MR D.I.Y. Group Q2 Net Profit Drops 30% Quarter-On-Quarter

MR D.I.Y. Group (M) Bhd reported a 30% quarter-on-quarter drop in net profit for the second quarter of fiscal 2026, marking its lowest quarterly earnings in nearly two years. The home improvement retailer’s revenue contracted 8.5% to RM1.26 billion, while its gross margin slipped to 47.4% from 48.6% in the previous period. According to The Edge Malaysia, these figures reflect a broader shift in consumer behavior rather than a singular competitive threat.

The company’s first-half revenue rose 6.5% year-on-year to RM2.63 billion, driven by a 7.2% expansion of its store network to 1,610 outlets. However, total transactions grew 9.8% to 106.2 million, but the average basket value fell 3%. Management attributed this divergence primarily to lower average selling prices resulting from targeted promotional campaigns intended to retain price-sensitive customers.

Retail sector growth slows sharply

Malaysia’s retail industry growth decelerated to 2.5% year-on-year in the second quarter of 2026, down from 3.7% in the first quarter. This performance fell well short of the 4.8% growth projected by the Malaysia Retailers Association and Malaysia Retail Chain Association in June. Department-store sales declined 7.2% during the same period, while furniture and electrical sales dropped 5.8%, indicating weakness in discretionary spending categories.

Price sensitivity drives transaction decline

MR D.I.Y. Group’s same-store sales growth turned negative at -3.7% in the second quarter, reversing a 1.6% gain in the first quarter. The average transaction size fell 5.9% to RM24 from RM25.50 in the prior quarter, continuing a downward trend from RM25.80 in the second quarter of 2024. This sustained erosion in ticket size suggests consumers are prioritizing lower unit prices over larger basket purchases.

Berjaya Bhd research head Kenneth Leong noted that ultra-low-price cross-border e-commerce platforms are benefiting from this shift, particularly for generic merchandise where product differentiation is limited. Although Pinduoduo launched in Malaysia only late last year, its presence coincides with a period of heightened cost-of-living pressures. This environment encourages shoppers to compare prices more closely and opt for discounts, intensifying competition for physical retailers exposed to non-branded products.

Operating expenses weigh on margins

Despite a 7% increase in gross profit to RM1.26 billion and a slight rise in gross margin to 48% for the first half, MR D.I.Y. Group’s net profit declined 1.9% to RM326.43 million. The reduction was driven by higher administrative and operating expenses, which outpaced top-line growth. The sequential slowdown in the second quarter was also partly attributed to the seasonally stronger first quarter, which benefited from Hari Raya and Chinese New Year festive spending.