KUALA LUMPUR: Retailer and wholesaler Mydin Mohamed Holdings Bhd is seeking a buyer for its premium chain of Sam’s Groceria stores as part of its ongoing internal reorganisation, said its managing director Datuk Ameer Ali Mydin.
The group now operates four Sam’s Groceria outlets, which are located in Gurney Paragon Mall and Straits Quay on Penang island, Sunway Carnival Mall in Seberang Perai and Nu Sentral here.
Ameer estimated the grocery business to be worth RM50 million.
The planned sale comes on the heels of the disposal of its loss-making MyMydin convenience store business in April last year. It also discontinued the Kedai Rakyat 1Malaysia (KR1M) stores in October 2017.
“We decided to sell Sam’s Groceria after realising that the stores’ patrons are mainly local Chinese and expatriates. (However,) we do not sell liquor, wine, beer or pork at our stores and thus, we have been unable to meet our customers’ needs,” he told The Edge Financial Daily.
Ameer said currently, Mydin Holdings has 62 stores under its portfolio excluding Sam’s Groceria.
According to Mydin Holdings’ website, Sam’s Groceria is positioned as a premier urban grocer and 60% of its products are fully imported brands. It opened its first flagship store in Gurney Paragon Mall in 2013.
In its latest statement on Mydin Holdings’ RM350 million bonds last month, RAM Rating Services Bhd (RAM Ratings) said the group may take time to dispose of its premium outlets due to the current weak consumer sentiment.
Last month, Ameer was reported as saying that he expects flattish to minimal growth in the local retail industry in 2018. However, he was hopeful that the upcoming general election would help prop up consumer spending.
Mydin Holdings posted its first loss in six decades in the financial year ended March 31, 2016 (FY16), citing the weakening of the ringgit against the US dollar and the extension of the Price Control and Anti-Profiteering Act 2011. It made a net loss of RM156.61 million on revenue of RM2.99 billion.
In a statement in February last year, RAM Ratings pointed out that Mydin Holdings’ loss was also due to a lagged response to the mispricing of products at the group’s mini markets and convenience stores.
Nevertheless, the group managed to reverse the loss to post a small net profit of RM796,005 on revenue of RM2.93 billion in FY17 due to cost-cutting measures.
Mydin Holdings’ accumulated profit stood at RM228.79 million as at March 31, 2017, while total liabilities were RM1.26 billion, of which RM987.15 million were current.
A check with the Companies Commission of Malaysia revealed that Sam’s Groceria Sdn Bhd is also loss-making. It posted a net loss of RM27.49 million on revenue of RM63.16 million in FY16. Accumulated losses stood at RM42.05 million as at March 31, 2016. Sam’s Groceria also has RM101.8 million in total liabilities, of which RM84.54 million are current.
With the sale of Sam’s Groceria, Mydin Holdings will be able strenghten its improving financial position.
Ameer noted that a “massive” cost-cutting measure including a freeze on hiring and no salary increment, coupled with store sales and the discontinuation of KR1M will “definitely” see the group post higher profits in FY18.
Last year, Mydin Holdings sold MyMydin Sdn Bhd, which operates 48 MyMydin convenience stores, to Jubilee Games Sdn Bhd. The shareholders of Jubilee are Siraj Pyar Ali (51%) and Shaakir Siraj (49%). Three other individuals — Jamaleddin SG Surani, Saleem Badrudin and Bana Inayat Hussain — hold one share each. In FY16, MyMydin posted a net loss of RM16.64 million and had chalked up accumulated losses of RM39.39 million. Ameer, however, declined to reveal how much the business was sold for.
Its other loss-making operations — KR1M — was operated by MRT Retail Sdn Bhd. MRT Retail posted its sixth consecutive net loss in FY17 of RM45.70 million, which saw accumulated losses reach RM128.15 million. The first KR1M store opened its doors in June 2011 and there were 179 stores when operations ceased.