Parkson disappoints analysts again with ballooning operating expenses

Blame it on worse sales.

According to Barclays, Parkson's 3Q13 earnings miss was due to a combination of worse-than-expected top-line and increasing operating expenses.

Total sales proceeds were only up mildly by 0.9% y/y to RMB 3,672 mn as the same-store-sales growth (SSSG) rate declined by 4.2%.

Here's more from Barclays:

The company opened a total of five new stores and acquired four managed stores in the first nine months, and therefore total operating expenses increased by 16% y/y to RMB783mn. Merchandise gross margin was down by 0.7 ppts y/y to 17.9% in 3Q2013.

Management guided that quarter-to-date SSS remained in negative territory (decline) but no specific number was given. We think margin pressure remains, as there will be six new stores opening next year, including two which are scheduled to open in 4Q this year. For the existing stores affected by subway constructions, namely the Hefei, Nanchang and Nanning stores, management said the situation would continue for the next two to three years.