Osim struggles in ‘soft market’
Health appliance retailer Osim says its core business is helping it maintain stable gross margins in a retail market it described as “soft” throughout the region.
Osim’s core is its 546-strong chain of Osim branded stores in 23 countries, which sell therapeutic devices including massage aids. Nearly half of those stores are in Mainland China.
The company also operates 214 GNC/RichLife stores and 49 TWG Tea cafes with three more planned to open by the year’s end.
Osim said last week its third quarter sales were S$142 million and profit before tax $10 million. But during the last nine months it has incurred legal fees of $7 million relating to its TWG Tea operation.
“This has been another challenging quarter where retail sales across the core countries have been soft. This quarter has seen further challenges from gyrating markets and currency turmoil in the region,” the company said in last week’s filing.
“Despite these challenges, our dominant brand has enabled us to maintain a stable gross margin and cash generative business with cash and cash equivalents growing again in the quarter. We are using our strong balance sheet to invest in new products and continuing our marketing activities.”
The company expects trading conditions to remain challenging in the short term but says it is cautiously optimistic about its prospects for the remainder of the financial year following the launch of uMagic in key markets and other upcoming planned product launches.