three Brands Outlet stores (Tai, 2018). In is Padini’s official e-commerce site which caters to customers who prefer to shop online.

Looking ahead, Padini intends to expand its retail network whenever good opportunities are presented. This includes the planned opening of six Padini Concept stores and six Brands Outlet stores in 2018. The management also intends to carry out refurbishments for at least one Padini Concept store and three Brands Outlet stores (Tai, 2018). In addition, the management has completed the incorporation of Padini (Cambodia) Co. Ltd on 2 August 2017. It intends to open new stores to sell apparels, shoes and accessories in Cambodia in the near future (Tai, 2018).

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Cambodia as a pioneer for regional expansion. As of 30th June 2017, Padini has 59 foreign outlets managed as a franchise and dealership under the Vincci Label which contributed 4% of revenue. With the strong brand base built over the years, Padini has selected Phnom Penh, Cambodia for its first in-house outlets venture with three new stores opening in FY18 under Padini Concept and Brands Outlets stores with total CAPEX allocated at RM20m and expected breakeven period of 2 years. Cambodia was chosen as its first regional venture attributed to its attractive benefits such as; (i) Cambodia does not have capital control, (ii) leniency in regulation for 100% foreign shareholding, and (iii) potentially lower corporate tax rate of c.20% vs domestic of c.26%.

No material impact is expected for FY18 and FY19 (kiasutrader, 2017).Closing of underperforming stores to boost margins. FY17 recorded the highest revenue and core net profit since IPO at RM1.5bn and RM180.6m, respectively, with higher net profit margin at 12%, attributed to its stores rationalisation program, which saw: (i) the closing down of 22 underperforming stores, and (ii) opening of 6 Padini Concept Stores, 7 Brands Outlet Stores, 1 free-standing stores and 8 new franchise/dealers stores. In particular, the closing of the underperforming stores boosted the core net margin to double-digit growth starting FY16 at 11% with total stores decreased to 241 stores from 326 stores in FY15.

As of 30th June 2017, Padini has an unchanged number of stores at 241 stores. For FY18, Padini will continue to focus on opening of stores with 12 new in-house stores in plan for FY18 (6 Padini Concept Stores and 6 Brands Outlets Stores). However, currently there is no plan to close down stores. As of October 2017, Padini has opened 4 new stores with estimated CAPEX of RM1m to RM3m per store with an expected breakeven period of less than 2 years (kiasutrader, 2017).


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