MC Forges Ahead With its Expansion Plan Under Temporary Contraction in Retail Market and Announced Interim Dividend Payment of THB 0.45/Share for 1H 2017

Stocks and Financial Services Press Releases Friday August 11, 2017 10:37
Bangkok--11 Aug--MC GROUP

MC GROUP Public Company Limited and its subsidiaries ("MC") released its first half of 2017 sales revenue of THB 2,139 mn, dropping by 0.6% from the first half of 2016 amidst weak demand and intense competition in the retail market. The Company posted a net profit of THB 321 mn, declining by 18.2% from same period last year. For Q2 2017, MC reported sales revenue of THB 919 mn and a net profit of THB 90 mn, dropping 8.7% and 53.0% respectively compared to the same period in the previous year. Nevertheless, MC reached a resolution to pay a dividend worth THB 360 mn at THB 0.45 per share.

Ms. Sunee Seripanu, Chief Executive Officer stated that "the sentiment in Q2 2017 had not been at its best as domestic consumption subdued amidst competition from various retailers that suppressed revenue growth of local department stores upcountry, putting a dent on the Company's sales revenue through this channel. MC's sales revenue in 2Q 2017 and 1H 2017 dropped by 8.7% and 0.6% respectively compared to the same period last year falling below the growth target previously set at 10%"

"At the end of Q2 2017, the Company closed down 22 points of sales, net, from the end of last year, finishing the quarter at 875 outlets, comprising 296 free standing shops, 561 doors in modern trade channel, 6 mobile units as well as 12 points of sales outside of Thailand. Such changes are part of the Company's international dealership reprogram and current year's sales network expansion, whereby most new outlets will be opened in the latter half of the year"

Mr. Bundit Praditsuktavorn, Chief Financial Officer added "For the first half of the year, the Company recorded a net profit of THB 321 mn, declining by 18.2% from Q2 2016 driven by lower sales revenue and gross profit margin. MC's gross profit margin for 1H 2017 was at 51.0% compared to 53.1% of the same period last year while its overall gross profit margin in Q2 2017 stood at 50.9%, decreasing from 54.5% of the same period last year and about the same level as that of Q1 2017. The overall decline of gross profit margin was caused by sales promotions launched to support wholesales channel.

Ms. Sunee Seripanu, Chief Executive Officer made a remark on the Company's business plan that "On the back of the softening demand, the Company remains committed in its business plan to achieve sustainable growth in the long run. Key highlights of our strategies are:

(1) Emphasis on innovations of major denim products through such collection as MC MOVE and MC COOL in order to differentiate the brands, maintain leadership position in the industry as well as tap new target groups of customers.

(2) Investment in new lifestyle products. In 2017, the Company's focus is on skin care or home spa products which now extends to cover eau de perfume, aromatic soap and scented talcum powder in addition to body lotion and shower gel earlier launched. The Company had opened pop-up stores to raise brand awareness of these products at Centerpoint of Siam Square and Terminal 21 before opening the one most recently at Mega Bangna. The products are also available at Mc Jeans stores and its online channel In parallel, MC continues to seek strategic partner in bringing new lines of lifestyle products to the market.

(3) Investment in Customer Relationship Management (CRM) and E-Commerce system that will be a foundation for sustainable revenue-generating capability

(4) Continuous expansion of sales network to serve broader group of customers. The Company planned to add 15 points of sales during the second half of 2017. Furthermore, the Company and Robinson Department Store joined forces in enlarging 30 existing points of sales that is expected to bring more opportunities in both short and long term."

Mr. Bundit Praditsuktavorn, Chief Financial Officer further commented that "Revised channel strategies is expected to require an investment of THB 80 mn in 2017, up from THB 70 mn previously budgeted at the beginning of the year. Given the extended period of slowdown, the Company revises sales growth estimate for 2017 down to 3% from 10% earlier forecasted as well as revises down gross profit margin estimate from 54%-55% to 52%-53%."

"MC set its ex-dividend date on 23 August 2017 and will publish the list of shareholders who are entitled to the dividend payment on 25 August 2017. Book closing date will be on 28 August 2017 and dividend payment is scheduled on 8 September 2017"

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