Teo Guan Lee to spend RM30mil to expand range

  • Corporate News
  • Monday, 19 Dec 2016

Group managing director Toh Kian Beng told StarBiz that the funds were available in trust receipts and bankers

GEORGE TOWN: Teo Guan Lee Bhd will spend about RM30mil to expand its range of stocks next year.

Group managing director Toh Kian Beng told StarBiz that the funds were available in trust receipts and bankers’ acceptance facilities, which the group had yet to utilise.

“So we are in a good position to widen our stocks.

“We plan to improve the baby apparel stocks to tap the baby market, which is a growing segment.

Cuddles, our baby brand, improved its performance for the 2016 financial year ended June 30.

“We plan to increase our outlets for the baby apparel products.

“The baby segment currently generates about 20% of group revenue,” Toh said.

Toh said the group expected the second half of the 2017 financial year ending next June 30 to improve over the first half.

“This is because the Hari Raya sales will start in early June next year, allowing us to tap into the Hari Raya market for the final quarter of the 2017 financial year,” she said.

Toh said the group was able to capture only a portion of the Hari Raya market for the first quarter of the 2017 financial year ended in Sept 30, as Hari Raya fell in early July.

“This is the reason why our first quarter sales of the 2017 fiscal year dropped by about 30% compared to the same period a year ago,” she said.

For the 2017 financial year first quarter ended Sept 30, the group posted RM331,000 in net profit on the back of a RM16.8mil turnover, compared with RM2.8mil and RM26.4mil achieved in the previous year same period.

Toh said the new characters licensing signed last year were launched early this year and “we will see the full range of apparels in our consignment stores in 2017”.

“We expect the new characters to contribute reasonably to our 2017 revenue,” she added.

To date, the group has a total of 527 consignment outlets and 12 boutiques.

“We will continue to grow with our business partners and open new consignment outlets at strategic locations.

“Our retail boutiques made losses in the 2016 financial year and we are strategising with an additional label ‘Mirth’ of apparels exclusive to these boutiques to spearhead the performance with different merchandise,” she added.

According to Toh, because the group is able to buy competitively through bulk sourcing, it is able to lower its importation cost, despite the significant weakening of the ringgit.

“As we are able to maintain the cost of import, we are also able to maintain the existing selling prices and gross margin,” she said.

“The measures we have undertaken to maintain our gross margin include sourcing a better mixed of merchandise with better value buys, and well-controlled purchases.

“We have brought down the inventory level to RM33.43mil in 2016 from RM47.72mil in 2015, a reduction of RM14.29mil or 30%.”

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