Parkson Retail Asia Ltd’s (PRA) said its indirect wholly-owned subsidiary Parkson Vietnam Co. Ltd has filed a court application in Ho Chi Minh City for the commencement of voluntary bankruptcy proceedings starting Friday.

The move will end the mall chain’s 18 years of operation in Vietnam as it is not commercially feasible to continue its business in the country, said Singapore-listed PRA, a 67.96-percent-owned subsidiary of Parkson Holdings Bhd.

Parkson Vietnam has historically been operating at a loss, with such losses being compounded in recent years due to the challenging business environment caused by the COVID-19 pandemic, according to the PRA statement.

Its pre-tax loss stood at SGD2.3 million (US$1.72 million) last year against a pre-tax profit of SGD13.7 million ($10.25 million) in 2021 as its revenue plunged from SGD10.1 million ($7.55 million) to SGD2.4 million ($1.8 million) in the same period.

The profit attained in 2021 was largely attributed to the closure of two stores and the exit from tenancies resulting in derecognition of lease liabilities, and recognition of income from subleasing assets.

By the end of last year, Parkson Vietnam had a capital deficiency of SGD30.16 million ($22.55 million).

The lack of support from Parkson Vietnam’s landlord, such as the negligible rental rebate or rental reduction, during the COVID-19 lockdown, and the high land tax when the operation of department stores’ retailers was restricted, adversely impacted its financials, the statement added.

Therefore, the company has filed a bankruptcy application to the People’s Court of Ho Chi Minh City and is awaiting its approval.

PRA said the bankruptcy of its Vietnamese subsidiary is not expected to have a financial impact on the Parkson group.

With its impending exit from Vietnam, PRA will continue to focus its operations in Malaysia where it is running 38 stores with a total retail space of 429,000 square meters, according to its 2022 annual report.

In Vietnam, there is currently only one Parkson store, which covers 18,000 square meters downtown Ho Chi Minh City.

Tuoi Tre (Youth) newspaper reached out to this sole remaining store in Vietnam on Friday for more details on the bankruptcy application but its representative was not available for comments.

The Parkson group set foot in Vietnam in 2005 and developed a premium shopping mall chain in the major cities of Ho Chi Minh City, Hanoi, and Hai Phong before shutting most of them down.

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