SEA gives struggle to Dairy Farm International

“Significant challenges” across the Southeast Asian supermarket business are continuing to test Hong Kong-listed multi-format retailer Dairy Farm International. In a management statement discussing the company’s third-quarter performance – which did not include any figures – Dairy Farm said its businesses produced “mixed results” with a strong performance in health and beauty and good results from home furnishings and restaurants divisions. However, the performance of the Hong Kong supermarkets business has softened.

The company said the Southeast Asian grocery store business – Cold Storage and Giant stores in Singapore and Malaysia – is expected to continue for the remainder of the year with the group’s full year results expected to be impacted by increasing costs from ongoing investment in technology, supply chain infrastructure, stores and people in order to improve the long-term performance of the business. Sales and profits fell in its supermarkets in both countries. Falling sales in Indonesia were mitigated by management action which resulted in reduced losses there.

In North Asia, sales from the food businesses were slightly ahead of the same period last year, but profits were lower as a result of weakening margins and continued cost pressures, particularly from increased rents.

However, the health and beauty businesses in Hong Kong and Macau (Guardian stores) delivered “strong sales and profit growth”.

The Philippines food business showed good sales growth, benefitting from the opening of several new stores, but profit was slightly behind the prior year due to increased operating costs. There was continuing good sales and profit improvement in the group’s health and beauty businesses, notably in Malaysia and Indonesia.

Ikea’s sales and profits were ahead of last year in Taiwan and Indonesia. In Hong Kong, sales were higher, supported by the new store which opened last year; however profits were lower as a result of higher operating costs.