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Parkson Retail Asia sales continue to fall

Parkson Retail Asia sales continue to fall, but the company is optimistic about reducing its losses this year.

Its most problematic market continues to be Vietnam where sales in the third quarter were down 9.8 per cent – but that’s significantly better than the 18.2 per cent tumble in the same three months last year.

Sales in Malaysia, its biggest market, rose by 4.5 per cent, but slipped 0.6 per cent in Indonesia and were unchanged in Myanmar, where the department store chain closed its original store in January and opened in a new location in March.

The group recorded a pre-tax loss of S$7.8 million for the quarter, and S$22.5 million for nine months to date. It cited negative same-store sales across the group and the gestation period of new stores and new ventures.

During the nine months it closed six underperforming stores and opened three, including one managed one in Malaysia.

Parkson Retail Asia said it expects its performance in the final quarter to receive a boost from the Hari Raya / Lebaran festive shopping, especially in Malaysia and Indonesia.

“Nevertheless, in view of the headwinds encountered in each operating country, the group is expected to end the year with reduced losses as compared with last year. We will continue to drive top-line growth proactively whilst exercising prudence on operating costs and new investments.”

The company blamed its poor performance in Vietnam on “intensive promotional activities carried out, and low-base effect arising from the entry of foreign retailers in the comparative period”. In Indonesia, the negative sales was caused by the downsizing of a store in Jakarta, as well as the aftermath of a volcanic eruption in Bali. Excluding those factors, Indonesia would have recorded same-store sales growth of 2.4 per cent during the quarter, the company argued.

Sales at Parkson Retail Asia are predominantly driven by concessions, which accounted for 75.1 per cent of its turnover in the nine months to March 31, slightly down on the 77.3 per cent in the same period a year earlier.

The contribution of direct sales has increased to 24.9 per cent following the group’s investment in house brands and agency lines.

Merchandise gross margins (a combination of the commission from concessionaires and direct sales margin) for the nine months was lower at 23.4 per cent, largely due to intensive promotional activities carried out across the group’s operating markets.

Income from F&B operations rose, mainly as a result of the expansion of its bakery business, but the company discontinued its theme park and education centre operations during the nine-month period, to curb further losses.

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