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Vietnam's retail giant: fish meat is good, pharmacy is painful

In the context of the difficult technology market, The Gioi Di Dong recorded a positive signal of Bach Hoa Xanh chain, FPT Retail massively opened a new Long Chau pharmacy; while Digiworld grew from importing beverages, home appliances...

Massively opening new retail, price competition pressure

FPT Retail (FRT) 's consolidated financial report for the second quarter of 2023 shows that this technology retail business turned a profit into a large loss despite the revenue growth.

FRT had net sales of VND 7,170 billion during the period, up 15% yoy. A series of expenses skyrocketed, making the business picture worse, such as: General and administrative expenses (increased by 170%); selling expenses (up 24%), interest (up 50%)... As a result, FRT lost VND214 billion, while the same period gained VND46.7 billion.

In 6 months, FPT Retail's net revenue reached VND14,923 billion, up 7%. Profit after tax was negative nearly 224 billion dong.

The reason explained by FRT leaders was that the Long Chau pharmacy chain opened 565 new stores compared to the end of the second quarter of last year. Despite contributing significantly to consolidated revenue, it is still in the investment stage, so profits have not improved much.

In its separate financial report with a loss of VND251 billion, FPT Retail said its revenue in the second quarter decreased by VND797 billion because the demand for goods declined sharply when consumers tightened spending, especially with high-value items. , not essential.

Another important reason mentioned by FPT Retail is that the level of competition in the e-retail industry continues to be strong, with price competition to gain market share.

At the annual general meeting of shareholders in 2023, the company's leaders said that with the FPT Shop chain, there will be many sales policies, promotions, and price subsidies. Therefore, the gross profit margin is expected to be lower than in previous years.

To improve gross profit, the company revealed that it will sell more household goods in the existing FPT Shop chain. By the end of June 2023, FPT Shop has 800 stores, of which 585 are selling household appliances, an increase of 285 compared to the beginning of the year.

Even selling household appliances, the accumulated revenue of FPT Shop in the first half of this year still decreased by 19% over the same period, reaching VND 8,118 billion.

With the Long Chau chain, in the first 6 months, 306 new pharmacies have been opened. The average revenue reached more than 1 billion VND/store/month, bringing the total revenue to 6,899 billion VND, up 72%. Currently, this chain has 1,243 pharmacies.

Competitors selling vegetables, meat, and fish "lose" more than phones

The big "rival" in the market of FPT Retail is Mobile World (MWG). The competition between these two "big guys" is quite fierce, once compared to the battle between Amazon and Walmart in the US.

Mobile World has not released its Q2 financial report yet, but the business update for the first 6 months shows the preliminary situation. In the first half of the year, MWG achieved net revenue of 56,570 billion dong, down 20%.

Which, the total revenue of 2 chains The Gioi Di Dong and Dien May Xanh (two retail chains of technology such as phones and televisions...) reached more than VND 41,500 billion, down 27% over the same period.

In June, the total revenue of the two chains mentioned above reached VND 6,700 billion, down 13% from the previous month and down 25% from the same period last year. The reason came from the decline of air conditioners while other products continued to improve in sales.

With the Bach Hoa Xanh chain (selling food), June revenue reached VND2,530 billion, up 9% over the same period and up 3% compared to the previous month. Average revenue exceeded VND1.45 billion/store in June. MWG revealed that this chain is expected to continue to improve sales strongly in July.

Accumulated in the first 6 months, Bach Hoa Xanh brought in VND 13,600 billion, up 7% over the same period.

By the end of June, Mobile World had 1,180 stores, down 9 stores compared to February this year. Similarly, Bach Hoa Xanh also reduced 23 stores to 1,706. the An Khang drugstore chain increased the number of stores, but it was still less than "rival" Long Chau.

The decline in electronic sales is not only for retailers, a wholesaler and retailer like Digiworld is no exception.

In the second quarter of 2023, the total revenue of Digiworld (DGW) reached VND 4,596 billion, down 6%, and profit after tax reached VND 83 billion, down nearly 40% over the same period.

In the second quarter, mobile phones - the largest revenue contributor for the company in this quarter reached VND2,190 billion, down 19%. The office equipment segment also decreased when the economy was difficult and businesses were "afraid" to innovate.

The impressive growth in the period of this "big man" suddenly came from the sales of consumer goods, which increased by 70%. As explained by the company's leaders, the growth mainly comes from importing beverages and shaking hands with two giants ABinbev and Lotte Chilsung.

Like FPT Retail, this company recorded a sharp increase in selling and administrative expenses. Which, selling expenses increased more than 2 times over the same period.

By the end of June 2023, short-term receivables from DGW's customers also increased by nearly 50% compared to the beginning of the year, reaching 2,356 billion VND, an increase of nearly 50% compared to the beginning of the year. Which, revenue from Mobile World increased by 80 billion VND to VND750 billion, with FPT Retail (FRT) from nearly VND13 billion to VND215 billion...

(Tuoi Tre)


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