Kimly post fiscal 3Q net profit fell 6 percent on higher expenses

A Kimly-owned Rive Gauche outlet at VivoCity mall in Singapore.A Kimly-owned Rive Gauche outlet at VivoCity mall in Singapore.

Singapore-style coffee shop operator Kimly reported Wednesday its fiscal third quarter net profit fell 6 percent on-year to S$4.69 million despite higher revenue as expenses increased.

Revenue for the quarter ended 30 June rose 3.5 percent on-year to S$51.65 million, Kimly said in a filing to SGX. That was on contributions from Japanese restaurant chain Tonkichi and Japanese-French confectioner Rive Gauche, brands which were acquired in July 2018, Kimly said.

Selling and distribution expenses jumped 38.8 percent on-year to S$1.21 million on increased delivery charges, cleaning and packaging materials, while administrative expenses rose 5.1 percent on-year to S$3.27 million in the quarter on higher depreciation, the filing said.

Cost of sales rose 3.9 percent on-year to S$42.10 million, in line with higher revenue, the filing said.

For the nine-month period, Kimly posted net profit of S$14.70 million, down 9.2 percent on-year, on revenue of S$155.79 million, up 4.4 percent on-year.

In its outlook, Kimly appeared cautiously optimistic.

“Given the recent economic slowdown, the coffee shop dining option remains attractive to the value conscious consumers,” Kimly said, adding it expected to remain profitable for the fiscal year.

“The group continues to monitor the challenges in local F&B industry, including issues of affordability at a time of slower economic growth and the reduction of the Foreign Worker Quota (announced in Budget 2019), which will come into effect over the next two years,” Kimly said.

Kimly added it obtained leases for three coffee shop sites from the Housing and Development Board (HDB), which operates Singapore’s public-housing system. Operation for the new coffee shops is expected to begin in the first quarter of 2020, it said.

The coffee shop operator said it was working to expand its offerings to diversify its revenue streams via acquisitions, such as Tonkichi and Rive Gauche, and it was seeking cost savings, including via using its central kitchen for food preparation.

The company also pointed to two new products: The bak kwa pau, or BBQ pork jerky bun, which is set to begin sales in 45 Kimly Dim Sum stalls and on major food delivery platforms this week; and Kanaaji, a new brand of value-for-money Japanese cuisine, currently operating at Kimly’s refurbished Foodclique food court at National University of Singapore.

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