KUALA LUMPUR (Jan 9): Parkson Holdings Bhd (KL:PARKSON) announced that its unit, Liupanshui Parkson Retail Co Ltd, has signed a 10-year tenancy agreement for its department store operations in the city of Liupanshui, Guizhou province, China.

In a filing with Bursa Malaysia on Thursday, Parkson said the tenancy agreement was entered into with Guizhou Hanhua Real Estate Development Co Ltd to occupy 26,723 square metres of space in the Baolong International Building. The tenancy is set to commence on Jan 1, 2027 and expire on Dec 31, 2036.

Liupanshui Parkson is an indirect wholly owned subsidiary of Hong Kong-listed Parkson Retail Group Ltd (PRGL), which is itself a 54.97%-owned subsidiary of Parkson Holdings Bhd.

The tenancy agreement has been recognised as an asset acquisition by the Hong Kong Stock Exchange, according to Parkson. The group reported that the acquisition of assets recognised by PRGL Group amounted to 46.3 million yuan (RM28.2 million).

By end-September, 2024, Parkson was operating 42 stores in 28 cities across China. In the July-September quarter last year (3QFY2024), which marked Parkson's third financial quarter for the year, the group's retail division in China saw its operating profit drop 49% year-on-year to RM36 million from RM69.94 million, while revenue declined 21% to RM402.63 million from RM509.32 million.

The group blamed slower-than-expected economic recovery and cautious consumer spending for its disappointing performance. In 3QFY2024, Parkson's quarterly revenue fell 16% to RM584.94 million from RM692.44 million a year ago, due to low traffic flow and cautious discretionary spending across its retailing regions.

During the quarter under review, Parkson's overall net profit increased to RM7.27 million from RM2.21 million, driven by a foreign exchange gain of RM15.41 million.

For the nine months ended Sept 30, 2024 (9MFY2024), Parkson's China retail division reported a 27% drop in operating profit to RM175.17 million from RM241.19 million in 9MFY2023, while revenue fell 15% to RM1.48 billion from RM1.74 billion.

At the group level, Parkson's nine-month cumulative net profit fell 40% to RM25.27 million from RM42.23 million, as revenue dropped 12% to RM2.11 billion from RM2.36 billion.

Parkson's shares closed unchanged at 21.5 sen on Thursday, valuing the group at RM247 million.