“Significant challenges” across the South-east Asian supermarket business are continuing to test Hong Kong-listed multi-format retailer Dairy Farm International, reports Inside Retail Asia.
In a management statement discussing the company’s third-quarter performance – which did not include any figures – Dairy Farm said its businesses produced “mixed results” with a strong performance in health and beauty and good results from home furnishings and restaurants divisions. However, the performance of the Hong Kong supermarkets business has softened.
The company said the South-east Asian grocery store business – Cold Storage and Giant stores in Singapore and Malaysia – is expected to continue for the remainder of the year with the group’s full-year results likely to be impacted by increasing costs from ongoing investment in technology, supply chain infrastructure, stores and people in order to improve the long-term performance of the business. Sales and profits fell in its supermarkets in both countries. Falling sales in Indonesia were mitigated by management action which resulted in reduced losses there.
In North Asia, sales from the food businesses were slightly ahead of the same period last year, but profits were lower as a result of weakening margins and continued cost pressures, particularly from increased rents, the report said.
The Philippines food business showed good sales growth, benefitting from the opening of several new stores, but profit was slightly behind the prior year due to increased operating costs, the statement added. There was continuing good sales and profit improvement in the group’s health and beauty businesses, notably in Malaysia and Indonesia.
Dairy Farm, together with its associates and joint ventures, operate more than 7,400 outlets, including supermarkets, hypermarkets, convenience stores, health and beauty stores, home furnishings stores.
