Dairy Farm H1: sales decline slightly caused by large formats

Date : 29 July 2016

Hypermarkets and supermarkets sales down 2%

Hypermarkets and supermarkets are the retailer's main formats, accounting for 77% of total sales of all subsidiaries. Sales declined in Singapore and Indonesia following the closure of underperforming stores, though profitability was improved. In Hong Kong, sales increased but profits were impacted by higher rental and labour costs. Sales were flat but profits were lower in Malaysia. The Philippines saw good sales growth and improved profitability.

Stronger performance of convenience

Convenience format saw a 2.3% sales increase. The 7-Eleven convenience store operations in China, Hong Kong and Macau performed well in a difficult trading environment. While overall sales in Singapore were flat due to a reduced store base, like-for-like sales were positive and profits were higher. Dairy Farm has agreed to transfer all its Starmart convenience stores to FamilyMart in Indonesia.

Health and Beauty flat

Sales remained flat with improved performance in Hong Kong, positive like-for-like sales in China but Malaysia and Macau declined year-on-year. In Indonesia, both sales and profits were improving following its store rationalization programme. In the Philippines, the integration of Rose Pharmacy is still ongoing.

Outlook remains uncertain

According to Ben Keswick, chairman of Dairy Farm, “While sales and profit performance in the first half have been encouraging in a challenging trading environment, the outlook remains uncertain with consumer confidence fragile in most markets. Our businesses are continuing to invest in their customer offerings and infrastructure, and are fully committed to enhancing their competitive positions.”

As of 30th June 2016, Dairy Farm and its associates and joint ventures operated about 6,500 outlets and it reported total annual sales of US$17bn in 2015.