Parkson shuts down less than 2 years after its opening

In the wake of closing its 20 year store at Suria KLCC, Parkson has shut yet another store, this time at Parkson M Square Mall in Puchong, Selangor. The store shut down on June 30 after just a year and a half of operations.

A spokesperson from Parkson who confirmed the closure said sales were below expectations.

“The retail market is very dynamic. New store opening and closure is part and parcel of our business. In Malaysia, shopping malls are mushrooming everywhere and the demographics are ever changing. Understandably, we are always cautious and selective when choosing new store locations; however when sales do not meet expectations, we have to cut losses and move on,” said the source.

The spokesperson also pointed out that despite the very difficult and challenging market conditions in a shrinking disposable income market, Parkson still managed to achieve same store sales growth for the department store category in excess of 5% in the nine months ended March 31, 2019.

This compares to data compiled by Retail Group Malaysia on behalf of Malaysia Retailers Association (MRA) which saw the department store category expand by 2.5% in the July to September 2018 quarter, by 1% in the October to December 2018 quarter and by a marginal 0.8% growth in January-March 2019.

Parkson, a Lion Group company, in its results announcement to Bursa Malaysia for the third quarter ended March 31, 2019, said revenue grew by only 2% to RM788 million from a year ago following the closure of underperforming stores.

“Savings arising from stores’ rationalisation and improved operating efficiencies have enabled the operations [to report profits of RM1 million],” it said.

“As mentioned, shopper demographics are constantly evolving and we will continue to pursue new location opportunities; and where necessary, undertake closure and resizing of existing stores. As of now, we have 43 operating stores,” the spokesperson added.

The Puchong M Square Mall, located in Millenia City, near Puchong Perdana, was launched in January 2018. The store had 32,516 sq m of retail space, including two levels of carpark. Apart from the department store, the retailer also offered a Foodpark Supermarket by Parkson, which is a gourmet supermarket and food hall.

Parkson has closed several stores since 2017 including stores in Megamall Kuantan (September 2017) and Melaka Mall (in December 2017) after operating for 10 years. Subsequently, it closed stores in Maju Junction and Sungei Wang in 2018.

The home-grown retailer had a total of 42 stores in FY2015, 44 outlets in FY2016, 45 stores in FY2017, and 44 stores in FY2018.

source:/www.theedgemarkets.com