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Is the worst over for Dairy Farm?
Competition relaxed as Amazon Prime limited its services to paying members.
Analysts are bullish that the worst is over for struggling retail giant Dairy Farm as competition from smaller players and Amazon Prime may be easing and the store is set to recover its lost market share under new leadership.
This comes as Amazon Prime started charging a subscription last December. With the local market remaining averse to paying subscription fees, this should limit Amazon’s momentum and give room for Dairy Farm to step up.
“As overall industry sales have been showing strong growth since 2H17, we believe same-store sales should improve on rising consumer confidence,” said RHB Research analyst Juliana Cai.
The leadership of newly knighted CEO Ian McLeod, who has turned around retail giant Coles, is also set to steer the company to a positive growth trajectory as the company recuperates from major store closures and stock clearances.
The move is projected to boost overall efficiency and productivity especially for the company’s Malaysian operations. “The upcoming opening of a new distribution centre should translate into operational efficiencies this year, while YTD appreciation of the MYR is also positive for Dairy Farm,” Cai added.
The company is also planning to acquire 18.25% stake in a top Philippine retailer for $681.93m as it scours new markets to fuel its comeback.
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