Dairy Farm sales stagnate
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Dairy Farm sales were described as “flat” in the third quarter to September 30.
The Hong Kong-headquartered company said improved performances in health and beauty, Ikea, restaurants and Yonghui were offset by lower sales in the food and grocery division.
“The lower food division sales, together with new store pre-opening costs in home furnishings, (Ikea) led to underlying profits being marginally below the same period in the prior year,” the company said in a statement issued in London, where it has a secondary listing. “Similar trading conditions are expected to continue for the remainder of the year.”
Dairy Farm said the weakness seen in food and grocery sales was principally driven by difficult trading for the hypermarket and supermarket operations in Southeast Asia, where it operates Giant hypermarkets and Cold Storage supermarkets. It says reviews of “a number of the businesses” are being undertaken.
The results from greater China (including its Hong Kong Wellcome supermarkets) showed improvement over the same period last year. Convenience store operations (including 7-Eleven stores in Hong Kong and Singapore) produced improved sales and profitability.
Yonghui reported a strong 20 per cent growth in revenue and 131 per cent increase in profit in the quarter.
Improved sales in the health and beauty division (Manning’s, Guardian and Rose Pharmacy) were driven principally by a strong performance in Hong Kong and Macau. Home Furnishings (Dairy Farm has the Ikea franchises in Hong Kong and Taiwan) traded well, although profitability was reduced due to pre-opening expenses for the new store in Hong Kong.
Maxim’s (which also includes Starbucks operations in Hong Kong, Vietnam and Cambodia) had a seasonally strong quarter in both sales and profit, benefiting from record mooncake sales during the Mid-Autumn Festival period. In September, Maxim’s acquired the existing business and exclusive rights to operate and develop Starbucks franchise stores in Singapore.
In August, the group completed the acquisition of the remaining 34 per cent interest in Rustan’s in the Philippines from its joint venture partner.
Questions & Answers
Q.Which business segments performed well for Dairy Farm during the third quarter?
Which business segments performed well for Dairy Farm during the third quarter?
Improved performances were seen in health and beauty, Ikea, restaurants, and Yonghui. Convenience store operations and greater China also showed improvement in sales or profitability.
Q.What specifically caused the underlying profits to be marginally below the prior year?
What specifically caused the underlying profits to be marginally below the prior year?
Lower sales in the food division, combined with pre-opening costs for a new Ikea store in home furnishings, led to the marginal decline in underlying profits.
Q.Which specific regions or operations contributed to the weakness in food and grocery sales?
Which specific regions or operations contributed to the weakness in food and grocery sales?
The weakness was primarily driven by difficult trading conditions for hypermarket and supermarket operations in Southeast Asia, including Giant hypermarkets and Cold Storage supermarkets.
Q.What actions is Dairy Farm taking regarding some of its struggling businesses?
What actions is Dairy Farm taking regarding some of its struggling businesses?
The company stated that reviews are currently being undertaken for a number of its businesses, following the weakness experienced in some segments.
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