Dairy Farm's beauty and convenience business takes hit in Q1

Movement restriction policies led to store closures in China.

Singapore-listed Dairy Farm International’s total subsidiary sales dropped in Q1 2020 as it saw significant reduction in sales from its health and beauty and convenience business due to deteriorating consumer sentiment, the company announced.

The group’s grocery retail businesses recorded profit growth as various government activities restricting movement resulted in a rise in customers eating at home and building pantry reserves.

On the other hand, its convenience businesses were significantly constrained in the period, as movement restrictions and physical distancing requirements led to store closures in Mainland China and reduced customer numbers in Hong Kong and Singapore.

Its North Asia health and beauty business was also significantly impacted by the effects of the measures taken by governments to counter the pandemic, as well as the lack of custom from overseas tourists, despite seeing an initial surge in demand for personal protection products.

“In Southeast Asia, where pandemic-related restrictions were initially less severe, the business continued to perform well in the period. However, government policies enforcing social distancing began to take effect towards the end of the quarter in Malaysia and Indonesia which will adversely impact trading in the second quarter,” the company said.

Sales in the home furnishings business grew YoY, as strong e-commerce growth and the store opening in the prior year more than compensated for the impact taken by customer visits amidst the pandemic. Lower pre-opening expenses and improved gross margins resulting from lower cost of goods sold also improved profitability.

Restaurant Maxim’s, the group’s 50%-owned associate, was affected by a substantial fall in customers and some temporary closures of its outlets.