MALAYSIA. Duty Free International has reported a duty free retail revenue increase of +38.0% in Q1 FY2017, amounting to RM52.9 million (US$13.4 million).
It was the main contributory factor to an overall +37.9% year-on-year increase in revenue to RM192.6 million (US$48.8 million).
The retailer attributed the revenue growth to an improvement in the pricing for certain products as well as revenue contributed from new outlets at Kuala Lumpur International Airport 2.
It also noted that in Q1 FY2017, the value of the closing inventories was lower than the value of the opening inventories by RM57.9 million (US$14.7 million). In Q1 FY2016, the value of the closing inventories was higher by RM23.8 million (US$6 million). This resulted in a variance of RM81.7 million (US$20.7 million) for Q1 FY2017 against Q1 FY2016, which Duty Free International said “was mainly due to timing differences in purchases and consumption of inventories in the respective quarters”.
The rental of premises expenses increased +20.3% to RM11.8 million (US$3 million). The retailer said this was mainly due to rental expenses incurred for its outlets in the Zon Johor Bahru, which increased by RM1.0 million (US$0.25 million), based partly on higher revenue achieved.
There was also an increase in rental expenses of RM1.0 million (US$0.25 million) for the outlets at Kuala Lumpur International Airport 2, which opened in August 2015. The rental payable for the KLIA outlet is based partly on sales performance.
Duty Free Internationals said it expected the operating environment to “remain challenging”, given the present economic outlook and weak consumer sentiment on the back of a rising inflationary environment.
It stated: “The Group will continue its efforts in enhancing operational efficiency, stringent cost control measures, intensifying marketing efforts and improving its core business by exploring further business opportunities and strategies.”
Duty Free International also noted its previous announcement to sell an initial 10% stake in its subsidiary DFZ Capital Berhad to Heinemann Asia Pacific, with options to sell a further 15%. It said the sale and purchase of the First Tranche Sale Shares was completed on 1 June 2016.
“The disposal is expected to enable the Group to benefit from the resources and expertise of Heinemann Asia Pacific in the areas of product assortment and costing, retail store management, distribution and logistics management of products,” Duty Free International stated. “The disposal is also expected to further strengthen the Group’s financial strength, enabling the Group to consider future business opportunities.”
