China continues to weigh on Parkson

KUALA LUMPUR: Parkson Holdings Bhd posted earnings of RM72.66mil in the second quarter ended Dec 31, 2016 due to exceptional gains as the department store's financial performance continued to be weighed down by its China operations.


It said on Tuesday that there was an exceptional item totalling RM490mil in the second quarter from the sale of a subsidiary. However, it posted net losses of RM31.44mil a year ago.


Its revenue was slightly higher at RM1.046bil compared with RM1.038bil a year ago. Earnings per share were 6.76 sen compared with loss per share of 2.88 sen.


For the first half, its earnings fell 68.6% to RM10.09mil compared with RM31.84mil in the previous corresponding period when there was also an exceptional item of RM135mil. Its revenue dipped to RM1.92bil from RM1.97bil.


During the first half, its retailing division recorded marginally lower revenue of RM1.90bil with an operating loss of RM98mil. 


Parkson's operations continued to face weak consumer sentiment. Its Malaysian operations benefited from increase promotions, resulting in a 4% growth in same store sales (SSS) in the second quarter but a decline of 1% in SSS in the first half.


It explained the new stores enabled Malaysia to achieve an 8% growth in revenue to RM485mil.


However, the operations posted al ower operating profit of RM2mil for the first half due mainly to the losses incurred by new stores which are still in their gestation period.


Parkson said China's operations continued to remain challenging with intensifying competition and change in market landscape such as e-commerce trends and new retail concepts.


Nevertheless, the China operations saw a rebound of its SSS growth with 1.4% growth in Q2 from the SSS decline of 7% in the previous quarter.The lower revenue coupled with costs incurred by newbusiness ventures have resulted in Parkson China recording an operating loss of RM85mil for the six months ended Dec 31, 2016.