Parkson narrows net loss in 4Q on lower operating losses, tax expenses

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KUALA LUMPUR (Aug 27): Parkson Holdings Bhd narrowed its net loss to RM71.89 million in the fourth financial quarter ended June 30, 2018 (4QFY18) from RM97.75 million a year ago, on lower operating losses and tax expenses.

This resulted in a lower loss per share of 6.74 sen for 4QFY18 from 9.16 sen for 4QFY17. Quarterly revenue fell 3.8% to RM939.68 million from RM977.14 million a year ago.

“The improved profitability of Parkson Credit together with lower losses from the food and beverage (F&B) business following the closure of non-performing outlets have enabled the division to record lower operating losses for the current quarter and financial year-to-date,” Parkson said in a filing with Bursa Malaysia today.

For the full FY18, Parkson saw its net loss narrow to RM103.99 million from RM120.9 million in FY17. This marked the third consecutive year of losses for Parkson.

However, its revenue for FY18 increased slightly to RM3.98 billion from RM3.96 billion in FY17.

“For FY18, the Parkson’s retailing division registered a marginal growth in revenue to RM3,926 million and turned profitable with an operating profit of RM26 million,” Parkson said.

The group said China operation-led the business with operating profit in FY18 recorded RM111 million against a loss of RM42 million a year ago, which contributed to the higher revenue and improved operating efficiencies.

However, the group said the operation in Malaysia and Indonesia posted operating losses of RM47 million and RM20 million respectively.

For Malaysia, the group said the higher operating loss of RM47 million was recorded mainly attributed to the impact from the gestation period for new retail stores and the margin erosion resulting from promotional activities. While in Indonesia, the operating loss narrowed to RM20 million compared with RM28 million a year ago mainly from the closure and downsizing of underperforming stores.

As of June 30, 2018, Parkson Malaysia has 44 stores following the opening of four stores, while five underperforming stores were closed.

In same period, it had 47 stores, 15 stores, six stores and one store in China, Indonesia, Vietnam and Myanmar respectively.

“In light of the more challenging, yet booming consumption market environment in China, the group will continue to explore the feasibility to seize market opportunities and strongly believes that its efforts in executing transformation strategies, including diversification of retail formats, operational optimisation and cost rationalisation efforts, will further reinforce the Group's position as a leading lifestyle retailer,” Parkson said.

“On the Southeast Asian front, while the clarity in the new Government's policies in Malaysia will be the key to sustainable consumer confidence, the upcoming general election in Indonesia is likely to impact consumer sentiment there.

"The operating environment in Vietnam is anticipated to remain challenging with the influx of retail players. The group will continue to drive top-line growth proactively whilst exercising prudence on its strategies,” it added.

Parkson shares closed unchanged at 49.5 sen today, with 1.08 million shares done, giving it a market capitalisation of RM541.48 million.