Sheng Siong Group reported Wednesday its third quarter net profit rose 16.4 percent on-year to S$20.6 million on the addition of new stores and an improved gross profit margin.
Revenue for the quarter ended 30 September increased 11.4 percent on-year to S$253.8 million, the supermarket operator said in a filing to SGX.
Around 10.4 percentage points of the revenue growth was from new stores, with 1.3 percentage points from the China stores, Sheng Siong said, adding that was offset by a 0.3 percentage point fall in comparable same-store sales due to poor consumer sentiment.
The gross profit margin rose 0.6 percentage point to 27.1 percent for the quarter, mainly on a slightly higher sales mix of fresh produce and lower input costs due to higher suppliers’ rebates, the filing said.
“Consumer’s sentiment seems to have deteriorated in the last few months. Sales at supermarkets dipped in the last few months as reported in the retail sales numbers published by the Department of Statistics, Singapore. Competition was keener as more new stores were added into the market by the competition,” the supermarket operator said.
Administrative expenses increased 12.6 percent on-year to S$43.94 million in the quarter, mainly on higher staff costs from adding headcount to operate the new stores, higher provision for bonuses on the better financial performance and an increase in depreciation due to changes in accounting for leases, Sheng Siong said.
“Revenue at the new stores will require time to grow to its normal level, but certain expenses like rent and basic staff crewing are fixed, regardless of revenue,” the filing said.
For the nine-month period, Sheng Siong reported net profit rose 10 percent on-year to S$58.4 million on revenue of S$743.4 million, up 11.1 percent on-year.
In the outlook, Lim Hock Chee, Sheng Siong’s CEO, pointed to the opening of two new stores, with another new store set to be operational by the first quarter of next year.
“Going ahead, we will continue with our efforts in expanding our retail network in Singapore, especially in areas where our potential customers reside,” Lim said in the statement. “Besides placing focus on nurturing the growth of our new stores in Singapore and China, we remain committed to enhancing the gross margin and lowering input cost by improving the sales mix with a higher proportion of fresh produce and deriving more efficiency gains in the supply chain.”
Sheng Siong has 59 outlets in Singapore, mainly in the “heartlands,” or suburban locations.