FPT Retail reports yet another quarter of losses

FPT Retail is still wallowing in losses from its core investments

FPT Retail, the retail arm of technology giant FPT Group, has just released its third-quarter results.

Accordingly, its pre-tax losses dropped to VND8 billion ($347,830). In comparison to the same period of last year, its revenue fell by 22 per cent to VND3.422 trillion ($148.8 million).

Although posting better performance than in the second quarter, when it had pre-tax losses of VND21 billion ($913,050), earnings continue to suffer with another round of store closures that have hurt mobile phone sales amid weaker disposable incomes and consumption demand.

According to KB Securities, the aggressive expansion of Long Chau drug stores was another factor in its earnings fallout. The firm has upped the ante to bring better customer experience by rolling out its online channel as a solution during the pandemic. Its online sales have reached VND1.614 trillion ($70.17 million), up 22 per cent on-year, and increasing total quarterly revenue by 47 per cent.

Year-to-date pretax earnings plunged 94 per cent to a mere VND18 billion ($782,610). This represents 8 per cent of the management’s full-year earnings target and 9 per cent of this year’s consensus.

Revenue for the first nine months is also down 14 per cent on-year to VND10.729 trillion ($466.5 million), equaling 70 per cent of the management’s annual goal.

On the other hand, FPT Retail has ventured beyond their traditional businesses and into pharmacy retail in recent years, with the Long Chau pharmacy chain. Long Chau pharmacy chain recently reported its third quarter’s revenue reaching VND351 billion ($15.26 million), up 131 per cent on-year.

Strong topline growth was likely from the pickup in demand for health products and flu medications due to the pandemic but these items usually carry thinner margins.

The total number of stores reached 593 FPT shops and 176 Long Chau stores, following the opening of 41 new Long Chau locations and closing of three FPT shops in this quarter.

The company’s board, however, remains committed to expanding the Long Chau franchise and is planning to open more than 200 stores nationwide by the end of 2020.

The company’s initial plan was to open 150 new Long Chau stores this year.