Sheng Siong recovery looms as same store sales rebound

Same-store sales are expected to bounce back 0.5% after a 0.6% decline in H1.

Sheng Siong Group’s same-store sales (SSS) may rise by 0.5%, after seeing its Q2 and H1 figures down 0.3% and 0.6% YoY, respectively, according to a Maybank Kim Eng report.

This SSS forecast is due to low base effect. Maybank Kim Eng said that risks to its view include higher-than-expected new stores, stronger-than-anticipated SSS contributions and improved consumer sentiment.

The report also noted that the SSS results in Q2 and H1 closely mirrors the whole supermarket industry’s performance as it dipped 0.3% and 0.7% YoY, respectively.

Furthermore, Sheng Siong’s sales contraction could be due to a combination of declining footfall and shrinking basket values. According to analyst Sze Jia Min, this suggests that the supermarket business is not immune to the challenges faced by the industry as well.

The profits of the supermarket chain rose 6.6% YoY to $37.8m in H1 from $35.4m in 2018, whilst its Q2 profits climbed 11% YoY to $449.6m from $441.3m previously. This was attributed to higher revenue, slightly improved gross margin, and higher other income.

Overall, supermarket sales together with the main retail sales index slipped 0.4% YoY in June whilst retail sales fell by 2.7%, excluding motor vehicles. Discretionary items were said to be the main drag.