DFI Retail: 1Q22 grocery sales bolstered by panic buying

Outlet of Cold Storage supermarket, which is owned by Dairy Farm, at Kinex mall in SingaporeOutlet of Cold Storage supermarket, which is owned by Dairy Farm, at Kinex mall in Singapore. Photo taken pre-Covid

DFI Retail Group, formerly known as Dairy Farm Group, said Thursday its grocery retail and health and beauty businesses got a boost from panic buying in North Asia due to increases in Covid-19 cases.

The surge in cases spurred panic-buying in core grocery products and rushes for Covid-19 protection items and anti-bacterial products, DFI Retail said in a filing to SGX.

“The trading performance of both Grocery Retail and Health and Beauty benefitted from these factors, which offset heavy reductions in foot traffic that negatively impacted Convenience performance,” the company said. “In Southeast Asia, stronger year-on-year performance within Health and Beauty broadly offset some softer performance in Grocery Retail as a result of normalisation of customer behaviours.”

Like-for-like sales for the grocery retail business in the quarter came in higher on-year, with Wellcome outlets in North Asia seeing strong growth on pantry-stocking behaviour, the filing said. In Southeast Asia, sales was impacted by easing of movement restrictions and store renovation disruptions in Singapore and disruptions to stock availability on pandemic-related disruptions in Malaysia, the filing said.

Overall grocery retail profitability for the first quarter was broadly in-line with the year-earlier period, DFI Retail said. The health and beauty business posted strong sales growth in the quarter amid strong demand for Covid-related products, with the sales translating into solid on-year profit growth, the filing said.

For the home furnishings division, first quarter revenue rose on-year on the impact of the previous year’s newly opened stores and strong e-commerce sales, the filing said. Like-for-like sales, however, fell as the Covid case surge impacted store visits in Hong Kong and limited store operating capacity in Indonesia, the filing said.

“Despite the challenges posed by Covid-19 and ongoing supply chain constraints, IKEA’s profitability in the quarter was broadly in line with the prior year, reflecting strong cost control,” DFI Retail said. “Global geopolitical conflicts and recent government-imposed movement restrictions in the Chinese mainland have, however, exacerbated IKEA’s supply chain constraints further, and this is likely to delay a return to normalised levels of availability and further adversely impact trading performance.”

In its outlook, the company pointed to a “high level of uncertainty” for 2022 on pandemic-related restriction sin China and Hong Kong.

DFI Retail said full year results are expected to be lower than in 2021, due to additional planned investments in digital capacity and headwinds from prolonged border closes in China and Hong Kong and continued supply-chain disruptions.