Despite the challenges, the group continues to expand its store network in Singapore as evidenced by its latest fiscal 2023’s first half results.1. A steady set of financialsThis increase can be broken down into three components – contributions from new stores in Singapore, comparable store sales, and China’s store contribution.
From the numbers above, Sheng Siong enjoys the biggest revenue uplift from the opening of new stores in Singapore. Despite the slightly lower net profit, the retailer posted a 31.7% year on year jump in free cash flow from S$54.9 million in 1H 2022 to S$72.3 million in 1H 2023.2. Gross margin continues climbingFor 1H 2023, the gross margin clocked in at 29.7%, slightly above the 29.4% recorded in the same period last year.
Investors should note that Sheng Siong offers more than 1,600 products under its 23 house brands and that traditionally, house brands command a better gross margin compared to selling other brands.The graphic above shows the steady climb in Sheng Siong’s store count over the years.Even during the pandemic period of 2020 to 2022, Sheng Siong managed to open new stores, albeit at a slower pace as construction activities were halted.
Management also believes that inflation will spur more people to reduce non-essential spending, thus increasing their spending on groceries and fresh food.