KUALA LUMPUR (May 29): The Body Shop retailer InNature Bhd, which made its main market debut in February this year, reported a net profit of RM2.75 million for its first quarter ended March 31 (1QFY20), down from RM9.9 million in the corresponding quarter last year, as the nationwide movement control order imposed following the COVID-19 outbreak forced the group to temporarily close its stores.

Quarterly revenue declined to 21.5% to RM37.39 million from RM47.61 million, as the MCO and a gloomy economic outlook significantly impacted the group's performance in Malaysia, according to the group's first quarterly report filed with Bursa Malaysia following its listing.

"The decline was partly mitigated by Vietnam’s 13.5% revenue growth following the net opening of eight new stores in 2019, and contribution from its new businesses in Cambodia and Malaysia. Lockdown in Vietnam was only imposed towards the tail end of March 2020," InNature said in a statement also filed to Bursa.

Notwithtanding the unprecedented revenue drop, the group said it remained profitable with a core profit after tax of RM3.7 million for 1QFY20, even after accounting for a gestational loss from its new business in Malaysia of about RM800,000.

Also supporting the quarter's earnings was a 75.4% year-on-year jump in sales from the group's e-commerce channels to RM1.8 million, with the bulk of sales coming from Malaysia, according to InNature's group managing director Datin Mina Cheah-Foong.  

Meanwhile, the group's financial position remains healthy, with a working capital of RM45.3 million and total equity of RM129.5 million as at March 31, and a RM3 million net cash generated from operations. It also kept a cash balance of RM48.3 million as at March 31.

On the group's expansion plans, Cheah-Foong said there will only be five new openings (four in Vietnam, one in Cambodia) for The Body Shop's operations this year, and one new opening (in Malaysia) for Natura's operation, as the group adopts a precautionary approach prior to committing a new location.

“Our performance in the 2nd quarter ending June 30, 2020 will continue to be significantly impacted by the MCO. We expect consumers to remain cautious beyond the MCO period, as efforts to contain the virus is still a work-in-progress at this juncture. As such, it may take a while to rebuild footfall to our store, and social-distancing is expected to become the new normal in the foreseeable future, though we expect to be able to capitalise on new opportunities presented by this situation for our ecommerce and social selling channels, as we are prepared with our omnichannel capabilities," Cheah-Foong said.

Nevertheless, assuming that consumer sentiment is to recover gradually by the final quarter of the year, she believes the group will remain profitable for its FY20 ending Dec 31.

InNature shares closed one sen lower at 38 sen today, giving it a market capitalisation of RM268.24 million. The stock's IPO price was at 64 sen.