Mobile World is expecting revenues to mostly flatline this year while FPT Retail is anticipating halved profits as the electronics market continues to suffer the pangs of current economic strife.
FPT Retail is the owner of consumer electronics chain stores FPT Shop and pharmacy chain Long Chau, while Mobile World is the owner of consumer electronics chain stores The Gioi Di Dong (Mobile World) and Dien May Xanh, as well as drugstore chain An Khang, and food and consumer goods chain stores Bach Hoa Xanh.
Drugstores of Pharmacity (left) and FPT Retail’s Long Chau located next to each others in HCMC’s Binh Thanh District. Photo by VnExpress/Quynh Tran
According to documents prepared for its coming annual meeting in mid-April, FPT Retail plans to make pre-tax profits of VND240 billion (US$10.17 million) in 2023, down from VND485 billion in 2022, and VND554 billion in 2021.
The main reason behind FPT Retail’s low expectations is difficulties at FPT Shop, the company’s retail chain.
Last year FPT Shop contributed nearly 70% of FPT Retail’s VND30 trillion in total revenues.
With both financing costs and inflation still rising, FPT Retail management has assumed that FPT Shop will continue struggling with the ongoing decrease in demand for information and communications technology (ICT) products.
The company also expects a continuous decline in demand for buying products such as laptops, desktops and smartphones on installments.
FPT Retail’s rival, Mobile World, plans to see revenues rise a modest 1% to VND135 trillion this year, the company’s lowest growth rate since 2009.
Mobile World said the expected 1% hike is based on the assumption that demand for ICT products will start recovering in the second half of this year.
In the first months of 2023, sales of phones and computers at Mobile World chain stores decreased more than expected.
Due to the tough economic situation, well-off customers have tended to delay buying high-value products, and less affluent customers have had more difficulty accessing loans to purchase goods via installments.
Both Mobile World and FPT Retail plan to try to combat these problems with promotions and discounts this year. Both outlets are also planning to be cautious with further expansion. FPT Retail has not announced any FPT Shop expansion plans for this year.
Mobile World has also not announced any openings of new Dien May Xanh or An Khang stores this year.
Mobile World will maintain its 500 An Khang drugstores this year while focusing on increasing their revenues, curbing costs, and reducing losses.
Meanwhile, FPT Retail wants to open at least 400 more Long Chau pharmacies by the end of this year.
At the end of last year, Long Chau reached the milestone of 1,000 pharmacies, which are present in all of Vietnam’s 63 provinces and cities, accounting for the sector’s largest market share.
Long Chau’s 2022 revenues increased 2.4 times against 2021, and the pharmacy chain has continued to prove itself a growth engine for FPT Retail so far this year.
For Mobile World, Bach Hoa Xanh is expected to be its only ray of light in 2023 as the chain could hit double-digit revenue growth and break even by the end of this year.
Last year, Bach Hoa Xanh achieved sales of VND27 trillion, accounting for 20% of Mobile World’s total revenues.
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