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Sheng Siong's profit inches up 6.1% to $16.1m
Thanks to higher revenues and improved gross margins.
Supermarket giant Sheng Siong reported an improvement in its bottom line for the past quarter ending in June, up 6.1% to $16.1m.
According to the group, this came as the revenue increased by 6.8% to $201.5m, of which 5.2% was contributed by the new stores, 0.9% by comparable same store sales and 0.7% by Loyang Point and The Verge stores.
The growth in same stores sales was mainly due to improved consumer sentiment, but it was offset by the decline in footfall of stores in areas affected by the slowdown in the oil and gas industry, the store at Tampines which was undergoing renovation, and the Woodlands store.
Meanwhile, gross margins increased to 26.6% in 2Q17 compared with 26.1% in 2Q16, mainly because of input cost which was lowered by efficiency gains derived from the central distribution centre and a higher level of suppliers’ rebates; and a better sales mix of higher gross margin fresh versus non-fresh produce.
The improvements in revenue and net profit came with the $1.8m increase in administrative expenses. Higher costs were incurred due to the uptick in staff costs as more headcounts were needed to operate the new stores and a higher bonus provision as a result of the higher operating profit.
Looking ahead, Sheng Siong CEO Lim Hock Chee said the group will continue with its efforts in expanding its retail space in Singapore, particularly in locations where we do not have presence to reach out to potential customers.
"At the same time, we remain committed to nurture the growth of our new stores. In order to enhance our operating margin, we will stay focused to lower our input cost by increasing direct purchasing, bulk handling and changing the sales mix to a higher proportion of fresh produce," he noted.
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