SUPERMARKET chain Sheng Siong : OV8 0% on Thursday (Apr 25) posted a 9.3 per cent rise in net profit to S$36.3 million for its first quarter ended Mar 31, from S$33.2 million the year before.
Revenue for the quarter rose 5.5 per cent to S$376.2 million from S$356.5 million, mainly driven by higher same store sales, said the group in a bourse filing.
The higher revenue was also supported by a longer sales period before the Chinese New Year festive season – which fell in February this year – as compared to January last year, it added.
Gross profit margin improved 0.6 percentage point to 29.4 per cent in Q1, from 28.8 per cent. This was primarily due to the group’s continued efforts in optimising the sales mix and addressing increased staff costs and utility expenses.
The group recorded higher operating expenses for the quarter. This was attributed to selling and distribution expenses rising 7.2 per cent to S$58.1 million on the year, as well as administrative expenses rising 15.6 per cent to S$14.5 million – of which were due to higher staff variable bonuses, as a result of better financial performance.
The global economy continues to face uncertainty and risks in 2024, noted Sheng Siong, pointing out persistent inflation, supply chain disruptions, geopolitical conflicts and a tight labour market.
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Competition in the retail market also “remains intense”, with active promotions being launched by competitors. Coupled with escalating labour costs driven by manpower shortage and higher energy costs, the group said it could face margin pressures.
Lim Hock Chee, chief executive officer of Sheng Siong, said: “Despite economic uncertainty, the group has demonstrated resilience and maintains its commitment to providing customers with quality products at affordable prices.”
He added that the group will diversify its supply chain and refine its sales mix towards higher-margin products in order to manage risks effectively.
The group will also remain “proactive” in seeking retail space in new and existing housing estates to open more stores, having opened two new stores in FY2023 and one store in Q1 FY2024. It is currently awaiting the results of four outstanding tenders.
The group’s local store expansion strategy continues to be supported by a “robust” supply pipeline of HDB housing, Lim said. Another six stores are expected to be put up for tender in the next six months.
He added that the group’s operations in China are also experiencing “steady growth”, with a sixth store set to open there in the second quarter of FY2024.
Shares of Sheng Siong closed at S$1.54, up S$0.01 or 0.7 per cent on Thursday, before the results were announced.
