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HK retailer cites Robinsons, omits Rose Pharmacy

Robinsons Supermarket

Of the two investments held by Hong Kong-based pan-Asian retailer Dairy Farm International Holdings Limited in the Philippines, Robinsons Retail Holdings, Inc. was cited for its contribution to the company’s strong performance in the first half of 2019.

Rose Pharmacy, which Dairy Farm fully acquired for an additional $58.5 million (over P2.9 billion) in December 2018, was not mentioned.

But Dairy Farm said in a statement on August 1, 2019 that the Health and Beauty Division, under which Rose Pharmacy falls, was among its four divisions that turned in strong results in the first half.

The Convenience (a subsection of Food), Home Furnishings (IKEA) and Restaurants (Maxim’s) divisions also posted solid sales performances.

The pan-Asian retailer reported a 13% increase in combined sales (including 100% of associates and joint ventures) to US$13.7 billion from January to June 30, 2019, “primarily due to the impact of the strategic investment in Robinsons Retail and a strong performance by Yonghui.”

Yonghui is a chain of superstores in China.

Dairy Farm holds 20% equity in Gokongwei-led Robinsons Retail after a share swap agreement in 2018.

Under the agreement, Robinsons acquired the 100% stake in Rustan Supercenters Inc. held by Dairy Farm subsidiary Mulgrave Corporation BV. In exchange, Dairy Farm acquired 18.25% shareholdings in Robinsons.

Including on-market purchases as of end-2018, Dairy Farm’s total shareholdings in Robinsons Retail is 20%.

Robinsons Retail reported a 27.7% increase in consolidated net sales of P77.2 billion in the first half of 2019, “driven by the same store sales growth (SSSG) of 3.9%, additional sales coming from new stores opened in the last 12 months and the consolidation of Rustan Supercenters.”

The pan-Asian retailer said Robinsons’ contribution offset the impact of the de-consolidation of the Rustan Supercenters business in the final quarter of 2018 and the space optimization plan for the Food business in Southeast Asia.

“The Group’s underlying profit benefitted from higher contributions from Yonghui and Robinsons Retail partially offset by continuing business transformation costs,” the company said.

Rose Pharmacy, now a wholly-owned subsidiary of Dairy Farm, has continued to expand its network, establishing more branches in major cities across the country.

Dairy Farm first acquired a 49-percent stake in the Cebu-based drugstore chain in November 2014. It acquired the remaining 51% interest from the Lim family of Cebu in December 2018 for a total consideration of US$58.8 million.

The consideration was paid in cash, US$54.6 million, and cash equivalents.

Dairy Farm recognized goodwill amounting to US$97.5 million from the transaction, “attributable to the retail network and the market position” of Rose Pharmacy in the Philippines.

This was, however, followed by goodwill impairment amounting to US$15.3 million and loss due to the reclassification of a joint venture to a wholly-owned subsidiary.

Related Story: Dairy Farm now fully owns Rose Pharmacy

As of June 30, 2019, Dairy Farm operated over 10,000 outlets and employed over 230,000 people across Asia. Total annual sales in 2018 exceeded US$21 billion.

Dairy Farm operates five divisions: Food (Wellcome, Yonghui, Cold Storage, Giant, Hero, and Robinsons as well as 7-Eleven); Health and Beauty (Mannings, Guardian and Rose Pharmacy); Home Furnishings (IKEA); Restaurants (Maxim’s); and Other Retailing (Robinsons department stores, specialty and DIY stores). (Ventures Cebu)

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