billion yuan.

"We made significant improvement in individual stores' performance through a series of network rationalization measures including the closure of underperforming stores and introduction of renovated stores with fresh lay-outs," Chen Xiao, chairman and president of the company, said.

The retailer had 726 stores at the end of 2009, against 859 a year ago, and plans to open 80 stores this year.

Gome will continue to increase the number of stores in second-tier cities, optimize its store network and establish additional logistics centers. The retailer will capitalize on prospects in second-tier markets, which are boosted by the government's stimulus policies including subsidies to farmers to buy home appliances and for replacing older products for new ones, according to the statement.

Chen took over as chairman at the end of 2008 after former chairman Huang Guangyu was detained on alleged insider trading, illegal business dealings and bribery. Gome's Chinese mainland unit has been charged with bribery allegedly involving 4.56 million yuan from 2006 to 2008 when Huang was the chairman and the legal representative of the mainland subsidiary. But Gome has dismissed fears the allegation would have "substantive adverse effect" on its business.

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