Sunday, February 8, 2015

'Dislike' - Caring ...

It will take time for the retailer to reap the benefits of its revamp plan to improve sales.

For its second quarter ended Nov 30 2014, its posted revenue and net profit for the quarter improved 5.4% and 14.8% from a year ago, for the cumulative six months to Nov 30 net profit shrank 63.4% to rm2.64 million compared with the previous year.

Caring’s revenue expanded 5.8% to rm177.4 million for the six months due to improved contributions from its new outlets.

The sharp decline in earnings to the increasingly intense price war between pharmacies such as Watson and Guardian.

The group financial statements show that a large chunk of its expenses stemmed from selling and distribution which contributed 18.5% of it revenue in 2QFY2015 and 16.8% in 1QFY2015. This could mean that the current (Jan 2015) promotional and marketing activities are not brining the desired results given its weak performance.

Furthermore, net margins appear to be slim for the group – 0.9% and 2.4% for its 1QFY2015 and 2QFY2015.

Silver lining for Caring could be the drug dispensing policy to separate prescription and dispensing of medicine. The policy of introduced may allow Caring’s pharmacies stationed at its outlets to dispense medicine to patients thereby raising the group’s revenue.

However it is said to be introduced in the next three to five years from now (Jan 2015).

For now only time will tell whether Carign can weather the tough operating conditions to ensure its outlets remain financially sustainable on the back of management’s proposals to revamp its marketing strategies.

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