Bonia Corp Bhd is remaining cautious for the year ahead after it saw its net profit fall 17.78% this year, hit by slower sales after the implementation of GST.
Although it expects more challenges ahead, due to weaker ringgit and uncertain economic conditions, the group is going ahead with its expansion plans in Vietnam, Indonesia, Cambodia and other Asian countries.
It saw a 14% fall in sales for its Malaysia operations during the fourth quarter ended June 30, 2015, compared to a year ago, attributed to the GST and the absence of any festivities during the period.
The group says in its latest annual report that the year had been a challenging one for the entire retail industry.
Sales in its Malaysian businesses dropped by 2% for the year after excluding a one-off RM12.3mil sale of consignment stock to its dealers to Indonesia and Vietnam.
Its same store sales growth (SSSG) in Malaysia also fell 2% year-on-year with its boutiques and counters registering a fall of 2% and 1% respectively.
“Sales were badly affected as shopping traffic had dropped in shopping centres for the first three months after GST.
“Generally, consumers had been holding back on their purchases to observe the price movement of retail goods and services,” it says in the report.
While sales had picked up closer to Hari Raya, it was still not as good as the previous year, the group says.
The fall in its earnings were due to intensive promotion activities and higher discounts offered to push sales before GST, as well as not increasing their prices post-GST.
“Unprofitable retail stores in certain high rental boutiques and higher operating costs also contributed to the drop in earnings,” it says.
However, the company saw its Singapore operations manage a marginal 0.8% increase in revenue to RM175.4mil due to better contribution from its newly opened Bonia stores in Westgate and existing Braun Buffel stores in Westgate and ION Orchard.
Revenue from its Vietnam operations rose 34.8% to RM27.7mil, while revenue from Indonesia operations were up by 35.7% to RM29.6mil.
“Moving forward, the group will continue to undertake more promotional activities as part of the stock rationalisation program and to boost our topline.
“The group will also try to maintain its profit margin by closure of non-profitable stores and more selective in store openings,” it says.
The group’s revenue for the year was up marginally by 0.54% at RM695.33mil.
“The boutiques’ revenue for last quarter for Malaysia and Singapore has dropped by 28% and 10% respectively due to lower consumer traffic, be it local or tourists to our stores,” it says.
Bonia Corp is the holding company of Bonia Group which is primarily involved in designing, manufacturing, marketing, retailing and distribution of brands of leatherwear, footwear, men’s apparels and accessories.
In addition to its flagship fashion label Bonia, the group also owns Sembonia and Carlo Rino, and holds the license to distribute international labels including Santa Barbara Polo & Racquet Club, Jeep, Braun Buffel and Pierre Cardin.
The group has a network of over 1,400 sales outlets and 170 standalone boutiques throughout the world. — By P. Aruna