Today, all of the mainboard-listed department store operator’s 37 outlets are in Malaysia. In terms of total gross floor area, they take up 409,000 sq m, roughly the size of 76 football fields. That’s down from 809,000 sq m in 2017.
In addition to competition from online shopping, the Covid pandemic also played no small role in Parkson Retail Asia’s downsizing over the years. The combined impact of these two factors has been significant.
Revenue has been on a sustained decline since 2018, down 48% from $414 million that year to $215 million in 2024. The company returned to the black in 2021 after a four-year losing streak, but earnings have kept on falling since 2022, from $29 million that year to $24 million last year. As at March 31, 2025, it had $21 million in accumulated losses.
While the pandemic is over, e-commerce still poses a threat to its stores to this day. Meanwhile, Malaysia’s rising cost of living and increasing economic uncertainty stemming from America’s trade tariffs are giving consumers reason to think twice before spending on non-essentials.
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Against this backdrop, Parkson Retail Asia’s announcement on May 14 of a special interim dividend of 4 cents a share was a breath of fresh air. It reported that day a 21% increase in earnings to almost $15 million for 1Q2025, but what really caught the attention of investors was the dividend, which will be paid on June 12. June 5 is the books’ closure date.
Parkson Retail Asia has no fixed dividend policy. The last time it declared a dividend was 2016. Besides its accumulated losses, its ability to pay dividends was also crimped by occasional short-term financial constraints.
In the last two years, for example, the company was profitable but ended up having more current liabilities than current assets. The bulk of its current liabilities are trade payables, which do not incur interest costs and are usually settled within 30 to 90 days.
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Net current liabilities amounted to just over $26 million at the end of 2023, before easing to $0.9 million last year. The situation has since improved further. As at March 31, 2025, it had slightly more than $17 million in net current assets. Cash and short-term deposits, totalling $152 million, accounted for the lion’s share of its current assets. It typically has very little debt on its balance sheet.
The day after Parkson Retail Asia announced the special dividend, its share price more than doubled to 14.5 cents on huge volume. The payout of 4 cents a share, totalling $27 million, represents half of its net asset value of 8 cents per share.
Finally on firmer footing?
Having exited the Singapore Exchange(SGX) watchlist on Oct 4 last year after being there since Dec 4, 2019, and now with its first dividend in nearly a decade, is Parkson Retail Asia finally on a much firmer footing? Or is the upcoming payout to shareholders premature?
Parkson Retail Asia is 68%-owned by Bursa-listed Parkson Holdings, whose single-largest shareholder is William Cheng Heng Jem. Cheng, 82, is the executive chairman of both companies as well as Hong Kong-listed Parkson Retail Group, a unit of Parkson Holdings that operates malls, department stores and supermarkets in China.
Cheng’s three daughters are all executive directors, each running a different company. Of the three companies, Parkson Retail Asia is the only one that showed improved revenue and profitability in the most recent quarter.
At its recent AGM on April 25, Parkson Retail Asia said its 37 department stores in Malaysia are all profitable and that it was in talks to expand its store count. All its outlets are leased on three-year terms, which can be renewed every three years for up to 15 years.
Parkson Retail Asia’s cash flows from operations are often robust. If it were to open more outlets, building up its cash pile further — currently at $152 million — will be helpful in servicing its lease liabilities, the largest liability on its balance sheet.
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Lease liabilities made up 48% of its total liabilities of $295 million as at March 31. Now that it is no longer on the SGX watchlist, banks may also look more favourably on the company if it needs financing.
No slowdown at Aeon
If the positive momentum of its key competitor in Malaysia is anything to go by, Parkson Retail Asia may have grounds for cautious optimism.
Bursa-listed Aeon, which operates 35 department stores, 28 malls and 47 Daiso outlets in Malaysia, is going ahead with plans to redevelop and expand Aeon Mall Kinta City in Perak. The project is expected to be completed within three years.
Development is also underway for a new two-storey mall adjacent to Aeon Mall Seremban 2. The group will also fast-track renovation works at a few department stores and malls this year.
Back to Parkson Retail Asia. While its dividend is refreshing and its exit from the SGX watchlist timely, the core challenge remains — staying competitive with e-commerce surging and rivals like Aeon continuing to push ahead. The real test starts now. Cash helps, but without bold moves and sharper execution, its rebound risks being little more than a blip.
