From loss to profit for Parkson Retail Asia

Department store Parkson Retail Asia has managed a turnaround with profit before tax (PBT) of S$35 million (US$25.8 million) for the year ended June 30, compared to a pre-tax loss of $40.6 million the previous year.

Profit was boosted by gain from a partial disposal of equity interest in Parkson Hanoi (PHCL) of $45.6 million. A subsidiary of the group, PHCL is now an associate company.

On a same-store basis, PBT for the year fell by 46.9 per cent year-on-year to $17.4 million.

For Malaysia, PBT declined by 28.9 per cent through negative same-store sales of -6.5 per cent and weak local currency; Vietnam had a pre-tax loss of $0.5 million with -2.9 per cent same-store sales; there was a pre-tax loss of $3.2 million in Indonesia; while Myanmar’s results were affected by uncertainty arising from redevelopment plans for the FMI Centre where the store is located.

For the group’s fourth quarter, same-store sales grew 21.5 per cent in Malaysia, attributed to early festive buying arising from a shift in the Hari Raya calendar as well as the same quarter last year being hit by low sales following the introduction of the Goods & Services Tax.

New concepts

New concepts have been initiated, such as introducing Korean apparel, affordable private labels, and specialty shoe stores.

“We have been consolidating our department store space by identifying non-performing stores with the view to closure upon tenancy expiry,” says Parkson.

In Myanmar, the group had a 25 per cent decline in same-store sales, affected by plans to close the FMI Centre, while Vietnam had a 4.1 per cent decline for the quarter, with the discretionary retail environment difficult amid an increasingly crowded retail scene.

Indonesia was more positive with 7.3 per cent growth in same-store sales, mainly because of early festive buying as a result of a shift in the Lebaran calendar.

Overall, gross sales proceeds (GSP) and revenue for the quarter grew by 9.8 per cent and 10.9 per cent respectively to $232.1 million and $93.9 million. However, GSP and revenue declined by 10.2 and 9.4 per cent respectively to $967.7 million and $388.4 million.

The group’s pre-tax loss for the quarter was $13.4 million. Contributing factors included impairment on fixed assets for two loss-making stores of $5.4 million, impairment on prepaid rental and rental deposit of $3.3 million, provision on deposit for a managed store in Ho Chi Minh City of $2.2 million, and the initial loss-making periods associated with new stores and businesses.