Parkson Retail Group, the mainland's largest department store operator, said it would keep using promotions to increase market share after delivering a 14.9 per cent increase in net profit for the first quarter. The department store chain, controlled by Malaysia's Lion Group, said it would strike a balance between increasing market share and maintaining operating margin, easing the concern by some analysts that heavy promotions would squeeze margins. Parkson reported net profit rose to 258.68 million yuan (HK$293.83 million) from 225.16 million yuan a year earlier, thanks to better sales and effective control over staff costs. Revenue increased 10.8 per cent to 946.48 million yuan from 853.85 million yuan while staff costs fell 7.2 per cent to 72.5 million yuan from 78.12 million yuan. Parkson said in its filing to the Hong Kong stock exchange that as a result of aggressive sales and promotional strategies, the gross margin for merchandise sales declined to 18.1 per cent from 19.4 per cent in the first quarter of last year. Concessionaire rates came in at 18.3 per cent in the first quarter, against 19.9 per cent last year. 'Amid intense competition in big cities, Parkson has to launch aggressive promotional activities to boost sales,' said a recent UOB Kay Hian report. 'It seems consumers would stop shopping without promotions.' Still, same-store sales, a key measure for business performance, grew 9 per cent, better than some department stores but trailing strong regional players such as Nanjing-based Golden Eagle Retail Group. Golden Eagle said on Wednesday that it had a 13 to 15 per cent increase in same-store sales for the first four months of the year. Overall, department stores have had diverse sales performance amid the slowing economy and intense competition in the period. Beijing Wangfujing Department Store (Group) and Shenzhen-base Maoye International Holdings saw sales fall in the first quarter, while Shanghai Bailian Group had a 7.5 per cent sales rise, according to the UOB Kay Hian report. Parkson has the biggest number of sales outlets on the mainland, located in big cities, but the stock has been viewed by analysts as expensive. Shares of Parkson have advanced 24.22 per cent so far this year, underperforming the 36.43 per cent gain by Golden Eagle. The stock closed down 2.01 per cent at HK$10.72 yesterday.