Dairy Farm reports COVID-19 impact on its 2020 operations

Date : 15 March 2021

Francis Ramos

Senior Retail Analyst

Dairy Farm International has reported an 8% drop in its subsidiaries’ revenue to US$10.3bn in FY20 (ending December 2020).  But total sales including from its associates and joint ventures has increased by 2% at US$28.2bn, primarily due to a higher sales contribution from Yonghui.

Growth in grocery retail and IKEA offset by health & beauty and convenience

The group’s sales performance in 2020 varies widely across its subsidiaries:

  • In food, sales from grocery retail has increased by 3% to US$5.3bn, resulting to a significant increase in profit from US$63m in the previous year to US$267m in 2020.  Its sales growth is coming from both North Asia and Southeast Asia, except in Indonesia where fewer people buy from hypermarkets due to governement restrictions
  • The pandemic has also negatively affected customer traffic in Dairy Farm’s convenience stores, resulting in a 4% reduction in sales to US$2.1bn.  This shortfall in revenue and a shift towards lower margin product categories have led to a 31% drop in profit for its convenience stores
  • Revenue from health and beauty has also reduced by 35% to US$2bn.  The lack of mainland Chinese tourists due to border closures in North Asia has severely affected the operations of Mannings in Hong Kong and Macau.  As a consequence, there is a significant decrease in profit from US$296m last year to US$66m in 2020
  • Sales from its home furnishings business through IKEA has increased by 9% in 2020.  New store openings as well as higher demand in online delivery have increased its profit from US$28m in 2019 to US$71m this year
  • Among the associates and joint ventures of Dairy Farm International:
  • Dairy Farm has 50% ownership in Maxim’s, which has declined from US$82m in the prior year to US$36m in 2020.  Temporary closures and a significant reduction of people dining in its restaurants due to social distancing measures have caused this drop
  • Sales from Yonghui has grown from US$23m last year to US$29m in 2020
  • Business from Robinsons Retail has dropped by 5% to US$14m

Key initiatives to adapt to the rapidly changing retail environment

Given the changes in shoppers’ expectations, Dairy Farm has started the following initiatives as part of its digital transformation:

  • Driving digital innovation
    • Launch of Yuu Rewards in July 2020 has enabled customers to be rewarded across 2,000 stores of Dairy Farm’s multiple brands.  It is now Hong Kong’s most downloaded app on the Apple store, and able to make personalised offers to its three million members
    • Investment in the online capability of its home furnishings, and health and beauty businesses
  • Growth in China
    • Yonghui has continued to expand with strong offline and online sales growth.  It has not only gained more supermarket space, but also grew its ecommerce penetration to 10%, with a new CTO recruited from JD.com
    • Dairy Farm has also optimised its Mannings stores in China and leveraged double-digit growth of ecommerce in health and beauty.  We can expect the Greater Bay Area to be its focus for future growth
  • Maintaining Hong Kong strength
    • The lack of tourists has severely affected its health and beauty business in Hong Kong.  It is now reviewing its product range to cater to the local demographic
    • Meadows private label is now its number one brand.  Over 600 items are already available in-store across its various banners, not only in Hong Kong but also in Singapore and Malaysia
  • Revitalising Southeast Asia
    • Refresh of all Giant stores in Singapore has been completed, while investing in lower prices on hundreds of frequently purchased items across fresh produce, grocery and chilled categories
    • Guardian Singapore has relaunched its ecommerce platform in February, which has brought in around 40% growth this year.  Guardian Malaysia has also reported triple digit ecommerce growth
    • Dairy Farm has a new partnership with CP All to sell Guardian products in 12,000 7-Eleven stores in Thailand
    • It has also strengthened its partnership with Robinsons Retail by bringing in Rose Pharmacy in addition to its Southstar Drug subsidiary in the Philippines
    • New upscale formats launched under Mercato, CS Fresh and Marketplace banners, has led to fresh food sales improvement.  These are to be rolled out in approximately 40 stores in 2021

Changes in key personnel

Chairman of the Jardine Matheson group, Ben Keswick, concluded, “2020 was a challenging year for Dairy Farm, with the COVID-19 pandemic impacting the group’s operations and, as a result, its financial results.  Continued progress in implementing the group’s transformation programme, however, helped the business adapt to the rapidly changing environment, while the diversity of the group’s businesses, coupled with the impact of ongoing efficiency improvement programmes, supported the group’s overall financial performance.”  As Dairy Farm International expects 2021 to remain challenging, it has also announced some changes in its key personnel to lead the group’s improvement programmes:

  • Clive Schlee has joined as a Non-Executive Director on May 2020
  • John Witt has succeeded Ben Keswick as Managing Director on June 2020, but Ben Keswick continues as Chairman
  • Jeremy Parr and Mark Greenberg have stepped down as Directors, with effect from December 2020



Retail Analysis weekly newsletter


Keep up-to-date with the latest retail developments shaping the industry.

Sign up for our newsletter »