Parkson Asia profit slumps as Vietnam gives disappointing number

Vietnam operations continue to be at the bleeding edge of Parkson Retail Asia’s ongoing losses.

The company’s full-year results show declining same-store sales in its department stores in all four markets, with Vietnam the worst performing market. Sales fell 14.6 per cent in the last quarter and by 8.3 per cent over the full year. Sales in Myanmar and Indonesia both fell by 3.8 per cent and in the home Malaysia market by 1.5 per cent.

Parkson Retail Asia finished the financial year with a pre-tax loss of S$17.6 million for the last quarter and of $40.1 million for the full year. It said that with the exclusion of a gain on the disposal of a subsidiary and allowances for doubtful debts, the reversal of impairments relating to closed stores, the group’s operational pre-tax loss would have been $29.9 million for the year.

“This reflects the challenging operating environments encountered by the group as evidenced by the overall negative same-store sales growth, while new stores and ventures might require longer gestation period given the aforementioned backdrop.

“We have been taking active measures in monitoring and assessing the viability of stores and ventures. With ongoing measures in place to rebuild top-line growth and monitor expenditures, coupled with the discontinuance of underperforming stores and ventures this year, the group expects its performance will show improvement in the coming financial year.”

Addressing the Vietnam problems, the company said the operating environment there remains challenging amidst a crowded retail scene, and “intensive promotional activities had to be carried out to capture sales”.

It said Indonesia’s sales were impacted by the downsizing of a store in Jakarta, as well as the aftermath of a volcanic eruption in Bali. Excluding those effects, Indonesia would have recorded a lower drop of 2.4 per cent for the year.

The Myanmar operations were impacted by the closure of the first store at FMI Centre in January last year, with the replacement at Junction Square, Yangon, opening two months later.

Throughout the network, “against the backdrop of competitive operating environments, we continue to take active measures in monitoring and assessing the viability of our stores and ventures,” the company said.

While the group added four new stores (including one managed store) to its network, it also took steps to exit seven underperforming stores (including one managed) during the year.

The company also closed its theme park and education centre operations to curb further losses, and exited its interest in the LOL-branded retail chain.