Isetan back in black for H1, closing Parkway Parade store

Singapore

DEPARTMENT store operator Isetan Singapore returned to the black in the first half of 2021 from a year ago, thanks to a recovery in sales from its stores being able to remain operational throughout the six-month period, the company said on Friday.

Net profit for the six months ended June 30 stood at S$1.3 million, reversing from a net loss of S$317,000 posted in the same period a year ago. The results translate to earnings per share of 3.03 Singapore cents, against loss per share of 0.77 cent.

Revenue for the six-month period was up 12.8 per cent at S$38.4 million, as compared to S$34 million in the year-ago period, due to higher sales of goods from the retail segment, higher consignment income and higher rental income from the Isetan Wisma Atria investment property.

This, it explained, was a result of its stores being able to operate over the six-month period as compared to their enforced closure during the "circuit-breaker" period between April 7 and June 18 last year. Revenue also received a boost from the company's investment in Wisma Atria versus last year when mandatory rental rebates were given to its smaller tenants in accordance with the government's Covid-19 response measures.

The impact of safe-management measures implemented last year also resulted in the store operator's reported loss in H1 2020. The year-ago period was also affected by the discontinued operations of its Jurong East store from March 8, 2020.

However, the department store operator said its recovery in revenue in H1 2021 was disrupted by measures during Phase 2 (Heightened Alert) from May 16.

On the outlook of Singapore's retail sector, the company described it as "challenging", given the continued emergence of new Covid-19 clusters across the island, and so continues to expect sales revenue to be negatively impacted in the coming months, with the duration and extent of this impact remaining difficult to predict.

That being said, the store operator sees optimism in the Singapore government's announcements regarding the nation's move towards treating Covid-19 as endemic, with travel anticipated to resume by the end of this year, and plans in the meantime to focus on driving operational efficiency and leveraging more on its online business.

It also said that its stable balance sheet and liquidity position allow it to take advantage of new opportunities.

With regard to the anticipated possible sale of Isetan Wisma Atria, there has as yet not been any further developments to its June 11 announcement of its appointment of Savills (Singapore) as its marketing agent to commence purchase interest discussions with third parties.

Isetan's board did not propose any interim dividend to be paid out for the period.

Meanwhile, the store operator announced it will be closing its store at Parkway Parade in Katong permanently after its lease expires on March 9, 2022.

In a separate bourse filing on Friday morning, Isetan's board said the existing lease had already been extended 15 months after the end of the previous term, and negotiations with the landlord, Prime Asset Holdings Limited, did not yield a positive result.

The company said it has no immediate plans to find a replacement store, adding that it will continue to maintain its retail operations at its other stores at Shaw House, Tampines Mall and Nex.

It also said it cannot reasonably estimate the financial effect of the impending closure of the Parkway Parade store at this time.

Isetan shares fell 2 per cent or nine cents to finish Friday at S$4.42.