Long Chau pharmacy chain gained VND 239 billion of turnover in the first quarter of 2020 and reached 100 stores
In a short time, Long Chau may face the risk when changing from selling non-quota products to official products, will add 10% of VAT to the cost of goods sold, the analysts raised their concerns.
After more than 2 years being taken over by FPT Retail (FRT), Long Chau chain has reached the milestone of 100 pharmacies in over 30 provinces and cities nationwide. The Company has also decided on 40 locations to open new stores in the second quarter of 2020. It is expected that Long Chau will reach 200 stores by the end of 2020.
It is known that Long Chau chain currently sells prescription and over-the-counter medicines, functional foods, cosmetic pharmaceuticals and health care products. By the end of the first quarter of 2020, Long Chau achieved VND 239 billion of turnover, up 20% compared to the fourth quarter of 2019, 2.5 times higher than that in the same period in 2019.
FRT has a strategy to increase the coverage of Long Chau pharmacies nationwide, accounting for about 30% of the market share of pharmaceutical sales through pharmacies in the next 2 to 3 years. For the plan until 2021, the chain will officially enter the stage of ‘boom’ when it is the first year when it gains profits, the number of stores is expected to be increased to 420 stores with the turnover of more than 2 times, VND 4,300 billion. Turnover of the following year (2022) will be VND 6,500 billion in revenue and VND 86 billion in profit, reaching 620 stores.
However, in a short-time, Long Chau will face the risk when changing from selling non-quota products to official products, which will add 10% of VAT to the cost of goods sold, the analysts raised their concerns.
In addition, Long Chau also sells imported medicines and functional foods that the competitors rarely sell. These imported products are brought to Vietnam by hand and in non-quota ways, they are sold at small business households, thus being more affordable. If FRT converts all of Long Chau pharmacies from small business households to one enterprise (to consolidate the FRT’s financial statements), this will not only cause the Company to pay more 10% VAT in selling expenses but also prevent the Company from selling imported drugs and functional foods by hand in large quantities like before, which may reduce the product portfolio in a short term.
According to Tri Tuc, CafeF.
Published May 18, 2020