Malaysia’s premium grocer chain Sam’s Groceria has been put on the block by owner Mydin Mohamed Holdings Bhd as part of an internal reorganisation to divest loss-making businesses.
Retailer and wholesaler Mydin estimates the loss-making high end grocery business to be worth $12.5 million (MYR 50 million). The chain includes four outlets — in Gurney Paragon Mall and Straits Quay on Penang island, Sunway Carnival Mall in Seberang Perai and Nu Sentral in Kuala Lumpur.
According to a report in The Edge on Monday, Mydin Managing Director Datuk Ameer Ali Mydin said, “We decided to sell Sam’s Groceria after realizing that the stores’ patrons are mainly local Chinese and expatriates. (However,) we do not sell liquor, wine, beer or pork at our stores and thus, we have been unable to meet our customers’ needs.”
Sam’s Groceria, which started in 2013, stocks 60 per cent imported grocery products and fresh food.
The news of a planned sale of the grocery chain by Mydin closely follows the disposal of another loss making unit, MyMydin Convenience last year. Later, it also discontinued the Kedai Rakyat 1Malaysia (KR1M) stores in October last year after accusations of profiteering.
“I would only like to say that this (KR1M) has been a massive loss-making CSR (corporate social responsibility) project for Mydin and we have done this for the benefit of the Malaysian rakyat (public),” Ameer Ali Mydin had said at that time.
The group posted its first loss of MYR156.61 million in 60 years for the year ended March 31, 2016 and claimed that the weakening Ringgit was partly responsible for the loss. However, with an internal re-organisation and cost cutting, the group managed to turn around and post a small profit for last financial year.
Earlier this month, local rating agency RAM Ratings said, given that loss-making mini markets and KR1M stores no longer weigh on Mydin Holdings’ performance, it envisaged better earnings in FY March 2018.
“The sustainability of the group’s earnings will, nonetheless, depend on its ability to turn around or dispose of loss-making divisions. While the group plans to dispose of its premium outlets, this may take time due to the current weak consumer sentiment,” RAM Ratings noted.
In the premium grocery segment in Malaysia, private equity firm Navis Capital Partners-backed Village Grocer acquired domestic rival Bens Independent Grocer (BIG) in a bolt-on acquisition last year. The deal saw Village Grocer Holdings (VGH) purchase the entire issued share capital of BIG from conglomerate The Big Group, which is divesting its retail grocery branch.