Parkson Q4 goes into the red from poor retail performance

PETALING JAYA: Parkson Holdings Bhd (Parkson) swinged into a net loss of RM90.95 million in the fourth quarter ended June 30, 2015 from a net profit of RM26.76 million dragged down by a weaker set of results from its retailing division.
The group's retailing division's turned in a loss of RM3.72 million in the Q4'FY15 compared to a profit of RM49.83 million in the same period a year ago.
The net loss came on the back of a 5.2% increase in the company's revenue during the quarter under review, from RM859.04 million to RM816.51 million.
For the 12 months period, Parkson net profit slumped 69% to RM42.83 million from RM138.15 million before, while revenue fell by 5.1% to RM3.74 billion.
"For FY2015, the group's retailing division registered a weaker set of results with revenue increasing only marginally by 4% to RM3,64 billion whilst operating profit contracted by 41% to RM190 million as compared with that recorded a year ago," it told Bursa Malaysia.
Parkson said its local operations reported a negative same store sales (SSS) growth of 4.5% for the FY2015 as consumer sentiments were affected by the rising cost of living and depreciating currency.
The operating loss at its Malaysian operations in Q4 was mainly due to the deleveraging of operating expenses resulting from sluggish sales performance as consumers have front-loaded their spending prior to the implementation of Goods and Services Tax (GST) on April 1.
After a dismal fourth quarter, Parkson has cautioned investors that its retailing operations in the Southeast Asian region are anticipated to remain challenging in the near future.
The economic slowdown and the rise of the e-commerce sector in China are expected to persist for sometime.
However, the group sees opportunities from the growing purchasing power of the young and affluent middle to upper class which could accelerate the domestic consumption.
Backed by the group's nationwide network, strong vendor relationships and adaptability to market changes, Parkson said it is well positioned to embrace the opportunities in China.
"Our local Parkson operations are expected to experience a drag from the soft consumer sentiments amid concerns over rising cost of living whilst Parkson Vietnam will continue to be impacted by the change in the competitive landscape," it said.
Nevertheless, the robust domestic demand and middle class population growth in Indonesia will continue to drive its performance and deliver encouraging results