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Headwinds At Parkson Retail Asia

parkson logo Parkson Retail Asia Limited (SGX: O9E), a premium department store operator across Malaysia, Vietnam and Indonesia, saw its revenue for Financial Year 2013 (FY2013) go up by 3.2% to $446.2 million as compared to the previous year. The revenue increase was due to gross sales proceeds (GSP) reaching $1.1billion in FY2013, with concessionaire sales remaining the main contributor to growth in GSP. The gross profit margin for FY 2013 was slightly lower at 59.3% for FY2013 as compared to 60% in FY2012 due to increased promotions for the stores in Malaysia.

The net profit, however, was down 16.6% to $37.9 million in FY2013. This was because of weaker same store sales growth in Malaysia and Vietnam and higher rental costs for the “new stores that opened in FY2013 and the inclusion of full period rental for the new stores opened in FY2012“. The net profit margin for FY 2013 was at 8.5% while that in FY2012 was at 10.5%.

On the balance sheet, the company does not have any debt and has a huge cash hoard of $176.8 million. The return on equity is at 14.8%.

Cash generated from operations for FY2013 was at $50.3 million and capital expenditure was at $17.2 million. This translates to a free cash flow of $33.1 million.

The company is paying out a final dividend of 2.7 Singapore cents per share. This translates to a dividend yield of 1.9%.

The Group Chief Executive Officer, Mr. Toh Peng Koon, commented, “The challenges we encountered this year have dampened our performance. Many of these difficulties are due to macroeconomic conditions. We believe that this is for the short term. By expanding our store network and enhancing the store retail experience to target middle-to higher-income consumers, we are confident of harnessing the growth in all our markets.”

The shares closed at $1.40 on 21st August 2013. The company sports a price-to-earnings ratio of 25 on the back of earnings per share of 5.6 Singapore cents for FY2013.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.