Bad medicine for Eu Yan Sang
In this article (5)
Traditional Chinese medicine retailer Eu Yan Sang lost $3.6 million in its last quarter, blaming weaker sales in Hong Kong and Malaysia.
Its full year profit to June 30 was down 70 per cent on the previous year at $4.56 million, compared with $15.03 million in 2014.
Fourth quarter sales dropped 15 per cent; full year sales a less dramatic four per cent to $350.4 million.
In Malaysia, the company – like many retailers of food and discretionary goods – noticed a sharp decline in trade after the imposition of six per cent GST on April 1.
In Hong Kong, it was the changing demographic of Mainland Chinese visitors to the territory to blame.
“While the travel restrictions to Hong Kong imposed on mainland Chinese have affected parallel traders coming to Hong Kong to purchase Eu Yan Sang products, it has encouraged sales of our products at online sales platforms and at cross border, tax free outlets,” the company said in a statement.
Eu Yan sang operates 252 retail stores and 25 franchised outlets. During the year it opened 13 in Australia, Malaysia and Hong Kong and closed eight in Singapore, China and Macau. A review of its Australian franchised stores saw it drop a new seven outlets.
The news was not all bad for the Singapore-listed company. In its home market, net sales were up five per cent in the fourth quarter and four per cent over the full year – in an overall retail market best described as stagnant. Managed cited the introduction of new products and consumer marketing campaigns for the improvement.
The company hopes continuing improvement in Singapore sales will help cushion the impact of the Hong Kong and Malaysia markets in the year ahead.
Questions & Answers
Q.What were the primary reasons given for Eu Yan Sang's poor financial performance in the last quarter?
What were the primary reasons given for Eu Yan Sang's poor financial performance in the last quarter?
Eu Yan Sang attributed its weaker sales to the imposition of GST in Malaysia and changes in the demographic of Mainland Chinese visitors to Hong Kong, which affected parallel traders.
Q.How did the company's full-year profit compare to the previous year?
How did the company's full-year profit compare to the previous year?
The company's full-year profit to June 30 was $4.56 million, representing a 70 per cent decrease compared to the $15.03 million reported in the previous year, 2014.
Q.Did Eu Yan Sang's sales performance differ across its key markets?
Did Eu Yan Sang's sales performance differ across its key markets?
Yes, while sales dropped in Hong Kong and Malaysia, the company saw net sales increase by five per cent in the fourth quarter and four per cent over the full year in its home market of Singapore.
Q.How did Eu Yan Sang's store network change during the year?
How did Eu Yan Sang's store network change during the year?
The company opened 13 new stores in Australia, Malaysia, and Hong Kong, but also closed eight stores in Singapore, China, and Macau. Also, it dropped seven new franchised outlets in Australia.
Reader pulse
What's the biggest threat to EYS?
Be the first to vote