Retailer Parkson hit by China slowdown
KUALA LUMPUR: Parkson Holdings Bhd fell deeper into the red in the October-December quarter, amid slowing retail growth in China – the company’s biggest market.
The retailer, which is closing down its flagship store at Suria KLCC on Feb 28, said on-going rationalisation of its stores will put the company in a better financial position going forward.
Over the past six months, Parkson has closed down one store each in China, Vietnam and Myanmar.
“While the Group’s operating environment is expected to be challenging amid the macroeconomic environment and market uncertainties, the Group believes that its transformation strategy focusing on diversified retail formats, enhanced brands and product offerings will pave way for the Group to grow steadily,” it said in a filing with Bursa Malaysia today.
Losses in the second quarter ended Dec 31 widened to RM37.6mil from RM13.9mil a year ago, as revenue was little changed at RM1.05bil. For the first six months of the year (1HFY19), its losses stood at RM80.6mil on revenue of RM1.98bil.
Parkson, which operates a network of 46 stores in 30 cities across China, said same-store sales (SSS) in the country contracted 3% in 1HFY19. Parkson’s operations in China contributed close about two-third of the group’s revenue.
“The retail market in China has seen slowdown amid macroeconomic headwinds resulting in Parkson China reporting a negative SSS growth of 3% during the period under review,” it said.
Despite this, Parkson China reported a marginally higher revenue of RM1.3bil for the six months ended Dec 31.
“The lower operating profit of RM29 million against RM32 million a year ago was mainly attributable to the negative SSS growth,” it said.
Meanwhile, Parkson Malaysia benefited from the buoyant consumer confidence resulting in a positive SSS growth of 5%. Operations, it said, reported a growth of 3% in revenue to RM522mil following the closure of underperforming stores.
“Savings arising from rationalisation of stores and improved operating efficiencies have resulted in operating loss narrowing considerably to RM1mil compared with RM15mil a year ago,” it said.
Parkson Malaysia has 45 stores as at Dec 31 with the opening of a new store in Sarawak in this quarter.
Source : TheStar