Singapore's Sheng Siong records 19.3% profit growth
TOMOMI KIKUCHI, Nikkei Staff Writer
SINGAPORE -- Sheng Siong Group, one of Singapore's major supermarket chains, recorded a net profit of 12.5 million Singapore dollars ($9.9 million) in the first quarter of 2014, a year-on-year growth of 19.3%. Sales increases at eight stores opened in 2012 contributed to profit growth, as did better sales at older stores following renovations and other improvements. Despite some setbacks, such as a tight labor market and rising employment costs, the company expects the new venues to continue supporting its financial performance.
Revenue for the period grew to S$189.7 million, up 5.7% from last year's S$179.4 million, with 2.7% coming from the eight new stores opened in 2012, and 3% from comparable same-store sales. Same-store sales grew primarily due to longer operating hours. Out of the 33 Sheng Siong stores, 29 are now open for 24 hours.
The company has reassessed areas such as store inventory and product positioning to improve sales at five or six underperforming outlets. Two of those stores were renovated last year. In the first quarter of 2014, the renovated outlets saw stronger growth in sales compared with other existing stores. After seeing these results, the company stated at a briefing on Friday that it will renovate at least three stores before the end of this year.
Higher staff costs resulted in a 7.1% increase in administrative expenses. The firm managed to keep logistical costs in check by shifting some store deliveries to nighttime for higher efficiency. The percentage of administrative expenses to revenue was 15.8%, compared with 15.6% in the first quarter of 2013.
The scarcity of labor will be a challenge as the Singaporean government plans to implement tighter restrictions on the ratio of foreign workers to local workers that a company can hire. Currently, around 25-30% of Sheng Siong's employees are from outside Singapore. "Most of our nightshift workers are from countries like Malaysia and China," CEO Lim Hock Chee said in the briefing. "We have some Singaporeans but not much."