DFI Retail Group D01 says it has seen a “significantly improved” y-o-y performance in the 1QFY2023 ended March 31 although the group reported no specific figures in its business update.
The group’s subsidiaries were said to have reported a “modest increase” in operating profit. During the period, the group’s health and beauty, as well as convenience divisions, saw “strong recovery” although that was offset by lower results in the grocery retail division as consumer buying patterns normalised.
In North Asia, grocery retail sales stood lower on a y-o-y basis due to the high base when demand was boosted by the fifth wave of Covid-19 in Hong Kong. In Southeast Asia, grocery retail sales were also lower due to cautious customer shopping behaviour, driven by rising cost of living pressures.
While profitability for the grocery retail division fell on a y-o-y basis, it still stood higher compared to pre-Covid-19, in the 1QFY2019, with particularly encouraging market share growth in Wellcome.
The convenience division saw strong like-for-like growth across all markets in the 1QFY2023 as economies reopened. 7-Eleven in Hong Kong saw strong like-for-like sales growth that was underpinned by the effective execution of a range of commercial activities including new product development and effective promotions. 7-Eleven in South China also saw improving sales momentum during the quarter due to the strong promotion execution, improved foot traffic and strong progress in the digitisation of customer-facing systems. Overall, the division saw a significant y-o-y improvement for the 1QFY2023 even though the figures were still below its pre-Covid-19 levels.
In health and beauty, the division saw “substantial” sales and profit growth during the quarter. Mannings in North Asia saw double-digit like-for-like sales growth as Hong Kong’s border with the Chinese mainland reopened and health-related sales remained strong. The effective in-store execution also led to a record market share in Hong Kong. In Southeast Asia, Guardian saw strong sales growth on a y-o-y basis, especially in Malaysia and Indonesia. Overall, the division’s profits more than doubled thanks to the recovery in sales and ongoing promotional optimisation and robust cost control. In its statement, the group said that the early pace of recovery is “encouraging” even though the division’s overall profitability remains below its FY2019 levels.
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In home furnishings, the group’s sales revenue fell on a y-o-y basis with sales impacted by the reduced demand for furniture. According to the group, the reopening of international borders were the likely reason as its customers preferred to spend on leisure activities especially in Hong Kong and China. Profitability for the division has also reduced on a y-o-y basis due to these trading challenges, with the impact on profitability partially offset by robust cost control. Ikea remains focussed on delivering increased accessibility through format innovation and new touchpoints.
Underlying profitability for the group’s associates were said to have improved “significantly” with the group’s 50%-owned Maxim’s achieving a “much improved performance”. Revenue and profit for Maxim grew “substantially” in the 1QFY2023 on a y-o-y basis due to increased restaurant patronage as Covid-19-related restraints on trading fell away in Hong Kong and the Chinese mainland.
Sales for Yonghui fell on a y-o-y basis due to the absence of panic buying seen in the same period last year. Despite this, Yonghui’s profits rose during the same period due to higher gross margins and reduced costs.
Robinsons Retail reported robust like-for-like sales growth in the 1QFY2023 with strong performances from the supermarket, drugstores, department stores and convenience stores segments, which together delivered double-digit revenue growth. Robinsons’ underlying profitability also increased, although reported profitability was impacted by higher interest expenses, foreign exchange movements and lower earnings from associates.
In its outlook statement, the group says it remains optimistic for the remainder of the year with the reopening of the Hong Kong border and the continued recovery in its Southeast Asian markets driving positive trading performance in the 1QFY2023.
That said, there remains “some way to go” before the overall business reaches the same profitability as its pre-Covid-19 levels.
“Global economic headwinds remain and, while inflationary pressures are easing, consumer confidence is uncertain and will have a bearing on both the speed and degree to which behaviours return to pre-pandemic levels,” says the group in its May 18 statement.
“Recognising the sustained shift to online digital convenience, the group will continue its investment in digital platforms in order to compete. The group’s business transformation has delivered strong underlying improvements and a solid foundation for the business and we remain focussed on its continued execution to deliver sustainable growth for our shareholders; a stronger business for our customers; and a supportive organisation for our team members,” it adds.
Shares in DFI closed 1 US cent or 0.36% up at US$2.78 on May 18.
