Performance slow in Q1 for modern retailers

Corporate May 09, 2014 00:00

By The Nation

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Many retail operators showed weak performance in the first quarter but expect it to improve as spending power rebounds in the third quarter.

On average, modern retailers should post 17-per-cent profit growth this year, said Vatcharut Vacharawongsith, an analyst with Krungsri Securities.
CP All posted Bt2.7 billion in net profit (Bt0.30 per share) in the first quarter, down from a year earlier when the company netted Bt3.1 billion (Bt0.35 per share). However, the company achieved Bt4.7 billion in operational profit in the first quarter of this year, up by 20.1 per cent. The decline in net profit was due to an increase in financing costs by Bt1.34 billion.
Kriengchai Boonpoapichart, executive vice president, said the company earned revenue of Bt89.3 billion in the first quarter, up 68.8 per cent year on year. The surge was due to its acquisition last year of Siam Makro. CP All started to realise revenue from Siam Makro in July.
He said the Makro business posted Bt35.2 billion in first-quarter revenue and Bt1.27 billion in net profit, up 25.8 per cent from about Bt1 billion in the same quarter last year.
CP All itself also increased the number of 7-Eleven stores last quarter, up 8.7 per cent from 7,041 stores in the first quarter of 2013 to 7,651 stores by the end of March this year.
Rumpa Kumhomreun, chief financial officer and vice president for accounting and finance of Big C Supercenter, said the company posted a 10.1-per-cent decline in net profit in the first quarter. But she said this was in line with expectations given the challenges it faced.
“Our net income declined slightly, by 10 per cent when compared with the same period last year, as a result of rapid store expansion since last year, which will have a short-term impact on operating costs,” she said. 
“When looking forward for the rest of the year, Big C, with our strong price-leadership position and our successful marketing strategies in place, our nationwide store network and leading positions in Bangkok and major tourist destinations, our proven resilient dual retail-property model bringing income stability, our continued supply-chain developments, and our ramped-up cost optimisation and productivity initiatives, we remain confident in our ability to deliver continued successful full-year results.” 
Big C posted Bt29.2 billion in retail sales in the first quarter, up Bt773 million or 2.7 per cent over the same period last year. Rental and service income also grew 7.8 per cent to Bt2.2 billion.
Big C continued its store expansion last quarter, opening two hypermarkets in Kanchanaburi and Nakhon Phanom, 17 Mini Big C stores, of which six are in Bangchak service stations, and two Pure Drugstores. The total number of stores at the end of March was 121 large-format stores (Big C Supercenter, Extra, and Jumbo), 30 Big C Market, 295 Mini Big C (68 of which are in Bangchak service stations), and 134 Pure Drugstores.
Meanwhile, Home Products Center, operator of HomePro stores, posted a 4.95-per-cent rise in net profit to Bt725.73 million in the first quarter. Sales increased by 18.32 per cent to Bt11.07 billion thanks to the opening of new stores last year and the expansion of its Mega Home business.
Kunawut Dhampromkul, managing director of Home Products Center, said the company would open no fewer than eight new HomePro stores this year and was targeting sales growth of 15 per cent. The company has already opened one store in Lampang province with an investment of more than Bt340 million. Two new stores will be opened this month in Prachuap Khiri Khan and Surin with combined investment of about Bt850 million.