Padini to open 4th Cambodia store in 2020

Presently, it has 152 domestic and international outlets solely managed by the group and 40 franchised outlets

by SHAHEERA AZNAM SHAH/ pic credit:

FAST-FASHION retailer Padini Holdings Bhd is expecting to increase its visibility overseas with the opening of a fourth retail store in Cambodia.

“We will open a store in Cambodia under the Brands Outlet (BO) label (in 2020). Currently we are managing three stores there. We exited the franchise chain, which was carried out under the Vincci label, in 2018,” group CFO and ED Sharon Sung told reporters after the retailer’s AGM in Shah Alam, Selangor, yesterday.

The additional store will increase the total number of retail outlets solely managed by Padini in Cambodia to four stores.

The group established its operations in Cambodia in 2018 with three retail stores, comprising a BO Store and two Padini Concept Stores.

Previously, the group’s products in Cambodia were distributed through the franchise business since 2016, before the retailer exited the licensing agreement last year.

In 2019, the group also exited the franchise business for its Pakistan and Thailand operations.

Presently, it has 152 domestic and international outlets solely managed by the group and 40 franchised outlets.

On tapping into new markets, Sung said the retailer is waiting for the most viable option and opportunity for it to expand, without committing to any timeline.

“We have always been in expansion mode, but the culture of the company is that we are very careful in our selection. Thus, we will be expanding in a cautious way.

“We have some sort of target for the long run. However, for a short period, there is no target fixed yet. All markets are possible for us,” she said.

Due to the type of clothing marketed by the retailer, its options for new markets are limited to countries with similar climates to Malaysia, she added.

“For example, we couldn’t open a business in Russia due to its extreme changes in weather,” Sung said.

Moving forward, the retailer aims to strengthen its online presence through collaborations with e-commerce platforms, its ED Andrew Yong said.

“Revenue contribution from the online channel is less than 1%. However, we need to merge between the brick-and-mortar channel and online platforms to provide a seamless customer experience.

“We have collaborated with Zalora Group and starting from last month, our products under the PDI label are available through Lazada. Now, we’re in talks with Shopee to widen our online reach,” he said.

In the meantime, the traffic on Padini’s own website is still stronger as the full range of products is available there compared to what’s available on other online platforms, Yong added.

For the financial year ending June 30, 2020 (FY20), the retailer targets a profitable return despite cautious consumer sentiment amid the US-China trade tensions.

“I always believe that the group will do better. As the retail market has been challenging, we will prepare for the downturn and be sensitive to what is happening to adjust accordingly.

“We believe that Padini will slightly benefit in the long run if the trade war is prolonged, but we are unable to quantify the increase in margin,” Sung said.

The group’s net profit fell 10.1% to RM160.18 million in FY19 from RM178.17 million posted a year ago, as its gross profit margin in FY18 was higher due to the reversal of inventories written off and inventories written down.

Revenue for the year rose 6.2% to RM1.78 billion from RM1.68 billion last year, helped partly by higher fourth-quarter sales.

Shares of Padini closed 0.57% higher at RM3.50 yesterday, bringing its market capitalisation to RM2.3 billion.