Osim struggles in ‘soft market’
In this article (5)
Health appliance retailer Osim says its core business is helping it maintain stable gross margins in a retail market it described as “soft” throughout the region.
Osim’s core is its 546-strong chain of Osim branded stores in 23 countries, which sell therapeutic devices including massage aids. Nearly half of those stores are in Mainland China.
The company also operates 214 GNC/RichLife stores and 49 TWG Tea cafes with three more planned to open by the year’s end.
Osim said last week its third quarter sales were S$142 million and profit before tax $10 million. But during the last nine months it has incurred legal fees of $7 million relating to its TWG Tea operation.
“This has been another challenging quarter where retail sales across the core countries have been soft. This quarter has seen further challenges from gyrating markets and currency turmoil in the region,” the company said in last week’s filing.
“Despite these challenges, our dominant brand has enabled us to maintain a stable gross margin and cash generative business with cash and cash equivalents growing again in the quarter. We are using our strong balance sheet to invest in new products and continuing our marketing activities.”
The company expects trading conditions to remain challenging in the short term but says it is cautiously optimistic about its prospects for the remainder of the financial year following the launch of uMagic in key markets and other upcoming planned product launches.
Questions & Answers
Q.What is Osim's core business, and how is it performing in the current retail climate?
What is Osim's core business, and how is it performing in the current retail climate?
Osim's core business is its chain of 546 branded stores selling therapeutic devices, including massage aids. This core business is helping the company maintain stable gross margins despite a soft retail market across the region.
Q.What challenges has Osim faced recently, and how is it responding to them?
What challenges has Osim faced recently, and how is it responding to them?
The company has faced a challenging quarter with soft retail sales, gyrating markets, and currency turmoil in the region. Osim is using its strong balance sheet to invest in new products and continue marketing activities.
Q.Where are most of Osim's branded stores located across its global operations?
Where are most of Osim's branded stores located across its global operations?
Nearly half of Osim's 546 branded stores are situated in Mainland China. The remaining stores are spread across 22 other countries where the company operates its core business.
Reader pulse
Is Osim's strategy effective?
18,477 votes so far