Parkson earnings grow 40pc on strong sales, cost control

Parkson Retail Group, the mainland department store unit of Malaysia's Lion Group, delivered a 40.3 per cent growth in first-quarter net profit yesterday, benefiting from strong domestic consumption on the mainland and effective cost control.

Net profit for the three months to March rose to 225.2 million yuan (HK$253.15 million) or 40.64 fen a share, from 160.48 million yuan or 29 fen a share, a year earlier, the company said.

Sales climbed 25.5 per cent to 2.83 billion yuan from 2.26 billion yuan at the same time in the previous year.

'The booming mainland retail sales is the biggest factor behind the company's good performance, but its effective cost control and economy of scale also helped and are the key to fend off fierce competition in the market,' said Randy Zhou, an analyst at UBS Securities.

Mainland retail sales of consumer goods last month rose 22 per cent year on year to 814.2 billion yuan, the biggest rise since 1999 when monthly data in that category was collected for the first time, according to government statistics. Urban retail sales rose 22.9 per cent to 555.9 billion yuan with retail sales in rural areas up 20.1 per cent to 258.3 billion yuan.

But the industry is crowded with smaller national rivals such as New World Department Store China as well as regional players including Zhejiang-based Intime Department Store (Group), Shenzhen-based Maoye International and Jiangsu-based Golden Eagle Retail Group.