Padini expects slower sales growth in fiscal 2010 (10/9/2009)

Padini expects slower sales growth in fiscal 2010


2009/09/10

Malaysian fashion retailer Padini expects annual sales growth in fiscal 2010 to slow from a year ago as it expands at a slower pace.

The pace at which the company will add retail space will fall by more than half, Padini executive director Chan Kwai Heng said.

Sales for the year to June 2009 jumped 24 per cent to RM477 million from a year ago and net profit was up 19 per cent at RM49.5 million, company data showed.

"That kind of growth could be a bit hard pressed to sustain, because for FY2010 we are not adding a lot more space," Chan said in an interview yesterday.

Padini will add about 40,000 square feet of retail space in fiscal 2010, versus 90,000 sq ft in 2009 and 140,000 sq ft in 2008, said Chan.

Malaysia, Asia's third most trade-dependent economy after Singapore and Hong Kong, shrank 3.9 per cent in the second quarter after a 6.2 per cent drop in the first quarter from a year ago.

Padini's business is growing despite the downturn and the company is rolling out new product lines and opening more outlets.

"The increase in sales is mainly generated from (new retail space)," said Chan.

A company that began as a garment manufacturer for bigger brands in 1971, Padini moved to building its own brands in the late 80's and early 90's when a booming economy boosted domestic consumption in the Southeast Asian country.

The company now sells nine brands of fashion goods ranging from garments to women's shoes and accessories in 12 countries in Southeast Asia and the Middle East.

Foreign retail brands such as Top Shop, Zara and MNG have flooded the local retail market in recent years to tap into the growing consumer market.

Chan said the company has no intention of beefing up its exports in spite of rising competition at home. Currently, overseas sales account for about 10 per cent of the total.

"We do not have a concerted plan or strategy as to what we shall do to go for the export market," said Chan.

"For us, the retail market at home is still so lucrative and it is still doing so well for us, because of that we will really pay attention to this part," he said.

Padini shares have outperformed that of its rivals so far this year but lagged the performance of the wider market.

The stock has risen 14.63 per cent so far this year, compared to the benchmark stock index's 37 per cent gain while competitor Voir is down 10.56 per cent and Bonia has fallen 12.28 per cent. - Reuters