Parkson logo seen at Parkson Maju Junction in Kuala Lumpur. (Pic taken by Hafidz Mahpar for Star Online)
KUALA LUMPUR: Weak sales across geographical markets, costs of new stores and gestating business ventures led to Parkson Retail Asia registering a 2QFY18 net loss of SG$2.2mil.
PublicInvest Research said the Southeast Asia operations will likely to remain a challenge in the medium term and hamper China's recovery at the group level. It kept its neutral call on Parkson Holdings Bhd
with an unchanged target price of 75 sen.
The research firm views the continued improvement in Parkson Retail Asia's sales mix with direct sales making up 26% of 1HFY18 total sales.
"The encouragingly higher proportion of direct sales was due to the Group’s ongoing efforts on
introducing various in-house apparel brands.
"In terms of merchandise types, fashion & apparel segment and cosmetic & accessories segment were consistent at 82% in 1HFY18 and 1HFY17."
Same store sales growth (SSSG) in 2QFY17 was negative 1.7% due to stiff competition among retail players in year-end sales during the holidays and festive period. The markets that were most affected were Vietnam and Indonesia.
"Vietnam posted SSSG of -2.3% for 2QFY18, which has narrowed from 2QFY17 SSSG of -11.3%, primarily due to intensive promotional activities and fading of novelty effect of international players’ entrance into the scene.
"For Indonesia, SSSG remain negative at -2.1% in 2QFY18 (2QFY17: -2.2%), due to the downsizing of a store in Jakarta (Feb 2017) coupled with disruption from the Bali volcano eruption in Dec 2017."
"While we see value in the Group, operational challenges will keep on a lid on share price performances for the foreseeable future," it said in its outlook on the company.
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