The Convenience Stores had in 2Q-2024, recorded a Revenue of RM751.8m, an increase of RM23.8m  or +3.3% as compared to RM728.0m achieved in the same quarter last year. The increase in Revenue  is primarily attributed to the net addition of 94 new stores as compared to the corresponding quarter  last year, complemented by the festive trade of Hari Raya which spurred consumer spending.

As compared to the same quarter last year, we had successfully added 239 of our 7-CAFé store formats,  bringing the total count to 383 7-CAFé stores in 2Q-2024. And through our newly launched food  commissary, we had introduced a variety of affordably priced Ready-To-Eat (“RTE”) packed meals,  prepared with high-quality locally sourced ingredients, all of which, had contributed positively to the  Fresh Food sales growth in 2Q-2024.  

Operating Expenses increased by RM15.5m or +7.1%, primarily due to higher operational costs  associated with store operations and logistics; the increase in operating hours and expanded workforce  is in tandem with the addition of 94 new stores. Our total store count in 2Q-2024 stood at 2,593.  

Review of 6 Months Period Performance versus Corresponding Period Last Year  

The Convenience Stores recorded revenue of RM1,436.0m for the period ended 30 June 2024, an  increase of RM52.0m or +3.8% compared to RM1,384.0m in the same period last year. This Revenue  growth was accompanied by a Gross Profit of RM448.0 million, up RM16.2m or +3.8%, maintaining  a stable Gross Profit margin of 31.2%.  

Operating Expenses for the Convenience Stores increased by RM36.0m or +8.5%. This rise is  attributed to higher store rental costs due to an expanded store network, increase in store depreciation,  and including IT maintenance expenses, such as AWS Server Maintenance and other software updates. 

The Convenience Stores PAT for the period ended 30 June 2024 stood at RM31.8 million, an increase  of RM2.2m or +7.3% from RM29.7m recorded in the same period last year.  

Due to the successful disposal of discontinued operations at the end of FY2023, the Group’s  consolidated PAT for YTD 2Q-2024 is lower in comparison. The absence of RM14.2m from  discontinued operations, which contributed to a total PAT of RM43.8m in YTD 2Q-2023, resulted in  a decrease in overall PAT to RM31.8m for YTD 2Q-2024.  

PROSPECTS  

The economic landscape is shaped by several key factors; internally, the possible re-acceleration in  inflation for the second half of FY2024 due to the removal of the diesel subsidy on 1 June 2024, whilst  on the external front, the uncertainties from weaker growth in China and the US, including further  escalation in geopolitical conflicts. Despite these headwinds, Malaysia’s economy is anticipated to  grow by 5.8% in 2Q-2024, marking the highest growth since 4Q-2022. Domestic consumer spending  had remained robust, partly supported by the withdrawal of RM7.81 billion from EPF's Account  3/Flexible Account as of June 2024. The Group remains committed to navigating these economic  conditions by focusing on strategic initiatives that align with market trends.  

Looking ahead, the Convenience Stores will remain focused on the expansion of our 7-CAFé store  format, which is crucial in enhancing our product offerings, elevating in-store customer experience, and  driving growth in the fresh food category. Significant milestones achieved to-date include the highest  number of 7-CAFé stores opened in 2Q-2024 (Note: 79 stores) and with that, we have now fully  penetrated all states in Peninsular Malaysia. Our ongoing efforts include the continued roll-out of our  7-CAFés beyond Klang Valley, targeted expansions into high-potential areas, and building a stronger  partnership with our Japanese counterpart to expand fresh food offerings, optimizing commissary  production yields via best practices in operational efficiencies.  

Furthermore, we are committed to broadening our private label offerings to cater to the emerging  demographic of value-driven consumers who prioritize product quality over brand prestige. As part of  our customer-centric approach, we will intensify our efforts in consumer research and insights,  leveraging advanced analytics, social listening, and brand health studies to continuously refine our  services and product portfolio.  

With regards to the Indonesian pharmaceutical business, we will continue to collaborate closely with  our joint venture partner with an immediate focus on the overall strategic roadmap, including store  expansion plans, product range and pricing review, marketing activation and driving a consumer centric  operation.

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