2020 is the year when FPT Retail is at the bottom of business, the Company is ready for new products
2020 is the year when FPT Retail is at the bottom of business
On 28 May afternoon, FPT Digital Retail Joint Stock Company (FPT Retail, HoSE: FRT) held the General Meeting of Shareholders of 2020. In 2020, the Company sets the target of VND 15,320 billion of revenue, down by 8%, and VND 220 billion of profit before tax, decreased by 21%.
In 2019, FPT Retail’s revenue was increased by more than 5% to nearly VND 17,000 billion, and profit before tax, decreased sharply by 36% to VND 278 billion. According to the Chairman of the Board of Management Ms. Nguyen Bach Diep, such result was because at the end of last year, the Company made provision for bad debts for 2 programs, F.Friend and Subsidy for loyal customers, and also handled the accessories inventories, promoted the investment for Long Chau pharmacy and information technology system.
According to the leader, for the plan in 2020, the Company has taken the impact of Covid-19 pandemic and the closing of stores in April due to social distancing into account. The bright spot during that period was the online sales witnessed a significant increase, which contributed 50% to the total revenue, compared to the rate of 25% before.
Regarding FPT Shop chain, its revenue is expected to be down from VND 16,123 billion to VND 13,820 billion due to the intentional decrease of revenue of F.Friend and Subsidy programs. Because there is a down sign in the number of visitors, the Company has determined to increase the successful rate and average value of the orders, as well as expand customer groups.
In terms of Long Chau chain, the Company plans to open 150 new stores to increase the number of stores to 220 at the end of the year; accordingly, it is anticipated that the revenue will rise from VND 500 billion to VND 1,500 billion. The Company will also promote the development of products with private labels such as functional foods, medical equipment, pharmaceuticals and cosmetics, etc.
With the target of VND 220 billion of revenue in 2020, Ms. Diep considered that was the bottom of business of the Company. The Company also intends to increase the accessories portfolio, along with reduce the costs such as investing in security cameras in order to save VND 30 billion of cost every year, requesting to increase the business productivity to 25%, etc.
For the plan in 2021, FPT Retail sets the target of VND 18,573 billion of revenue (VND 3,000 billion from Long Chau, in particular) and VND 250 billion of profit before tax. In 2022, the Company aims to achieve VND 21,827 billion of revenue (VND 4,500 billion from Long Chau, in particular) and VND 370 billion of profit.
Revenue in the second quarter may be decreased by 15 to 20% compared to that of the previous quarter
Assessing the impact of Covid-19, Ms. Diep said that the business results have been affected from the end of March. Particularly, in April, the Company had to close about 170 stores, equivalent to one-third of FPT Shop chain. Although the stores have reopened, Ms. Diep assessed that the people’s income had been affected, thus, the demand for non-necessities reduced, which resulted in the fall of revenue in the second quarter by 15 to 20% compared to that of the previous quarter.
Regarding the cost reduction, the Company also asked for adjustment of the premise rental from the owners and it was approved with a period of about 3 months (from April to June).
Currently, private pharmacies need a pharmacist in their name so that they can be put into operation, but for a pharmacy chain like Long Chau, there is no legal problems in the procedures when the Company is the entity that owns that pharmacy chain, the pharmacist is only for professional value.
The Chairman of FPT Retail also emphasized that the investment in Long Chau is at an early stage, so the chain has not reached the break-even yet. The initial investment for the pharmacies depends on size but it may range from VND 400 million to VND 1 billion. Ms. Diep expected that by 2022, the chain can break even on an EBITDA basis.
Long Chau is expected to break even in 2022
Ms. Diep also admitted that there had not been any substitutes to ensure the growth of the Company. Drawing from that lessons, the Company has started to research on new business segments in order to ensure the growth when the pharmaceutical business comes into saturation stage like FPT Shop today.
Another leader of FPT Retail shared that the Company already has significant resources with 600 premises, stable customer volume and qualified personnel, which can easily help the Company to start with new suitable products. The current business lines that are in interest are selling air tickets, insurances or testing beauty products (FBeauty), etc.
At the moment, the aviation market is developing rapidly and the number of tickets is about 50 million units per year. FPT Retail’s leaders estimated that about 20% of air tickets are sold via corporate channel, 10 to 15% via online channel and the majority of 50 to 60% via retail agents, which is a huge market for the Company to exploit.
The Meeting also approved the appointment of an independent member of the Board of Management in place of Mr. Hoang Trung Kien. The nominated person was Mr. Nguyen Dac Viet Dung, whose date of birth was on 4th August 1974. Mr. Dung is currently the Chairman of the Board of Management of Sendo, it is expected that he will promote the development of FPT Retail’s online segment.
The Company also passed the distribution plan of dividends paid by cash with the rate of no more than 10% of 2019. The estimated timeline is in the third quarter. For 2020, FPT Retail sets the target that rate of dividends paid by cash will not exceed 15%.
According to Huy Le, NDH
Published May 28, 2020