Parkson Retail Group's 3Q12 earnings could slip 3.4% to RMB248m

Here are 2 things to watch out for in the upcoming results.

Nomura expects net profit for 3Q12 to be Rmb248m, representing y-y decline of 3.4% when results are released on November 16. There is no consensus forecast for 3Q12.

Here's more from Nomura:

However, if we assume the same split between 3Q and 4Q as ours, the market is looking for around Rmb241m net profit for 3Q12, which is in line with our expectation.  

The company will hold a conference call on Nov 16 at 6:00pm HKT.

Given reported 3Q earnings from A-share listed company, Parkson’s earnings may face downside risk
Both the market and we expect Q-Q earnings growth of over 10% in 3Q12 (Rmb212m net profit for 2Q12). We think there may be downside risks for the net profit forecast for Parkson, as most A-share listed department store peers have reported flattish Q-Q earnings growth in 3Q12.

Key things to watch for in the upcoming results
 Parkson’s operating profit has seen y-y decline from 4Q11 onward and the decline has been getting worse towards 2Q12. It is crucial to watch for whether the company is able to narrow the decline in 3Q12, as it targets to achieve positive y-y net profit growth in 4Q12.

 The trend of SSSG and concessionaire rate as well as efficiency of cost control. We think it is hard for Parkson to outperform peers in terms of SSSG given its old store portfolio age and relatively small floor spaces per store.

Thus, whether Parkson could achieve better cost control and maintain or improve concessionaire rates to keep its profitability is crucial for the company.