KUCHING: 7-Eleven Malaysia Holdings Bhd (7-Eleven) is staying true to its strategy as the group is on track with new store rollout and store refurbishments schedule, the research arm of CIMB Investment Bank Bhd (CIMB Research) observes.
It also highlighted that the company’s new products and continuous promotional activities are set to boost sales growth and in-store service offerings will be expanded.
According to CIMB Research, 7-Eleven is committed to the group’s plan of opening 600 new stores in 2014-16, and is well on its way to opening 200 net new stores in 2015.
The research arm noted that year-to-date third quarter of 2015 (3Q15), 7-Eleven has opened 163 new stores and closed 25 stores, resulting in 138 net new stores opened so far.
“It is also committed to refurbish 600 stores in 2014-16, targeting 200 stores in 2015.
“Year to date, it has refurbished 162 stores,” it said.
It further noted that 7-Eleven has also added 32 of the group’s ‘Next Generation’ stores in the first nine months of 2015 (9M15), and 103 new ‘Quick Win Food Services’ stores in 9M15, for a total of 153.
CIMB Research said that 7-Eleven is also expanding its fresh food and beverage offerings, and continues to undertake innovative and unique promotions.
“It launched its steamed pau offering on September 1, 2015, and targets to offer it in 50 stores by end-2015.
“Its Yeo’s RM1 promotion from August 4 to September 7, 2015 generated total sales of RM1 million, a 1,435 per cent improvement against an average 35 days of sales,” the research arm said.
In terms of the addition of new in-store services, CIMB Research noted that 7-Eleven continues to rollout innovative services via the existing MOL Platform.
The research arm highlighted that 7-Eleven’s BOXIT parcel locker pilot will commence in 4Q15 and this enhances the group’s e-commerce platform.
“Its bill payment services are also growing significantly with greater customer awareness.
“It has now signed Syabas whose bill payment service will commence in 4Q15,” the research arm said, adding that 7-
Eleven is also expanding the group’s stored value gift cards, with Starbucks and Zalora coming in 4Q15.
CIMB Research noted that despite the challenging operating environment this year, 7-Eleven has managed to maintain positive growth year-to-date.
It further noted that for 9M15, revenue increased 6.7 per cent year on year (y-o-y) to RM1.51 billion, resulting in a 1.2 per cent y-o-y rise in core net profit to RM41.9m.
“7-Eleven recorded sequential improvements as well,” it said.
CIMB Research highlighted that revenue rose 7.7 per cent quarter on quarter (q-o-q) while core net profit surged 55.9 per cent q-o-q.
The research arm said that the growth was achieved despite the ongoing retail market negativity caused by goods and services (GST) and declining consumer confidence.
“As a result, overall 9M15 revenue grew 6.7 per cent y-o-y due to new store additions, improved merchandise mix and consumer promotion activities,” it added.
All in, CIMB Research maintained its ‘hold’ call on the stock.