More post-COVID retail insights - MWG
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Source: MWG, chart by Vietecon.com
MWG reported April figures, and they are not as bad as I would have expected. Sure, sales were down 14% yoy in April, and net profit was off by a third. However, the figures actually didn’t look terrible, given that 600 stores were completely closed from April 1 to 15, and 300 of them were still closed in the second half of the month. That equates to about 10% of stores fully closed and 20% partially closed. Yet, the company still had a net profit of VND209bn.
Interesting items from the release:
Consumer electronic stores did poorly: TGDD was down 12% yoy in the first fourth months.
Source: MWG, chart by Vietecon.com
Groceries obviously did well, adding VND2tr to revenues in April alone. That was almost 17% of sales the highest percentage the company has seen yet since it started building up the division. BHX was up 167% in the first four months.
Laptops were also way up: 120% yoy. Helped by people moving to remote work.
Online revenue was 16% in April, which is a good number and way up from 7% in 1Q. But to be honest, I would expect there to be more online revenue. Maybe it is because of the strength of groceries, but MWG posted higher online sales in each of the first four months of 2019 than it did in April. I guess that makes sense with the closures, but even in March, online sales weren’t that impressive at only 9% of sales.
BHX stores, even with the pick up in March, still produce much less revenue than the other stores. Revenue per store at the division was just VND1.3bn in April (VND1.8bn in March). In the long term, these stores will likely bring down net profit margin just because of their smaller revenues and lower margins. But the grocery market ultimately is quite large, so it can be a good trade if the company makes it work. And MWG seems to be making it work very well.
New lower plan for 2020. Unsurprisingly, the company lowered forecasted revenues to VND110tr, from VND122tr previously. This still represents 8% growth over last year’s VND102tr. Net income should be VND3.45tr, down from the plan of VND4.8tr, and also 10% down from 2019’s VND3.86tr.
Overall, it seems like MWG is weathering COVID fairly well. I assume that May will be mostly back to normal, in terms of store openings, but sales are likely to suffer. It seems to me that the new plan figures are kind of low and give the company a bit of room to exceed expectations. But we will see.