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- In a filing with Bursa Malaysia, Parkson said this was disclosed by its 54.97%-owned Parkson Retail Group Ltd (PRG) on the Hong Kong Stock Exchange (HKEX).
KUALA LUMPUR (Aug 7): Parkson Holdings Bhd’s (KL:PARKSON) unit in Beijing will end its long-standing retail tenancy at the China National Arts and Crafts Museum from Jan 1, 2026, following a lease termination agreement signed to cut losses and reduce financial strain.
In a filing with Bursa Malaysia, Parkson said this was disclosed by its 54.97%-owned Parkson Retail Group Ltd (PRG) on the Hong Kong Stock Exchange (HKEX).
The lease termination agreement, signed on August 7, involves PRG and China National Arts and Crafts Group Co Ltd in respect of the early termination of the remaining lease term of the properties with effect from Jan 1, 2026.
The announcement did not specify the original expiry date of the lease agreement.
PRG has been carrying out its retail business there since 1994.
The lease termination will result in PRG paying RMB11.7 million (RM7 million) in penalty to the China National Arts and Crafts Group before Oct 10, 2025, with a daily interest of 0.05% for late payment.
PRG will derecognise approximately RMB127.1 million in right-of-use assets pursuant to International Financial Reporting Standard 16 (IFRS 16), qualifying the deal as a disposal of assets under the Hong Kong Exchange Listing Rules.
PRG noted that the penalty negotiated is lower than the outstanding rental due under the original lease terms.
The group has recorded continuous losses from its Beijing operations in recent years, including the six months ended June 30, 2025.
PRG stated that early termination of the lease agreement will help reduce its financial burdens and is in the best interest of shareholders.
The derecognition of assets and the penalty payable will not have a material impact on Parkson’s earnings for the financial year ending Dec 31, 2025.
Parkson also expects this development to not have any impact on the group’s net assets based on its audited consolidated statement of financial position as at Dec 31, 2024, it added.
As of Dec 31, 2024, Parkson operated 41 department stores in 27 cities across China, down from 43 stores a year ago. The reduction in the number of stores is part of Parkson’s ongoing evaluation of the performance and viability of its existing stores, its 2024 annual report showed.
Parkson’s China retail division saw its revenue decline 14.4% year-on-year to RM1.95 billion in the financial year ended Dec 31, 2024 (FY2024), down from RM2.28 billion, which it attributed to cautious spending patterns by customers.
As a result, operating profit also declined by 35.33% to RM205 million in FY2024, from RM317 million, the report read.
On Thursday, Parkson’s share price closed unchanged at 22.5 sen, giving the company a market capitalisation of RM259 million.
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