‘7-Eleven’s SSSG could remain rather muted’
KUCHING: 7- Eleven Malaysia Holdings Bhd’s (7-Eleven) samestoresales growth ( SSSG) could remain rather muted, analysts observe in a strategy report.
According to the research arm of CIMB Investment Bank Bhd (CIMB Research), 7-Eleven’s first nine months of 2016 (9M16) SSSG remained weak and declined 1.2 per cent year on year ( y- o-y), mainly due to persistently softer consumer confidence and spending.
“Moving forward, we think that SSS could remain rather muted as we reckon that the convenience store player will only be able to adjust its prices modestly and to a limited extent post the expiry of the Price Control and Anti-Profiteering Act ( PCPA) given the currently bearish environment for consumers,” CIMB Research said.
CIMB Research noted that as at 9M16, the group had opened a total net 113 stores.
It thought that 7- Eleven could fall short of the group’s 200 net new stores target for 2016.
CIMB Research recapped that the group’s slower store expansion this year was mainly due to the slower store ramp-up back in the first quarter of 2016 (1Q16) because of the implementation of 7-Eleven’s IT project for existing stores.
The research arm further noted that to date, 7-Eleven has a total of 2,057 stores throughout the country.
“Looking forward, we understand that the group will continue to push ahead with its usual 200stores- a-year strategy in 2017,” CIMB Research said.
It added that this also includes the 11 new stores that 7-Eleven has won for 11 stations (out of 28 stations) from the group’s tender for Mass Rapid Transit ( MRT) Phase 1, which was completed in December 2016, and Phase 2, which will be completed by the first half of 2017 (1H17).
CIMB Research highlighted that management remains positive on the long-term prospects and synergies from 7- Eleven’s long-term partnership with Brahim’s Holdings Bhd, which is currently manufacturing the group’s proprietary food services brand ‘Fresh to Go’.
The research arm noted that 7Eleven has added new products, such as wraps, lasagna and Japanese bentos to the group’s fresh food assortment.
“We think the tie-up will enable the group to efficiently deliver good product quality and at the same time potentially reap operating efficiencies in the long run,” it said.