Parkson profits slump
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Parkson Retail Asia has reported a 24.6 per cent slump in net profit – largely attributed to new store establishment costs.
The Singapore-based department store operator has reported a second quarter trading profit of S$10.23 million.
The company’s biggest problem markets appear to be Malaysia and Vietnam where same store sales are showing negative growth. And in Vietnam the company accrued costs relating to the closure of a store in the capital city, Hanoi.
Total sales revenue was flat at S$117.52 million in the three months to December 31, while expenses rose 6.6 per cent to S$109.5 million.
In the half year to December 31, net profit fell 28.2 per cent to S$17.09 million, on revenue a marginal 0.6 per cent higher at S$227.51 million.
In a statement, group CEO Toh Peng Koon said the closure of the Landmark-Keangnam store in Hanoi resulted in removing “a major drag on our operating performance” there.
“While we expect Malaysia’s consumer sentiment to remain muted in the near term, consumer buying prior to the introduction of the Goods and Services Tax on April 1 may provide us with some buffer.
“We feel confident that the strategies we have initiated to improve our fundamentals will reap the desired results going forward. With our healthy balance sheet and strong cash generation from our operations, we are well-positioned to continue to identify and make prudent investments necessary to growing our business.”
Questions & Answers
Q.What is the primary reason given for Parkson Retail Asia's significant drop in net profit?
What is the primary reason given for Parkson Retail Asia's significant drop in net profit?
The substantial slump in net profit is mainly attributed to the costs associated with establishing new stores. This factor was highlighted as the primary cause for the reported decline.
Q.Which markets are identified as the most challenging for Parkson Retail Asia, experiencing negative sales growth?
Which markets are identified as the most challenging for Parkson Retail Asia, experiencing negative sales growth?
Malaysia and Vietnam are identified as the most problematic markets for the company. Both countries are currently showing negative growth in same-store sales.
Q.How did the closure of the store in Hanoi affect Parkson's operating performance?
How did the closure of the store in Hanoi affect Parkson's operating performance?
The CEO stated that closing the Landmark-Keangnam store in Hanoi removed a major drag on their operating performance in Vietnam. This suggests the store was underperforming and negatively impacting results.
Q.What short-term positive effect does the company anticipate from consumer behaviour in Malaysia?
What short-term positive effect does the company anticipate from consumer behaviour in Malaysia?
The company expects consumer buying ahead of the Goods and Services Tax introduction on April 1 to provide some financial buffer. This pre-tax spending could offer a temporary uplift in sales.
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