Padini setting up more outlets to boost sales

20 OCTOBER 2006 - THE STAR

PETALING JAYA: Padini Holdings Bhd, the retailer of Vincci shoes and Padini apparel, is setting up an additional six concept stores and five stand-alone outlets nationwide to boost group revenue for the financial year ending June 30, 2007, said finance director Chan Kwai Heng. 

“We have so far confirmed opening one concept store each in Queensbay Mall in Penang, Warisan Square in Kota Kinabalu and Pavillon in Kuala Lumpur.  

“We have yet to decide on potential locations for three more concept stores, as well as on the stand-alone outlets,” he told StarBiz via an e-mail interview, adding that investment for each outlet would be about RM15mil. 

The company currently has 120 outlets nationwide. 

For the financial year ended June 30, Padini posted revenue of RM286.1mil, up 17.2% from RM244.1mil the previous year. Net profit increased 46% to RM27.7mil from RM19mil previously. 

Besides growing locally, Padini is currently in negotiation with two franchisees in Vietnam and one in India to expand its VNC (locally known as Vincci) shoes label into these countries. 

Chan added that the agreements were expected to be finalised by year-end and he hoped to identify store locations in these countries by early next year. 

Currently, Padini has 39 outlets overseas under it franchise programme which contributed 15% to group turnover last financial year. These countries include Thailand, Australia, Cambodia, Saudi Arabia, United Arab Emirates, Brunei, Singapore, the Philippines and Indonesia. 

Chan said Padini also intended to expand its production line to winter shoes to tap the European market. 

“This is our initial plan to to explore the market there. However, nothing has been firmed up and we hope to identify some potential franchisees soon,” said Chan. 

He added that Vincci's competitive edge included fashionable designs and affordable pricing that suited consumers’ demand.  

According to OSK Securities analyst Loong Kok Wen, Padini’s overseas expansion plan is promising as the company already has a strong position in the mass mid-end shoe and garment market in the Asean region.  

In addition, Padini intended to follow Jusco's expansion into the suburban areas to widen its geographical reach for consignment sales. 

The research house viewed Padini's move positively as it stood to gain from Jusco which was the only mid-end retailer in Malaysia with a proper expansion plan. 

Also in the pipeline are new brands for the lower-end consumer market to be launched by end-2007, Chan said. 

Loong said although profit margin for the lower-end segment would be relatively thin for Padini, the company intended to set up outlets in non-prime areas with low rentals in some shopping malls.  

Focus would be given to pricing to drive sales volume.  

“Going forward, we anticipate sales in the next two quarters to be relatively strong due to the upcoming festive season, megasales and school holidays,” she added.