Central Retail Corporation PCL (CRC) reported its second-quarter financial performance for 2020 as the company’s earnings came in at a loss of 2,590 million baht, sharply declining by 293 per cent year-on-year and 448.7 per cent quarter-on-quarter. 

The results missed TISCO Securities’ forecast by 230 per cent and 132 per cent on consensus.

CRC is a leading multi-format, multi-category retail platform. The company operates three business units consisting of fashion, hardline and food in Thailand, Vietnam and Italy with 2,083 stores in total.

In the second quarter of the year, weak fashion sales attributed to the bottom line slump in both the domestic and overseas market. The food business met the downside while the hardline stores saw the least impact.

As expected by TISCO, sales of fashion products dropped in the second quarter by -48 per cent year-on-year due to both citywide lockdowns and weakness in household income. Loss of tourists also dragged the company’s performance. 

The sales of food products also declined by 10.3 per cent year-on-year for both the supermarket and convenience store channels. Hardline sales fell only 3 per cent year-on-year.

Same-store sales growth (SSSG) dropped across the board due to the 8-10 week store closures. The retail sales margin declined by 659 baht per share year-on-year and 290 baht per share quarter-on-quarter.

SG&A surged to 14.1 billion baht or 30.0 per cent of all total sales. The key drag was from 1 billion baht in administration expenses. 

TISCO said in the research to note that CRC plans to close eight stores and 225 counters at CMG Malaysia in the second half of 2020.

From the second-quarter report, analysts anticipate households to remain cautious on spending and will cut some non-essential items due to the poor economic outlook. Sales of fashion products, which accounted for 52 per cent of EBITDA in 2019, should be hit the hardest.

TISCO remains ‘HOLD’ to CRC with the target price of 20 baht per share. 

An analyst from Phatra Securities rates CRC as neutral and suggests the target price of 36 baht per share.

Phatra said in the research paper that the upside-risk of CRC are strong sales recovery post-COVID-19, higher retail margin and lower funding cost.

However, the downside risks include the fact that the pandemic could last longer than expected, market competition outlook, economic volatility and operational risks.

CRC shares stood at 30.75 baht per share as Tuesday morning market ended (12:30 p.m.), increasing by 1.50 baht or +5.13 per cent.

 

Thai Enquirer