Singapore Post shows signs of possible exit from U.S. ecommerce market
Category: #retail  By Paroma Bhattacharya  Date: 2019-03-14
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Singapore Post shows signs of possible exit from U.S. ecommerce market

Reports suggest that Singapore Post (SingPost) could wind down or sell off its U.S. e-commerce business after performing a strategic review of the loss-making unit. Analysts have predicted that a divestment or closing down of the unit could result into potential long-term profitability for SingPost.

Apparently, two broking firms, including CLSA, have estimated SingPost’s earnings factoring in the benefits of a potential transaction. The poll seems to have been conducted after the company had stated last month that there could be an impairment risk to its U.S. unit’s book value.

A spokeswoman for SingPost, Ms. Mei Yu Hong, informed that the firm is now conducting a review of the business, which it expects to remain a loss-making unit in the current fiscal year. She explained that the environment for operating e-commerce businesses in the U.S. is still challenging, owing to an increase in customer bankruptcies and intensifying competition. Ms. Hong added that any impairments would be evaluated on the basis of full financial year results and future plans.

An analyst at CLSA said that the exit of SingPost’s U.S. e-commerce business could be done either by a sell-off or by scaling down. Supposedly, sentiment has been affected due to the loss-making unit even as the company’s management had reversed the structural decline in the Post and Parcel segment. The company’s filing revealed that the unit’s losses had widened to $13.3 million in the third quarter, in comparison with $11.7 million loss a year ago.

The U.S. e-commerce unit of SingPost, which assists retailers like Tommy Hilfiger and Speedo in managing package deliveries and online stores, has reportedly been grinding on the profit of the company by suffering losses continuously for the past three years. Subsequently, the market value of SingPost has seemingly been halved after reaching a record high in February 2015.

Counting Alibaba Group Holding and Temasek Holdings as two of its largest shareholders, SingPost had acquired majority shares in U.S. e-commerce firms Jagged Peak and TradeGlobal Holdings for around US$184 million in 2015.



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Paroma Bhattacharya

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Paroma Bhattacharya

Paroma currently works as a content developer for Algosonline, MSF and a series of alike platforms. Fortified with a post-graduation degree in Journalism and Mass Communication, she delved head long into a writing career, creating resourceful and information enriched ...

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