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Suning.com buys 60 Circle K stores in Guangzhou

Suning.com Co. Ltd.'s convenience store arm Suning Xiaodian acquired more than 60 Circle K stores in Guangzhou as part of its efforts to expand its presence in southern China, the Nikkei Asian Review reported Aug. 26.

Circle K is a convenience store brand owned by Canadian retail group Alimentation Couche-Tard Inc.

Suning.com's latest move is seen as an exercise of frugality on the company's part as purchasing existing stores entails lower costs than opening new ones, the news outlet said.

Analysts who spoke to the Nikkei said the company spends 330,000 yuan to open each new store. The company's convenience stores act as restaurants during the day and bars at night to keep customers around and encourage them to spend more, the newspaper said.

To stem potential losses, the company reportedly plans to turn Suning Xiaodian into an unconsolidated unit starting in this current half-year in a bid to boost net profits to 3.4 billion Chinese yuan this year.

Suning.com did not immediately respond to S&P Global Market Intelligence's request for comment.

In March 2018, Suning Xiaodian announced plans to expand its private convenience store brand across China. It also bought stores formerly owned by Distribuidora Internacional de Alimentación SA when the Spanish retailer exited the Chinese market last year.

Suning Xiaodian aims to have 20,000 stores by 2020, the Nikkei added.

As of Aug. 26, US$1 was equivalent to 7.15 Chinese yuan.