KUCHING: The ongoing expansion of Brands Outlet (BO) stores throughout Malaysia is set to drive future revenue for Padini Holdings Bhd (Padini) with four new stores to be added by June this year.
MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) noted that Brands Outlet stores recorded a commendable same store sales growth (SSS) of more than 30 per cent year on year (y-o-y) growth for the last second quarter financial year 2014 (2QFY14).
Moving forward, the management indicated that it would focus on expanding its Brands Outlet stores as other Padini’s stores are expected to have a relatively flat growth.
“We believe that greater revenue contribution from Brands Outlet stores will be able to boost Padini’s current overall level of topline growth,” said the research house.
Generic brands offered in these stores provide Padini with greater flexibility in controlling its products mix for each of BO stores to cater for differences in consumer preference in different localise area as well as being able to maintain its margin.
The management indicates that Padini is keen to further expand its network outside Klang Valley as it sees its appeals among the consumers in the other states. We are positive on this as it will enable Padini to further penetrate the value-for-money segment in Malaysia to further boost its earnings potential.
On another note, Padini has paid a total dividend of nine sen per share to date for FY14 and is
well on track to pay a full year dividend of 11.5 sen for a net dividend yield of 5.8 per cent at current price.
“We are expecting the company to continue to maintain its dividend payout as the company is laden with cash of RM212.9 million or RM0.32 per share,” it reiterated. On the expansion, four Brands Outlet stores and two Padini Concept Stores (PCS) have been successfully added in FY14. Another three Brands Outlet stores and one Padini Concept Store are expected to be opened by June 2014.
The management had further guided that store expansion will continue in FY15. It is possible that number of new stores will be similar as FY14 with two locations for the new stores has already been confirmed while others are still in negotiation process.
However, it is important to note that the opening of new stores in FY15 is dependent on the timing and availability of retail space as some of the new shopping malls are still under construction.