KUALA LUMPUR (Nov 30): Senheng New Retail Bhd’s net profit tumbled 64.56% to RM5.16 million in the third quarter ended Sept 30, 2023 (3QFY2023) from RM14.55 million in the corresponding quarter a year ago, as revenue dropped while it recorded higher operating and administrative expenses amid its expansion plan.

This is the group’s lowest quarterly profit since its listing in January 2022.

In a bourse filing, the consumer electrical and electronics retailer said revenue for the quarter fell 11.65% to RM312.83 million from RM354.1 million in 3QFY2022 due to lower sales on weaker consumer sentiment.

The group's gross profit margin dropped 1.6 percentage points to 21.5% from 23.1%, which it attributed to changes in product mix.

For the nine months ended Sept 30 (9MFY2023), Senheng’s net profit fell 54.71% to RM17.91 million from RM39.54 million in 9MFY2022 as revenue declined 14.53% to RM956.53 million from RM1.12 billion.

Senheng said subdued sentiment in the retail sector and the continued downtrend in Malaysia's Consumer Sentiment Index in the first three quarters of 2023 posed challenges to the group's ability to achieve growth. It also noted that Retail Group Malaysia had in September cut its 2023 growth forecast for the retail sector from 4.8% to 2.7%, citing reduced optimism about consumer spending in the third quarter.

"These factors may lead to Senheng’s weaker financial performance in 2023," it said.

In response to the challenging outlook, Senheng said it is pursuing more initiatives to boost customer traffic and capitalise on the year-end festive season, as well as implementing strategies to increase customer footfall and enhance its PlusOne membership engagement. It also plans to leverage its AI-enabled platform to launch more online marketing campaigns and introduce more rewards and promotions.

“Simultaneously, the group is refining its omnichannel retail model to elevate the overall shopping experience. As part of a three-year growth initiative spanning 2022-2024, the group is executing its Territory Champion store expansion and upgrading programme, aimed at enhancing in-store experiences nationwide and boosting per-store sales,” it said.

“Furthermore, the group is expanding its new retail channel, Senheng Mobile, by opening additional stores to cater to the increasing demand for mobile phones and digital gadgets,” the group added.

Senheng’s share price has declined by 45.9% since the beginning of the year. It closed at 33 sen on Thursday with a market capitalization of RM495 million.