Perhaps Thai Prime Minister Sureta Thavisin is right and Thailand's economy is indeed in crisis. These are strong words, and he is trying in part to gain leverage against the stubborn leadership of the Bank of Thailand, the central bank, which not only refuses to cut interest rates, but continues to steadily raise them throughout 2023. is certainly using this word.At the latest meeting, the decision to remain silent wasn't necessarily a victory for Tabisin, consumers or retailers.
Tailor dependent on expensive purchases. Among them are major home improvement stores, which have announced a series of gloomy financial results in recent quarters. HomePro: The Bigger, the Less Heavy the Fall HomePro, Japan's largest home improvement retailer, regrettably announced on February 27 that it had not achieved its sales goals for the second half of this year. The full year looks good, with sales increasing 4.9% year-on-year to THB72.8 billion (US$2.1 billion). Gross profit margin improved to 26.6% and profit after tax was 6.4 billion baht ($184 million), an increase of 3.6% year-on-year. Most of the company's revenue comes from direct sales to customers, but it also generates significant rental income as it operates several popular shopping malls in tourist-heavy locations and leases space around its superstores. It has gained. Rental income increased by almost 10%, mainly due to the resurgence of tourism. Sales increased with the opening of three new Home Pro stores and nine Mega Home stores in 2023, bringing the total number of stores to 128 units, including seven stores in Malaysia. In addition to store openings, a new program that allows customers to take home used home appliances and trade them in for replacements also contributed to sales. The company also actively held special events this year, which had a positive impact on sales. HomePro is also focused on sustainability, touting a program that offers solar panel sales consulting and installation services. But the problem for HomePro isn't the full-year outlook, but the fact that things took a turn for the worse in the fourth quarter, when instead of increasing, revenue fell by about 1.6%. The company believes that the Bank of Thailand's interest rate system is largely responsible, putting a damper on housing construction projects and making it difficult for households who borrowed large amounts during the low interest rate system during the coronavirus pandemic. Mr. Misery loves Homepro's main competitors Dohome and Siam Global House (the other is Thai Watsadu, a central retail company), and mostly sings the same sad songs as Homepro. It argued that a disappointing economic recovery and weak construction activity were the root causes of the problem. . Like HomePro, DoHome also benefited from new store additions during the year, ending the year with 35 stores, including three large stores and six small stores. Revenue in the fourth quarter was very weak, down approximately 2.6% year-over-year. For the full year, sales were almost flat at 31.6 billion baht ($902 million). Gross profit improved to 15.7%, but net profit fell 24% to 585 million baht ($16.7 million). The company suffered badly from financial costs (also due in part to central bank-led interest rate hikes), wiping out more than 200 million baht from its bottom line. Roi Et-based Siam Global House has a relatively large number of stores in the secondary market compared to its competitors, but the fourth quarter saw its annual revenue decline after a rather dismal first nine months. ended at 33 billion baht. ($943 million) decreased by 8.2% compared to 2022. This was achieved despite the addition of six new superstores, bringing the total number of stores to 83. (They also have a store in neighboring Cambodia.) Gross profit was $25.0. cents, a slight decrease compared to the previous year. Net profit was 2.7 billion baht ($76.6 million), down 24% (coincidentally the same as DoHome). Global House's profits were also affected by rising financial costs, but the bigger impact was a decline in sales at its large warehouses in the eastern part of the country. Central's Thai Wasadu has come full circle The problems at Dohome and Siam Global House have not been resolved by the expansion of Central's Thai Wasadu, the fourth largest player in the home center market. Thai Watsadu's sales are not separately reported by its parent company, but are expected to be slightly higher than its competitors, with the addition of 14 new stores in 2023, including a new “killer” format that combines home improvement warehouses and housing. There is a high possibility that it will. Turning the furniture concept “BnB” into a megastore. For the first nine months of this year, the company's combined sales rose 12%, including a 2% increase in same-store sales. 2% won't set the world on fire, but the top-line numbers strongly suggest that Thai Watsadu is stealing market share from other companies. He currently has 81 stores in 47 provinces, but they are concentrated in the more affluent Bangkok metropolitan area and the Central Plains region. Prospects remain positive Despite the current macroeconomic woes, the outlook for home improvement retailing in Thailand remains largely positive, thanks to the country's progress in modernization and favorable demographic trends. Still, home improvement tends to be an oligopolistic industry, with a few large companies consolidating the market by mopping up weaker competitors. Compare this to Thailand. There are four major players in Thailand, including his four companies, as well as smaller players. This leads to a nagging question. Is there really enough demand?