Parkson upbeat on China’s retail industry amid Covid-19 recovery

KUALA LUMPUR (Oct 27): Parkson Holdings Bhd maintains a positive outlook on the retail industry in China, with consumer spending picking up steadily amid effective control of the Covid-19 pandemic there.

In its 2020 annual report released today, chairman Tan Sri Cheng Heng Jem said the departmental store operator would continue to adopt an active and prudent strategy to widen its income sources.

“Hence, the group maintains a positive outlook on the retail industry in China despite the many challenges faced this year, especially the sluggish economy and the impact caused by Covid-19,” he said.

As for the Southeast Asian region, the operating environment remains challenging amid severe competition and economic uncertainties.

“Much emphasis will be placed on cost containment, improving stores’ productivity and optimising operational efficiency to improve the results,” Cheng said.

Parkson has 41 departmental stores in China, four in Vietnam and 15 in Indonesia. In Malaysia, it has 42 stories nationwide.

On Parkson’s announcement earlier this month that it had triggered of one of the prescribed criteria of PN17, he said it was not designated as a PN17 company and was not required to comply with the obligations of PN17 classification for a 12-month period from the announcement date, under the PN17 relief measures available to affected listed issuers granted by Bursa Securities.

On Oct 15, the company announced that its auditors had issued an unqualified audit opinion which included a paragraph on material uncertainty related to going concern on the Parkson Holdings group in respect of its financial statements for the financial year ended June 30, 2020, and the company’s shareholders’ equity on a consolidated basis as at June 30 being less than 50% of its issued share capital of RM4.15 billion.

Cheng said the group would re-assess and announce whether it continued to trigger any of the prescribed criteria in PN17, after 12 months from the date of the announcement.

Meanwhile, Parkson widened its net loss in the fourth quarter (Q4) ended June 30, 2020, to RM209.25 million from RM42.12 million recorded in the corresponding quarter last year.

For the full year (FY20), net loss widened to RM427.28 million from RM129.18 million in the previous year.

It registered an overall drop in revenue from RM4.03 billion in FY19 to RM3.2 billion in FY20.

Parkson’s retailing division recorded a 19% or RM3.2 billion, dip in revenue with a lower operating profit of RM110 million.

Source: TheEdgeMarkets