27 February 2017
HIGHLIGHTS
- Year to date (YTD) FY16 Sales growth of 4.8% and 4.8% growth in 4Q2016 despite the negative impact of GST and low consumer sentiment
- YTD Average spend per customer increase of 3.0%.
- 204 new stores have been opened in 2016 resulting in a total store network of 2,122 stores as at the end of December 2016.
- 100% earnings dividend payout announced.
Comments from CEO – GARY BROWN
In 2016 we have continued our expansion plans to build on our dominant position in the market. We remain confident that continuous store expansion, refurbishment, promotional activity, improved merchandise mix and expanded in-store services will continue to deliver positive results despite the challenging headwinds. It has been a difficult year for everyone involved in the FMCG (fast moving consumer goods) retail and manufacturing sector driven by weak consumer confidence and spending as well as rising costs, however we have continued to grow and expand our sales.
For the 4th Quarter ended 31 December 2016
The Group’s revenue for the current quarter of RM523.6 million grew by RM23.9 million or 4.8% against the corresponding quarter’s revenue in the previous year of RM499.7 million. The growth in revenue continued to be driven by the growth in new stores, improved merchandise mix and consumer promotion activity. This growth was achieved despite prolonged on-going retail market softness caused by weak consumer confidence/spending.
Gross profit of RM160.7 million was in line with the corresponding quarter in the previous year. Gross profit for the fourth quarter last year was positively impacted by non-recurring one-off tobacco sales as a result of change in excise duty.
Other operating income increased by 8.8% vis-a-vis the same quarter in the previous year primarily due to growth in the marketing income.
Selling and distribution expenses for the quarter increased by RM9.0 million or 6.1%, mainly caused by new store expansion resulting in higher staff cost, rental cost, store depreciation expense and utility cost. In addition, the increase in the minimum wage effective 1st July 2016 continued to significantly impact selling and distribution expenses.
Administrative and other operating expenses for the quarter increased by only RM0.5 million or 2.5%.
The profit before tax of RM12.0 million decreased by RM7.8 million or 39.3% compared to the corresponding quarter in 2015 despite positive sales growth due to higher selling and distribution expenses caused by new store expansion and the impact of minimum wage increase effective 1st July 2016.
For the 12 months ended 31 December 2016
For the 12 months ended 31 December 2016, the Group’s revenue of RM2.10 billion grew RM97.1 million or 4.8% against the corresponding 12 months’ revenue in the previous year of RM2.01 billion. The growth in revenue was driven by the growth in new stores (total stores as at 31 December 2016: 2,122 stores), improved merchandise mix and consumer promotion activity.
Gross profit improved by RM28.2 mil or 4.6% compared to the corresponding 12 months in the previous year and this was mainly attributed to the revenue growth of 4.8%.
Other operating income increased by 5.3% year-on-year mainly attributed to growth in the marketing income.
Selling and distribution expenses for the 12 months period in 2016 increased by RM32.8 million or 5.8%, mainly caused by higher staff cost, rental cost, store depreciation expense and utility cost which is in tandem with new store expansion coupled with the impact of minimum wage increase on the staff cost from 1st July 2016.
Administrative and other operating expenses increased by RM6.1 million or 7.0% versus the corresponding 12 months in the previous year.
The profit before tax of RM70.8 million decreased by 9.0% or RM7.0 million despite revenue growth of 4.8% due to higher selling and distribution expenses from new store expansion and also the impact of minimum wage increase effective 1 July 2016 on the salary cost.
Future Prospects
The Board of Directors is of the view that the trading conditions for the next quarter is expected to remain challenging due to continued weak consumer confidence/spending and current macro-economic conditions. Despite this latest development, we remain positive of holding onto our market leading position.
