Despite positive sales growth, 7-Eleven Malaysia’s profits have slumped by more than a fifth.

Higher selling and distribution expenses from store expansion are blamed for 7-Eleven Malaysia Holdings net profit falling 22.21 per cent to RM13.94 million ($3.3 million) in the fourth quarter ended December 31, from RM17.93 million.

Its revenue increased by 3.87 per cent to RM499.74 million from RM481.12 million for the same quarter the previous year, the group told the stock exchange.

Its net profit also fell for the full year, by 11.53 per cent to RMB55.8 million from RM63.07 million, while revenue rose 5.98 per cent to RM2 billion from RM1.89 billion.

7-Eleven Malaysia’s growth in revenue continued to be driven by introducing new stores, improving the merchandise mix and promotional activity, says the company.

“This growth was achieved despite ongoing retail market negativity caused by the implementation of GST (on April 1, 2015) and weak consumer confidence and spending.”

However, the group’s selling and distribution expenses for the quarter also increased by RM13.7 million, or 10.3 per cent, mainly because its new stores meant higher staff costs, rental costs, store depreciation expenses and maintenance costs.

It believes trading conditions for the current quarter will stay challenging.

“Despite this, we are positive of holding on to our market leading position, while our new store expansion plan remains on track,” says the company.