Dairy Farm International has seen the success enjoyed in FY20 reverse, with previously strong results in Yonghui now adversely impacting the group’s first half result.
According to the group, total sales fell 4 per cent during the six months to June 30 to $14 billion, and previously strong consumer buying patterns returned to normal, pushing underlying profit 69 per cent lower than the same period of last year – from $105 million to $32 million.
“Ongoing pandemic-related restrictions have significantly affected trading in all markets, impacting the Group’s overall performance in the period,” said chairman Ben Keswick.
“There remain significant uncertainty as to the future impact of the pandemic on Dairy Farm’s business, and trading conditions in the second half are likely to remain challenging.”
The Group’s convenience stores business enjoyed strong growth in profitability for the period, but both its health and beauty division and Ikea business saw customer traffic reduce and sales fall.
And Dairy Farm’s share of Yonghui’s underlying losses for the six months ended 31st March 2021 was US$31 million, with its operating performance over the period hurt by sales normalisation and reduced gross margin.
Keswick said, however, that the business is committed to its multi-year transformation, and that he is confident in Dairy Farm’s ability to return to growth.
“Despite the challenges posed by Covid-19, the group made good progress in executing its key transformation initiatives,” Keswick said.
These initiatives, a strong focus on own-brand goods and improved and upgraded store formats, are expected to improve profitability for the business over time.