PETALING JAYA: Homegrown convenience store chain, MyNews Holdings Bhd, aims to bank on the expansion of its outlets and potential brand tie-ups as it sees this as growth drivers in the wake of the revival of stiff competition in the retail space.
As the second-largest convenience store chain in the country after 7-Eleven, its latest brand tie-up with leading South Korean convenience store CU last year would culminate in the opening of 30 to 50 CU outlets this year. The outlet was launched on April 1.
Analysts are upbeat about the opening of the outlets as they expect the brand’s potential scalability to support the company’s earnings growth.
Group CEO Dang Tai Luk (pic below) told StarBiz that it plans to maintain at least 100 outlets for this year and the next.
As to whether there are plans to increase the RM50mil budget spent for its outlets this year, he added that should there be an increase in the number of outlets, the allocation would be adjusted accordingly.
The opening of new stores is the most important growth driver and priority of Mynews, Dang noted. He said the group would continue to drive the performance of its brands in its stable namely, myNEWS Supervalue, WHSmith and CU.
“We expect the rate of outlet expansion to pick up as the pandemic situation improves, and hopefully we will return to the pre-pandemic appetite soon.
“Mynews is expected to do better in the financial year 2021 compared with 2020. With the first batch of vaccines being delivered and administered in the country and the change of movement control order (MCO) to the conditional movement control order recently, there are signs that the economic activities are increasing, and more people are moving around thus creating the footfall for our business, ” he added.
The company posted the biggest quarterly net loss of RM8.94mil in the first quarter ended Jan 31,2021, from a net profit of RM4.35mil a year ago, since its listing in 2016.Mynews business was basically dragged by the lengthy movement restrictions as about 80% of its outlets are located in the Klang Valley which had witnessed the most restrictive movement control in the country.
Mynews growth drivers, besides increasing store count, included having more Maru Kafe concept stores and the effective utilisation of its Japanese food processing centre (FPC).
CU outlets would most likely become Mynews main driver of growth moving forward.
“CU is no ordinary brand. It is the largest in South Korea with 15,000 stores. It will satisfy Malaysians of all walks of life who enjoy and follow the K-culture trend. For the first time, an authentic South Korean convenience store is open in the country.
“Now this piece of South Korea which is a noticeable K-drama scene is in Malaysia to enrich the consumer shopping experience and choices, ” he said.
As for the performance of its WHSmith outlets located in airports, Dang said they will depend on the return of air travellers.
Outlet expansion for this brand, he said, would be unlikely in the immediate future as the traffic in all the airports remained low.
“We target to grow myNEWS Supervalue to 20 this year from the existing five. This is a larger format store that will meet the needs of new norm consumers shopping patterns in the residential areas.
“myNEWS stores will continue to grow as smaller format stores at strategic locations, ” he added.
Meanwhile, AmBank Research said Mynews store chain is seeing an uptrend in March, given the growing amount of products that it offers.
“Affected clusters such as malls, transit and mixed-development are showing double-digit growth recovery. Mynews needs a 30% increase from its current operational metrics to breakeven, ” it said.
Moving forward, the research house is confident about the group’s FY22 forecast recovery prospects on the anticipated return of footfall volume and the success of its Ichi QQ food line and South Korean brand CU outlets.
RHB Research expected the South Korean brand and its offerings to be met with encouraging reception.
“Although earnings contributions from CU may be muted in the near term, we believe CU can provide a strategic platform for the group to offer its quality fresh food products, leveraging on the higher-end brand image that is able to attract discerning consumers with higher spending power, ” it said.
Mynews stores and food processing centre (FPC) should benefit from the post-pandemic recovery, given the entrenched store network.
Given the relaxation of movement restrictions and CU’s opening, RHB Research foresees the group’s FPC to show improvement with better store footfalls moving forward.