Parkson 1Q net losses narrow on sales recovery in China and Malaysia

KUALA LUMPUR (Nov 26): Parkson Holdings Bhd managed to reduce its year-on-year losses for the first quarter ended Sept 30, 2020 (1QFY21) on better operating profits from its Malaysia and China operations.

In a bourse filing yesterday, the retailer said net loss narrowed to RM21.73 million from RM44.62 million in 1QFY20. Revenue fell 8% to RM812.1 million from RM887.45 million.

The group explained the lower revenue was on account of Covid-19 hitting footfall and purchases at its stores in Malaysia, Indonesia and Vietnam.

However, the group posted stronger segmental operating profits in Malaysia and China as a result of greater store productivity and cost rationalisation in Malaysia, and greater online purchases in China.

On a quarter-on-quarter basis, Parkson’s RM21.73 million net loss was significantly lower than the RM209.25 million reported for 4QFY19, with revenue rising 20% from RM677.99 million.

The reduced losses were due to the Malaysian store footfall picking up and the absence of impairment losses in the preceding quarter.

On its prospects, the group noted that retail operations in China are seeing an improvement in shopper traffic, while the operating environment in Southeast Asia remains challenging amid high competition and cautious consumer spending.

“Nevertheless, the group's performance in the next quarter is expected to benefit from the year-end festivities and holiday season. In the face of operational disruption, the group has taken various measures to mitigate risks and negative impact of the pandemic, focusing its priorities on enhancing product offerings, optimising operational efficiency and productivity as well as cost rationalisation.

“At the same time, the group remains committed to adopting an active and cautious strategy and to diversify its business development by exploring various operation models to broaden its income sources, in order to drive the Group's long-term and sustainable development,” it added.

Parkson’s share price closed unchanged at 12.5 sen yesterday, valuing the group at RM136.74 million. The counter saw 4.01 million shares traded.

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