Humbled Carrefour bids adieu to S'pore market

[pianist]

Outlets at Suntec City and Plaza Singapura to close by year-end; 380 employees will be affected
BY
NISHA RAMCHANDANI
Moving out: '...expansion and growth perspectives do not allow reaching a leadership position in the medium and long term,' says Carrefour Singapore on the decision to shelve its S'pore business -
[SINGAPORE] French hypermarket chain Carrefour, which started operations here back in 1997, will shut down its outlets at Suntec City and Plaza Singapura before the end of this year, pulling out of the Singapore market entirely.
It has decided to shelve its local business "since expansion and growth perspectives do not allow reaching a leadership position in the medium and long term", Carrefour Singapore said in a statement yesterday.
The closure will affect over 380 staff, though Carrefour intends to contact other local retailers to help its staff find employment. A spokesman for Dairy Farm Singapore, which runs nine Giant hypermarkets in Singapore, said that the chain is open to employing staff presently working for Carrefour. "In this tight labour market, we are constantly looking out for experienced retail staff to join our group," the spokesman said.
With two stores, Carrefour has minimal market share, pointed out head of retail for Jones Lang LaSalle Hannah MacDonald, while competitors such as NTUC FairPrice, Giant and Cold Storage - the latter two being owned by Dairy Farm - have economies of scale, giving them an edge in terms of purchasing and logistics. "Margins are tight in supermarket retail, in the region of 3-5 per cent," she added.

[wsreader]

The 380 should not have problem seeking employment, considering that ntuc fairprice was unable to recruit local retail staff and had to advertised in the prc.

[sgd]

wah the 380 staff happy like anything golden handshake coming. 1 year - 1 month so if worked for 15 years means 15 months severance pay.

if manage to find another job within the same month that got laid off wow that money fall from the sky.

or

If carrefour sells out and new management takes over they going need the old staff so old staff had experience and domain knowledge can ask for 15-20% pay hike or more from the new mgt.

[snowcap]

Carrefour exiting Singapore... What do you guys think of the following?

Sell Suntec REIT: because it has lost an anchor tenant
Buy Dairy Farm: because it has one competitor removed.

This is not an advise to buy or sell anything.
{vested in both Suntec and DairyFarm}

[wsreader]

Carrefour 2 outlets are tenant of:
a) Suntec reits for Suntec City outlet
b) CMT for Plaza Singapura outlet

Both are good locations near mrt stations. Should not have difficulty to find another tenant.

(not vested in all above-mentioned counters)

[godjira1]

in a way i find JSH or JMH a better way of entering Dairy Farm due to the illiquid nature of Dairy Farm. U get some sort of conglomerate discount (though it might stay forever since this company has been around almost 200 years....) with similar dividend yield.

Suntec Reit, man, it's just one of those things I won't buy anyway but shorting it is an expensive proposition due to its high yield nature?

[snowcap]

Thanks for the replies.

@godjira, precisely because Dairy Farm is illiquid, I've been able to take advantage of occasional "mispricings" (like this week when it went up to $11.50, then back down to $10.80 - a 6% swing in a few days). There are other examples of the market underpricing it by 5-10% in one or two days, then recover to the 10 or 30 day moving average.

Suntec REIT is the defensive portion of my portfolio, where i park CPF and SRS, 7% yield is better than CPF's 2.5%, so don't intend to divest.

Cheers!

[KopiKat]

The bigger impact to Suntec is going to come from their AEI (Pg 20 onwards),

[wrap]
[table=Phase]
1
2
3/4[/table]
[table=Est Completion]
Q213
Q413
Q414[/table]
[table=Est Area]
193,000sf
380,000sf
249,000sf[/table]
[table=CAPEX]
$55m
$75m
$100m[/table]
[/wrap]

Capex of $180m to be funded by own bank borrowings

Phase 1 started in 1-Jun and looks like it may have already impacted the Q2(Jun) DPU=2.361ct vs Q1(Mar) DPU = 2.453ct. I'm expecting DPU to drop further...

[pianist]

wah the 380 staff happy like anything golden handshake coming. 1 year - 1 month so if worked for 15 years means 15 months severance pay.

if manage to find another job within the same month that got laid off wow that money fall from the sky.

or

If carrefour sells out and new management takes over they going need the old staff so old staff had experience and domain knowledge can ask for 15-20% pay hike or more from the new mgt.

how did u know they get 1 month for 1 year ofservice?

[snowcap]

how did u know they get 1 month for 1 year of service?

I think this is market practice - MOM may also have some guideline for "fair" retrenchment practices. I recall a friend was terminated "unfairly" and complained to MOM - in the end MOM got the company to pay "1 month per year of service".