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MR DIY’s recovery signals stronger future

The Star·05/06/2025 23:00:00
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PETALING JAYA: For seven straight quarters, MR DIY Group (M) Bhd suffered a negative same-store sales growth (SSSG), which became a key drag on its earnings.

This, however, changed in the first quarter ended March 31, 2025 (1Q25), albeit with a small growth of 0.6% year-on-year (y-o-y).

While the SSSG has finally recovered, benefitting from the earlier timing of Hari Raya Aidilfitri, CGS International Research (CGSI Research) said there will be scepticism about the sustainability of the turnaround.

After all, MR DIY’s average basket size in 1Q25 was also flattish, with just a 1% y-o-y growth.

Nonetheless, investors “should be happy” to see improvement in MR DIY’s SSSG, it stated in a note.

The positive SSSG, along with a 13.3% store count growth in the quarter, led to a robust 10.5% revenue growth and a 21.2% core net profit expansion to RM176mil in 1Q25.

CGSI Research pointed out that first quarters have been “seasonally strong” for MR DIY. Meanwhile, CIMB Securities deems the first-quarter numbers to be within expectation.

“We expect MR DIY to post 8.1% y-o-y growth in financial year 2025 (FY25) core net profit. This is backed by its ongoing store expansion strategy, lower start-up costs for its automated warehouse and higher operating leverage,” it said.

The research house further noted that MR DIY is targeting to achieve gross profit margins of 46% to 48% in FY25 – an improvement from 45.8% in FY24 and broadly consistent with the 47.8% achieved in 1Q25.

“Although a moderation in consumer spending is possible in the coming quarters of FY25 – owing to the front-loaded festive season in 1Q25 – the company remains optimistic about sustaining robust earnings and margin performance,” said CIMB Securities.

In a separate note, Kenanga Research said MR DIY had a “slow start” in store openings in the first quarter of FY25.

It said store expansion was slightly behind schedule in 1Q25, with no KKV openings.

KKV is a lifestyle store brand from China.

“However, management maintained its full-year target of 190 new outlets, including 160 MR DIY stores and over 30 KKV and sub-brand stores.

“Most openings are backloaded into the second half of FY25, with over 20 stores already in the pipeline for Sabah and Sarawak,” it said.

Hong Leong Investment Bank Research noted that KKV stores generate three times higher monthly revenue than standard MR DIY outlets due to their premium product mix.

“KKV remains at eight stores, with no new openings this quarter due to extended site selection processes for premier mall locations.

“We remain optimistic on the group’s strategy of store expansion to defend its market share as the leading home improvement retailer.”

On MR DIY’s new automated warehouse, Kenanga Research said integration issues have largely been resolved, with throughput improving over the past three to four months.

The facility in Seri Kembangan, spanning 600,000 sq ft, is on track to be fully operational by 1Q26, with increasing efficiency expected to ease labour costs.

“Previous inventory flow disruptions that contributed to higher out-of-stock rates in 4Q24 are no longer a concern.”