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Eco-Shop’s FY2025 Report: Record Growth Tempered by Rising Costs and a Challenging Quarter
Eco-Shop Marketing Berhad, a household name for value shopping in Malaysia, has just released its financial results for the fourth quarter and full year ended May 31, 2025. The report paints a picture of a company in a strong growth phase, marked by impressive full-year revenue and profit expansion, and a rewarding dividend for its shareholders. However, a closer look at the final quarter reveals the mounting pressures of rising operational costs and one-off expenses that have tempered its profitability.
Let’s dive into the numbers and see what they tell us about Eco-Shop’s performance and its path forward.
Core Data Highlights: A Tale of Two Timelines
A Year of Robust Growth: FY2025 in Review
For the full financial year 2025 (FYE25), Eco-Shop delivered a stellar performance, driven primarily by its aggressive network expansion. The company added a net total of 74 new stores during the year, significantly boosting its market presence and top-line figures.
FYE 31 May 2025
Revenue: RM 2.79 billion
Profit Before Tax (PBT): RM 280.9 million
Net Profit (PAT): RM 204.3 million
Basic Earnings Per Share (EPS): 3.79 sen
FYE 31 May 2024
Revenue: RM 2.40 billion
Profit Before Tax (PBT): RM 241.7 million
Net Profit (PAT): RM 177.3 million
Basic Earnings Per Share (EPS): 3.29 sen
The 16.0% surge in annual revenue translated into a healthy 15.3% increase in net profit. This growth was not just about opening more doors; the company also improved its gross profit margin to 28.2% from 26.4% in the previous year, thanks to a more favourable product mix and the strengthening of the Malaysian Ringgit in its global procurement activities. It’s worth noting that these results include RM9.4 million in one-off IPO listing expenses. Excluding these, the normalised profit figures would be even stronger, reflecting solid operational efficiency.
A Closer Look at the Fourth Quarter (Q4FY25)
While the full-year story is one of clear growth, the fourth quarter presents a more nuanced picture. Revenue continued to climb compared to the same quarter last year, but profitability took a hit due to a significant spike in costs.
Q4 FY2025 (ended 31 May 2025)
Revenue: RM 689.0 million
Profit Before Tax (PBT): RM 68.1 million
Net Profit (PAT): RM 49.4 million
Q4 FY2024 (ended 31 May 2024)
Revenue: RM 640.7 million
Profit Before Tax (PBT): RM 86.2 million
Net Profit (PAT): RM 63.3 million
Quarterly revenue grew by a respectable 7.5%, supported by the addition of 22 new stores and a price increase implemented on April 14, 2025. However, Profit Before Tax (PBT) and Net Profit saw declines of 20.9% and 21.9% respectively. The primary reason was a sharp 65.1% increase in Selling, Distribution, and Administrative (SDA) expenses. This was driven by the costs of the new stores, the full-quarter impact of the minimum wage revision, and a significant one-off IPO listing fee.
To put things in perspective, the quarter included RM7.6 million in one-off IPO expenses. Excluding this, the normalised PBT and PAT would stand at RM75.7 million and RM57.0 million, respectively, painting a healthier operational picture.
Strengthening the Foundation: Financial Position and Shareholder Returns
Eco-Shop’s balance sheet has strengthened considerably, with total equity growing to RM989.6 million from RM552.4 million a year ago. More impressively, net cash flow from operating activities more than doubled to RM319.4 million for the full year, indicating robust operational health and efficient working capital management.
In a move that will please shareholders, the company has declared an interim single-tier dividend of RM0.01 per share for the financial year, payable on August 26, 2025.
Risk and Prospect Analysis: Navigating the Road Ahead
Eco-Shop’s management remains optimistic about the future, and for good reason. The value retail segment in Malaysia is still considered underpenetrated compared to more developed markets, offering a long runway for growth. As consumers increasingly prioritize affordability, Eco-Shop is perfectly positioned to capture this demand.
However, the path is not without its challenges. The company is actively managing several headwinds:
- Cost Pressures: Rising inflation, higher electricity tariffs, an expanded Sales and Services Tax (SST), and increased EPF contributions for foreign workers are all structural costs that need to be managed.
- Consumer Adaptation: Same-Store Sales Growth (SSSG) saw a marginal decline, partly due to consumers taking time to adapt to the mid-April price adjustment.
To counter these challenges, Eco-Shop is focusing on strengthening supply chain efficiencies, implementing strategic pricing, and rolling out targeted marketing campaigns to boost store footfall and drive sales.
Summary and
Eco-Shop’s FY2025 results showcase a company executing a successful and aggressive expansion strategy. The impressive full-year revenue and profit growth underscore the strong demand for its value-oriented offerings. The dip in fourth-quarter profitability, while notable, is largely explained by the costs associated with this rapid growth and significant one-off IPO expenses.
The strong operating cash flow and the dividend declaration are positive indicators of the company’s underlying financial health and commitment to its shareholders. Looking ahead, the key to sustained success will be balancing aggressive expansion with disciplined cost management.
While the outlook appears positive, investors should keep a close watch on the following key points:
- Cost Management: The ability to effectively manage rising operational costs from wages, utilities, and taxes will be crucial for protecting margins.
- Same-Store Sales Growth (SSSG): Monitoring the recovery of SSSG will indicate how well consumers are adapting to the new price points and the effectiveness of marketing initiatives.
- Expansion Execution: The successful rollout of new stores and the expansion of its distribution center, funded by IPO proceeds, are vital to its long-term growth story.
- Macroeconomic Environment: Broader economic trends that affect consumer disposable income and spending habits will continue to influence performance.
Disclaimer: This article is for informational purposes only and should not be considered as investment advice. Please conduct your own due diligence or consult a financial advisor before making any investment decisions.
With its ambitious expansion plans and a clear focus on value, Eco-Shop is a fascinating company to watch in the Malaysian retail space. The coming year will be pivotal as it works to absorb recent growth and navigate a challenging economic landscape.
What are your thoughts on Eco-Shop’s performance? Do you think it can maintain its growth momentum while managing rising costs? Share your views in the comments below!
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