Thailand’s Central Retail reported its results for the second quarter and gave an investor presentation on August 19. It was a mixed bag with choppy results based on merchandise segment and geography. Except for fashion, sales growth was biased toward store fleet expansion, as opposed to same-store sales increases.Company revenues rose by 5.3 per cent, year on year in the second quarter, to reach 63.2 billion Thai baht (about US$1.9 billion). Omnichannel sales increased by 10 per cent and now account for 20 per cent of sales. The gross margin percentage on sales was 26.6 per cent, unchanged from the base year, while growth in selling, general and administrative expenses slowed, thanks to a decline in marketing expenditure and an even steeper, double-digit, decline in utilities expense. Net profit grew by 5.3 per cent, the same pace as revenues, to 1.8 billion baht (US$52.4 million).For the first half as a whole, revenues are up by 5.9 per cent, year over year, to 130.4 billion baht (US$3.8 billion). Net profit amounted to 4.1 billion baht (US$120.5 million), an increase of 2.4 per cent. Fashion strong, while food and hardlines struggleCentral reports its retail sales in three segments: food, fashion and hardlines. The food segment primarily includes the operations of its Tops supermarkets and Tops Daily convenience stores throughout Thailand, along with its Go! hypermarkets in Vietnam. Collectively, their sales increased by almost 10 per cent in the second quarter and now constitute just under 40 per cent of total company sales revenues. However, the underlying growth doesn’t make for as pretty a read: same-store sales actually fell by 1 per cent.The picture was brighter in the fashion segment, where same-store sales were up by 3 per cent. This segment, which incorporates a huge grab bag of department stores and specialty brands in Thailand, Vietnam and Italy (the latter being the Rinascente department store chain) enjoyed total sales growth of 7.0 per cent and accounted for 28 per cent of total company sales.In contrast, the hardlines segment remained weak, posting a 1.3 per cent sales decline, despite the addition of new home-improvement stores under the Thai Watsadu banner, four of them in the second quarter alone. Vietnam, where the company operates a large fleet of NK electrical appliance stores, was a particularly weak link. Hardlines currently account for a third of company sales. Same-store sales declined by 8 per cent, on top of a 5 per cent slump in the first quarter and another 8 per cent dive in the quarter before that. The macro picture is clearly a large contributor to the problem but there are other issues as well. Thailand is becoming overstored in home improvement, with large competitors like Siam Global House and HomePro operating mega-warehouses in the same merchandise space. Something may have to give.Vietnam lagsVietnam was a bit of a killjoy in general, with sales at Central’s various business units declining 0.8 per cent from the second quarter a year ago. This was despite renovations at its Go! shopping malls and hypermarkets, and the introduction of retail brands such as Crocs and Dyson. Same-store sales fell by 4 per cent. The company observed in its presentation to investors that there were “early signs of recovery” in its food business, but across the board: “Consumers prioritised value and delayed high-ticket purchases, impacting discretionary and essential goods.” In Vietnam, Central now operates 38 hypermarkets under the Go! Hyper banner and believes it has more than 40 per cent market share in Vietnam’s hypermarket/supermarket space.Store fleet big and growingCentral continued to be active in store openings in the second quarter, with the aforementioned four Thai Watsadu home improvement warehouses and two more of its new Go Wholesale concept stores, which will ultimately compete head-to-head with Makro in Thailand, if all goes according to plan. Central now operates 3744 stores across three countries, with a net selling floor space of 3.6 million square metres, which for perspective is the equivalent of about 100 regional shopping centres. It also operates 72 shopping malls, 28 of them in Thailand under the Robinson Lifestyle banner and the remainder consisting of smaller Tops Plaza shopping centres in Thailand and Go! malls in Vietnam.For the remainder of the year, Central plans four more Thai Watsadu openings and two more Go Wholesale stores, which would bring the total to 10 for that concept.Renovations and expansions are playing a role, too, particularly in driving fashion sales. Notably, the company unveiled the first level of what will, by the end of the year, be a three-level, 8000sqm luxury wing at Central Chidlom, its 50-year-old flagship department store in downtown Bangkok. The new wing is called Luxe Galerie. Since Central Chidlom has a direct physical connection with Central’s sprawling, ultra-high-end mall, Central Embassy next door, the combined effect of Luxe Galerie and Central Embassy will create a massive luxury zone, with edited brand selections in the department store that dovetail with the brand boutiques in the adjacent mall.In its investor presentation, the company trumpeted Central Chidlom as part of its latest round of Retail Asia awards, its prize department store won ‘Department Store of the Year’.Brand enhancementsIt’s not all about luxury though. Central either owns or operates the Thai licence for dozens of mid-market merchandise brands across virtually all retail categories, and it is reflected in Central Chidlom as well: This month, it unveiled Super Spots 3.0, the latest and greatest iteration of its mall sporting goods brand that covers 10 sports categories and more than 100 brands. The store is replete with interactive experiences that include a golf driving range and AI-driven analysis to identify a customer’s ‘perfect’ running shoes.The tourists are back and they are spendingThe macro picture is mixed but it is difficult to find any economic analysis of the situation in Thailand without getting a big serve of optimism about the booming tourist business. While Thai consumers are weighed down by weak household balance sheets (they borrowed a lot at rock-bottom variable interest rates during Covid-19 and are now paying the price), tourism is back close to 90 per cent of pre-Covid levels and is impacting Central materially. The company now estimates that 8 per cent of all its sales are attributable to tourists.