Robinson expects rosy year despite continued consumer slowdown

"We spotted a trend of sluggish consumer spending last month, but it's not clear yet," president Preecha Ekkunagul said yesterday.

The higher cost of living may even favour the local chain, because increased oil prices would force buyers to shop at stores near their homes, he said.

Even though Robinson's first-quarter net profit rose 37.6 per cent year on year to Bt245 million, Asia Plus Securities expects the department-store chain's full-year net profit to rise only 7.6 per cent to Bt930 million. The main reasons are customers concerned about inflation and no new branches opening this year.

First-quarter sales were brisk, up 13 per cent to Bt3.08 billion on the contribution of its 21st branch in Phuket's Jungceylon shopping complex, which opened at the end of last year.

Robinson has positioned itself as a lifestyle store, providing fashionable and quality products to young families and middle-income earners who are young professionals, Preecha said.

Since the chain exited from a court-supervised rehabilitation programme in 2006, it has expanded by three stores and paid dividends for the first time.

To shore up its margins, the company has adjusted its merchandising mix with more private brands. It has also rolled out promotions and campaigns to stimulate sales.

Upcountry branches contribute as much to total sales as the Bangkok outlets but are more likely to grow more quickly than those in the capital, Preecha said.

Last year, the modern retail business grew 11 per cent to Bt700 billion, said CRC Research. Robinson ranked second in the department-store category, after Central/Zen.

With the widest market coverage in the Kingdom, the company plans to open three Robinsons next year, in Chon Buri, Ubon Ratchathani and Khon Kaen, at a cost of Bt1.3 billion.

Four new stores are planned for both Bangkok and upcountry in 2011.

Asia Plus Securities upgraded its recommendation on Robinson from "sell" to "hold" after its promotions and campaigns pushed sales from existing branches up 3 per cent year on year.

However, the company's gross margin slid to 23.1 per cent in the first quarter, from 23.6 per cent in the same period last year.

CIMB-GK Securities (Thailand) has also bumped up Robinson stock from "underperform" to "neutral". With no new store openings this year, earnings are expected to drop slightly, by 3.47 per cent to Bt834 million, from 2007's reported net profit of Bt864 million. But this year's earnings should move up 13 per cent on a normalised basis, the brokerage said.