FRT’s General Meeting of Shareholders: ICT revenue will be decreased by more than 14%, while that of Long Chau pharmacy chain is expected to be increased by threefold to VND 1,500 billion
According to FRT, the Company has been affected by Covid-19 since March and in April, 170 stores closed, equivalent to one-third of FPT Shop’s total national scale, which has caused an impact on the whole business activities. After the social distancing was released in May, the stores were opened, however, the consumers’ demand is affected, their income was reduced, thus, the purchasing power and demand for non-necessities decreased. According to the preliminary forecast, the revenue of the second quarter may be down by 15 to 20% compared to that of the first quarter of 2020.
On 28 May afternoon, FPT Digital Retail Joint Stock Company (FRT) has held the Annual Meeting of Shareholders of 2020, approving the business plan in which the revenue will be decreased by 8% to VND 15,320 billion, profit before tax of VND 220 billion, down 21%. With the above target, the Company suggested that dividends in 2020 will be paid by cash with the rate of no more than 15%.
In 2020, the Board of Director aims to maintain the growth of ICT segment. This is also a fulcrum for FRT to invest in new business strategies. FRT plans to increase the turnover of the store chain by introducing sun glasses and watches under shop-in-shop model.
In contrast, after discovering the secret to success for the pharmacy chain, the Company will focus on investing, expanding the scale to 220 stores and increasing its coverage nationwide. The Company will also promote logistics. Long Chau chain has reached the milestone of 100 stores, and has decided on 40 locations to open new stores in the second quarter of 2020.
In the second quarter of 2020, the revenue is anticipated to be decreased by 15 to 20% due to Covid-19
Regarding the effect of Covid-19, Ms. Diep said that in general, the first quarter of 2020 was quite better than the fourth quarter of 2019, thanks to the favorable business index of the first 2 months.
Since March, the Company has been affected by Covid-19 and in April, 170 stores closed, equivalent to one-third of FPT Shop’s total national scale, which has caused an impact on the whole business activities. After the social distancing was released in May, the stores were opened, however, the consumers’ demand is affected, their income was reduced, thus, the purchasing power and demand for non-necessities decreased.
According to the preliminary forecast, the revenue of the second quarter may be down by 15 to 20% compared to that of the first quarter of 2020.
The new General Director, Mr. Hoang Trung Kien: “What am I going to do in my new position?”
In the opening speech, Mr. Hoang Trung Kien – the new General Director shared that: “In the new position, I understand that everyone is wondering what the new leader will do in order to bring value to the Company, the customers and shareholders. FRT’s strategy is to become to leading multidisciplinary retailer of Vietnam in the next 3 years. We will diversify the digital products, expand the scale under shop-in-shop model”.
Moreover, FRT will also stimulate the development of Long Chau chain after discovering the secret to success. In 2020, FRT plans to reach 220 pharmacies.
Lastly, according to Mr. Kien, FRT will seek for new business lines where the Company can promote retail chain management experience as well as experience in managing digital technology industry.
“I am also thinking on the next question is what I am going to do for that strategy. I always have in mind that I will contribute all of my capacity, by focusing on 3 things:
Firstly, technology, in order to improve the efficiency;
Second, personnel, in order to nurture and build key leadership force for the near future. With the expansion pace of the chain, the leadership enhancement is urgent;
Lastly, focusing on improving the culture and core values for the Company”, said the new General Director.
In 2019 – online sales were increased by more than 60% to VND 3,899 billion, contributing up to 24% to the Group’s total revenue
By the end of 2019, total assets were increased to VND 6,594 billion, the revenue was VND 16,634 billion, profit after tax was reduced by 41% to VND 204 billion, in which, online sales were increased by more than 60% to VND 3,899 billion – contributing more than 24% to the total revenue. Revenue of offline sales was nearly unchanged during the period, contributing 70% to the total revenue with VND 11,324 billion.
The turnover of 2 programs F-Friends and Subsidy witnessed a sharp decrease, which resulted in the fall of the Company’s turnover. The turnover of F-Friends was VND 800 billion in 2019, down 1.4%; that of Subsidy was VND 100 billion, which was deceased by more than 85% compared to that of the same period in 2018 (in 2018, VND 764 billion).
The profit of 2019 was affected by the system, which made the Group have to handle bad debts for 2 programs F-Friend and Subsidy. In addition, in accordance with the orientation of importing international accessories to increase the profit margin, in 2019, the Company must liquidate all domestic accessories
Finally, FRT also promoted the investment to speed up the opening of Long Chau, as well as the development of the information technology system (in order to reduce costs, increase benefits for the customers, etc.) in order to increase the operating capital.
In 2020, Long Chau chain anticipates to increase its revenue by threefold to VND 1,500 billion
In terms of the plan for 2020, Ms. Nguyen Bach Diep said that the Company will draw lessons from the previous year, for instance, reducing the investment in 2 programs F-Friends and Subsidy. Concurrently, due to Covid-19, the Company anticipates that the revenue will be reduced by 8%, profit before tax, by 21% down to VND 220 billion.
To be specific, the Company plans to reach the target of VND 15,320 billion of revenue in 2020, ICT segment will contribute VND 13,820 billion – down by more than 14% compared to that of last year (in 2019, the revenue was VND 16,100 billion). In contrast, for Long Chau chain, its revenue is expected to be increased dramatically by threefold from VND 500 billion (2019) to VND 1,500 billion. Long Chau chain also plans to reach 220 stores. Long Chau will expand its product portfolio, especially private label products such as functional foods.
“Covid-19 scenario has been taken into account when calculating this figure”, the Company’s Chairman said. There was a bright spot in Covid-19 pandemic, Ms. Diep emphasized, on average, online sales contributed about 25% of the total revenue, while in the pandemic, the proportion rose sharply to 50%.
In 2020, FRT will also record results from cost-saving activities, such as installing cameras at stores to minimize the recruitment of security guards.
In addition to the trading of accessories, in 2019, there was a significant increase of profit with the growth rate of 26% (but still not reaching the target of increasing by 50% compared to 2018). Accordingly, accessories and digital sims continue to be the goal to improve the profits of 2020, the plan of the previous year has not been completed, so the Company will maintain the target of VND 1,000 billion of revenue from accessories and 1 billion sims.
By the end of the first quarter of 2020, there was a slight increase in the Company’s revenue to VND 4,141.5 billion. After deducting expenses, FRT recorded VND 35.6 billion of gross profit – which was decreased nearly by double compared to the first quarter of 2019.
According to the Company’s explanation, the gross profit plummeted due to Covid-19 pandemic, which also caused the factories in China to cease operating. Thus, the revenue of the first quarter of 2020 was decreased by VND 163 billion compared to that of the same period.
In addition, the first quarter was the time when the rental was increased periodically, and at the same time, FRT distributed salaries according to actual results, which led to a signigicant increase in management and sales cost.
Regarding the Board of Management, on 6 March 2020, Mr. Nguyen The Phuong had a resignation letter from the position of member of the Board of Management. After Mr. Hoang Trung Kien holds the position of General Director, he will no longer be an independent member of the Board of Management. Accordingly, the Company has elected Mr. Nguyen Dac Viet Dung as an independent member of the Board of Management.
According to Tri Tuc, CafeF
Published May 28, 2020