Sheng Siong reports a 1.2 per cent increase in revenue for the third quarter to SGD202m (US$145m).
Sales driven by the new stores
Of the 1.2 per cent revenue increase, 5.3% was contributed by the new stores, but was offset by the temporary closure of the Loyang Point store and a contraction in like-for-like sales of 1.15%. Excluding the Loyang Point store, revenue would have grown by 4.15% instead of 1.2%.
The most recent addition to the retailer's outlets is the 15,500 sq. ft. store in Yishun Junction 9, which had completed its renovation works in August and officially commenced operations in September. The retailer has a total retail footage of 450,000 sq feet, compared with a total retail area of 431,000 sq feet as at December 31, 2015. The retailer is still looking for suitable retail space particularly in areas where it does not have a presence.
Gross profit margin stood at 25.9 per cent, stronger than the 24.3 per cent posted a year ago. The margin was boosted mainly by higher rebates for volume, display and for providing bulk handling services on behalf of the suppliers.
Competition remains keen
"Competition in the supermarket industry is expected to remain keen and with the uncertain economic conditions both globally and locally consumers would continue to be even more cost conscious," the group said in a media statement. "This may dampen the group's revenue and may affect the group's ability to pass on increases in input cost in full to the customers."
For new store locations, due to competition for retail space, particularly for new HDB shops is expected to remain keen, which have escalated bidding prices.Sheng Siong's competitor NTUC FairPrice opened two budget supermarkets at Eunos and Circuit Road earlier this year, targeting low-income groups, especially the elderly, with low-priced products and a limited range.
On the future plans of the Group,Mr Lim Hock Chee, the Group's Chief Executive Officer, said, "Looking ahead, expanding our retail network in Singapore particularly in areas where our potential customers are residing, remains as one of the top priorities of the Group. Besides focusing on nurturing the growth of our new stores, we remain committed to drive cost efficiency to lower input costs and operating overheads as well as changing the sales mix to a higher proportion of fresh produce.
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Shirley Zhu, Programme Director, IGD Singapore
Based in Singapore, Shirley heads up all of IGD's research on Southeast Asia. Contact Shirley at [email protected] for further insight on the region.