Vietnam retail majors report dismal profit in Q1

FPT Retail and Mobile World Investment Corporation reported their after-tax profit in the first quarter of this year fell 99% year-on-year, while Digiworld's profit dropped 61%.

FPT Retail, owner of FPT Shop and Long Chau Pharmacy, posted after-tax profit of VND2 billion ($85,300), down 99%.

The company said that in Q1, the demand for goods continued to decline sharply due to volatility of the economy and unfavorable macro factors, high inflation, and interest rates.

"Besides, the level of competition in e-retail is going strong."

Its net revenue reached VND7.75 trillion ($330.65 million), down 0.4%. Of this, the FPT Shop chain accounted for 58%, and Long Chau Pharma made up the rest.

Online revenue reached VND1.41 trillion ($60 million), accounting for 18% of FPT Retail’s total revenue, down 5% compared to the same period last year.

This year, FPT Retail is targeting revenue of VND34 trillion ($1.45 billion) and pre-tax profit of nearly VND240 billion ($10.2 million) in 2023, up 13% and down 51% year-on-year, respectively.

In 2022, FPT Retail, listed on the Ho Chi Minh Stock Exchange as FRT, recorded consolidated revenue of VND30.17 trillion ($1.29 billion) and pre-tax profit of VND486 billion ($20.73 million).

Of this, FPT Shop achieved revenue of VND20.69 trillion ($882.28 million), up 11% year-on-year, while Long Chau Pharmacy's revenue reached VND9.6 trillion ($409.22 million), 2.4 times.

The FRT share price hit VND64,100 ($2.73) per unit at Thursday's closing session.

Meanwhile, Digiworld, the first company providing electronic distribution solutions, recorded after-tax profit of VND82 billion ($3.5 million) in Q1, down 61%.

The company, listed on the Ho Chi Minh Stock Exchange (HoSE) as DGW, earned net revenue of VND3.96 trillion ($168.9 million), down 44%.

The biggest contributor to Digiworld's revenue was mobile phones with VND1.9 trillion ($81 million), followed by laptops and tablets with VND1.09 trillion ($46.6 million). Meanwhile, the home appliance segment saw strong growth with an increase of 158% over the same period, reaching VND165 billion ($7.04 million). The consumer goods sector hit VND120 billion ($5.1 million), up 69%.

The DGW share price hit VND33,550 ($1.43) per unit at Thursday's close.

Another retail giant, Mobile World Investment Corporation (MWG), posted after-tax profit of VND21 billion ($895,600), down 99%.

In its Q1/2023 financial report, Mobile World reported more than VND27.1 trillion ($1.15 billion) in revenue, down 25.7% over the same period last year.

In Q1, the total revenue of its two chains thegioididong.com and Dien May Xanh dropped by 34% over the same period, with the earnings of most phones and electronics products falling by 25% to 35% year-on-year, respectively. Even tablets and laptops saw a sharp drop of about 40-50% in revenue.

Meanwhile, Bach Hoa Xanh store chain’s accumulated revenue only increased by 5% in Q1.

This year, Mobile World targets VND135 trillion ($5.75 billion) in revenue and VND4.2 trillion ($179 million) in after-tax profit, up 1% and 2% from the previous year, respectively. At the end of Q1, the company completed only 0.5% of the year's profit plan.

The HCMC-based retail giant reported an after-tax profit of VND4.1 trillion ($174 million) in 2022, down 16% year-on-year, fulfilling 65% of its target. Its net revenue hit VND133.41 trillion ($5.66 billion), up 8%, according to its consolidated financial report.

On the HoSE, MWG shares were priced at VND37,900 ($1.61) at Thursday's close.

The giant has cut nearly 6,000 employees in the first quarter of 2023 to over 68,000, marking its second layoff in the past six months amid weakening purchasing power in the retail market, according to its financial report.

Earlier, the retail giant reported that its staff numbered 73,200 in Q4/2022, a quarter-to-quarter decrease of 7,000 employees.

In total, the firm laid off 13,000 people in the last six months, bringing its staff size to the same level at the end of 2021. However, on its website, Mobile World is offering 3,000 new vacancies.