Hong Kong-headquarter retail group Dairy Farm has reported a drop in sales and a rise in costs in the third quarter of 2015.
Difficult economic conditions including unfavourable exchanges rates and government regulations have affected its performance in markets such as Singapore and Malaysia, the group said in an interim management statement released on 4 November, adding that its food business in North Asia saw “satisfactory” results.
Dairy Farm’s Singapore-based business including 7-Eleven stores and Cold Storage supermarkets sale profits fell as a result of government restrictions on alcohol sales in 7-Eleven stores as well as weak performances in its newer stores.
Within Malaysia, Dairy Farm said the introduction of a goods and services tax (GST) and lower consumer confidence has affected sales at its Giant stores.
In Indonesia, the group said that labour costs and investments in price to attract more customers have negatively affected the good sales that were reported in July and August.
After purchasing a 19.99 per cent stake in China’s Yonghui Superstores earlier this year, Dairy Farm has announced a further US$210m investment in early 2016 to maintain its share after Chinese e-tailer JD.com bought a 10 per cent stake.
“With respect to recent investments, there have been positive contributions from [supermarket chain] San Miu in Macau and from Yonghui in China, despite the challenging trading environment,” the group said.
With more than 6,400 outlets from conveniences stores to hypermarkets, as well as health stores and restaurants, Dairy Farm’s 2014 annual sales were more than US$13bn.
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