SHAH ALAM: Garment and shoe retailer Padini Holdings Bhd sees a challenging year ahead but is optimistic on its performance for the financial year ending June 30, 2008 given its impressive first quarter results and the various government measures to encourage consumer spending.
Executive director Chan Kwai Heng said less than favourable external factors such as high oil prices could dampen consumer sentiment going forward.
“However, our first quarter results were very good. And traditionally, the October to December period is a good season for us,” he told Starbiz after the company AGM yesterday.
For the first quarter ended Sept 30, the retailer of Vincci shoes and Padini apparel made a net profit of RM11.5mil, or 8.78 sen per share, compared with RM3.7mil, or 2.92 sen, in the same quarter last year. Revenue was also higher at RM93.2mil against RM71.9mil before.
“In general, Malaysian consumers are pretty resilient and spending habits are hard to change. Slowdowns can be expected but sales will pick up again after some time,” Chan said.
Padini, he said, was looking at its Brands Outlet concept to drive growth over the next three to five years. These outlets sell value products such as clothing, toys, luggage and lingerie that are manufactured by Padini as well as other brands.
Currently, Padini has three Brands Outlet stores.
“We plan to open one store each in Malacca and Kuantan by June next year,” Chan said, adding that the fit-out costs for these would be about RM2.5mil.
Padini is also targeting to set up two Padini Concept Stores next year - one in Kuching and another, also in Kuantan. These would cost the firm some RM6mil, Chan said.
On overseas plans, Chan said the company was focused on India, where “there is market.”
“We are also looking for reputable partners in North African markets such as Egypt and Morocco.”
Padini's overseas business is currently conducted via franchise and/or licensing. It has franchise stores in Australia, Saudi Arabia, United Arab Emirates and Singapore.
“We do not own or manage these businesses but may consider doing so in future, depending on business conditions,” Chan said, adding that overseas sales currently contributed about 10% to revenue.
Analysts, meanwhile, said positive consumer sentiment would continue to drive Padini's sales.
Its overseas ventures, they added, were also expected to sustain the company's long-term growth.
“Padini is an alternative to food and beverage companies, and is suitable for those who want to invest in the consumer sector but do not want to have to worry about surging commodity prices as experienced by food and beverage companies,'' an analyst said.
