Review of Current Quarter Performance versus Corresponding Quarter Last Year
On the back of a more jubilant Hari Raya with local travel restrictions lifted and the re-opening of international borders, the Convenience Stores segment registered a Revenue of RM644.3m, an increase of RM207.6m or +47.5% higher as compared to previous year corresponding quarter. Notably, Revenue across all product categories grew in the current quarter, resulting in higher Gross Profit by RM80.2m or +60.5% to RM212.7m. In addition, Gross Profit margin improved by +270 basis points, mainly due to lower contribution of tobacco sales.
We had in the current quarter successfully rolled out sixteen (16) of our 7-Café store format, bringing a total count of thirty-one (31) 7-Café stores for the period ended 30 June 2022. It is encouraging to note that these 7-Cafés are more productive and have higher fresh food sales participation as compared to a normal store.
Operating Expenses increased by RM50.1m or +33.3%, driven by higher store operation related expenses vis-a-vis longer operating hours and minimum wage effect. Excluding corporate exercise expenses, the Convenience Store segment recorded a Core Profit After Tax of RM25.0m, an increase of RM19.5m or +365.9% higher as compared to previous year corresponding quarter.
The Pharmaceutical segment also benefited from more robust trading activity and the re-opening of international borders spurred medical tourism, especially for Wellings Pharmacy. The segment recorded a Revenue of RM299.4m for the quarter, an increase of RM59.4m or +24.8% higher than previous year corresponding quarter.
Gross Margin improved from 18.5% to 19.6% mainly driven by higher sales contribution from Blue Ocean products. As a result, Core Profit After Tax increased by RM2.2m or +32.4% to RM9.0m for the quarter.
Corporate exercise expenses of RM5.1m primarily consists of finance costs for the acquisition of Caring Group. The Group’s Consolidated Profit after Tax for the current quarter after corporate exercise expenses is reported at RM28.8m, an increase of RM25.2m or +697.6%.
Review of 6 Months Period Performance versus Corresponding Period Last Year
With the overall longer operating hours in the first half of 2022 and a bumper second quarter performance, Revenue for the Convenience Stores segment increased by RM282.4m or +31.9% to RM1,168.2m; with all product categories recording higher Revenue, thereby resulting in higher Gross Profits. Excluding corporate exercise expenses, the Convenience Store segment recorded a Core Profit After Tax of RM41.7m, an increase of RM26.0m or +166.5%.
Revenue from the Pharmaceutical segment increased by RM167.4m or +37.4% to RM615.4m, while Profit After Tax closed at RM28.7m, an increase of RM15.6m or +119.1%.
The Group’s Consolidated Profit After Tax for the period ended 30 June 2022 after corporate exercise expenses is reported at RM60.0m, an increase of RM42.9m or +250.1%.
Notwithstanding the recent positive turnaround in trading conditions and retail sentiment, the Group is cognisant and will continue to monitor potential headwinds arising from global supply chain disruptions, workforce supply constraints and costs pressures on the back of rising minimum wages and inflation; essentially, we will take appropriate measures to mitigate these impacts, as necessary.
The Convenience Store segment will continue to focus on the roll out of its new 7-Café store format, which entails much improved product offerings and in-store customer experience. In addition, this 7-Café format is expected to contribute positively to the growth of our fresh food category. We will also continue our efforts to enhance our product assortment, fresh food and private labels to drive stronger sales mix for margin improvement and/or preservation.
The Pharmaceutical segment, which had shown much resilience over the pandemic and will continue to strengthen its market share together with The Pill House and Wellings group. At the date of this report, we have opened our first Caring store in Sarawak and with that, the Group has now established its store footprint nationwide except for Terengganu. On the same note, Wellings had also successfully opened seven (7) stores in Indonesia via our joint venture in PT Era Caring Indonesia.
