Dairy Farm has reported solid profit growth in the first half despite lower sales in its supermarkets and hypermarkets.
Supermarket and hypermarket sales declined 3 per cent
Total sales, including associates and joint ventures, were 3 per cent higher at US$10.4bn. The underlying net profit was US$211m , up 6 per cent.
Supermarket and hypermarket sales declined 3 per cent at constant exchange rates, and profits fell because of continuing softness in some key markets, such as Malaysia, Singapore and Taiwan. In Indonesia, better margin management enabled profits to be maintained despite lower sales. Profitability improved in the Philippines even though sales were flat following the closure of a hypermarket.
Yonghui had 15 per cent growth in revenue and a 57 per cent jump in profit, thanks to higher store numbers and margin improvement from more effective merchandising.
Convenience, Health and beauty maintained strong performance
The 7-Eleven convenience stores performed well. Hong Kong and Macau were ahead of last year, supported in part by a modest increase in tourist numbers. In Singapore, sales were lower as some stores were closed, although earnings benefited as several had not been profitable. Store expansion in Mainland China continued to underpin sales growth.
In the health and beauty division, good sales and profit growth were achieved in Hong Kong, Macau and Indonesia. In Malaysia and Singapore, sales and profits fell as consumer confidence remained low. Mainland China sales were enhanced with successful promotions. In the Philippines, improved systems following the integration of Rose Pharmacy started to yield positive results.
The company agreed to take over Rustan’s in the Philippines by acquiring the remaining 34 per cent stake from its JV partner last month.
Group CEO Graham Allan is stepping down at the end this month after five years of introducing changes that have laid the foundation for growth, says chairman Ben Keswick. He will be succeeded by Ian McLeod, who has had more than 30 years’ experience in retail.
At the end of June, the Dairy Farm group had more than 6,600 outlets across all formats, compared with 6,548 at the end of last year.
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