Bonia’s refreshed narrative

Chiang: Our products are typically higher-ticket items and we have observed the trend where shoppers browse the products via our eCommerce channel but purchase in-store as they still prefer to touch and feel before making a decision.

WHEN Covid-19 started spreading in 2020, the luxury sector was not spared. With little international travel, lockdowns and a drop in footfall, many businesses suffered including that of Bonia Corp Bhd.

The homegrown luxury fashion house, whose own brands are Bonia and Braun Buffel, had only months earlier undertaken a brand overhaul exercise with a “goal to stand the test of time”.

“Our Bonia rebranding journey began in 2019 to set us as a visionary label that beyond just setting trends, can anticipate the needs of customers and curate a lifestyle towards which they aspire.

“A heritage, yet contemporary lifestyle brand, that can last a lifetime,” says Bonia group executive director Datuk Seri Daniel Chiang Fong Seng.

Guided by this, it conducted a consolidation and cost containment exercise that saw it closing down underperforming brands, boutique and consignment counters in the country.

The group also exited its foreign operations in the Middle East and Vietnam.

The result is a refreshed and leaner structure. Going forward, Chiang says the focus will be on building brand equity of its core brands.

“In the financial year 2019 (FY19), the Bonia Group had 128 boutiques and 539 consignment counters across all brands.

“We now operate (as at end-June 2022) 100 boutiques and 327 consignment counters across Malaysia, Singapore and Indonesia,” he tells StarBizWeek. Most of these stores are profitable and a strategic review of their performance will be a continuous exercise, he adds.

Besides its own brands, the group’s licensed brands include Renoma, Valentino Rudy, and Santa Barbara Polo & Racquet Club. In the luxury fashion space, the Bonia group is known for its affordable price point as compared to Western luxury labels. But can it maintain this positioning in light of higher raw material costs?

Chiang believes so. He says Bonia had marginally raised prices to take into account inflation and the higher production costs because of the increase in transportation and raw materials.

Even so, he adds that its prices “remain reasonable to our customers as we have also curated trendier and fashionable collections every season”.

Of its more immediate plans, he says Bonia targets to launch its full collection of ready-to-wear by autumn/winter 2023.

“Our ready-to-wear collections target the premium affordable segment.

“We are also pleased to share that after three decades, the Bonia brand recently introduced a new monogram design, called ‘La Luna’, which is inspired by the moon’s changing phases.

“You will see a lot of our products with the ‘La Luna’ design,” he says, adding that the monogram designs have been one of the group’s top selling products.

He elaborates that the group will continue to “explore its DNA” through dedicated new store design concepts, seasonal campaigns, social media content and a refreshed product offerings in new designs and categories.

With a target of having store presence in every state in the country, the group will continue to review its pipeline of new store openings.

It may also consider the relocation of existing stores to a more prime location, says Chiang.

In January this year, Bonia launched its new flagship store at Suria KLCC – its first physical store since the outbreak of Covid-19 in March 2020, and which represents its new brand vision and design philosophy.

“Since then, we have opened two more Bonia concept stores, namely in Mid Valley Southkey Johor Baru and IOI City Mall Putrajaya.

“We have also confirmed the opening of new Bonia concept stores at 1 Utama Petaling Jaya, Aman Sentral Alor Setar and Mayang Mall Kuala Terengganu,” he says.

Braun Buffel, meanwhile, has opened two new concept stores at Pavilion Bukit Jalil and IOI City Mall, he adds.

With the pandemic having accelerated consumer shifts towards the digital world, the group will continue to generate traffic to its online stores and improve sales conversion.

However, Chiang believes eCommerce will complement brick-and-mortar stores as customers return to flagship stores and glitzy malls for the traditional luxury retail experience.

“Our products are typically higher-ticket items and we have observed the trend where shoppers browse the products via our eCommerce channel but purchase in-store as they still prefer to touch and feel before making a decision,” Chiang says.

As of FY22 (ended June 30), eCommerce contributed about 7% to the Bonia group’s overall revenue. It targets to grow the eCommerce revenue contribution to 10%, to be supported by expansion into regional marketplaces and product development.

After a “challenging yet satisfactory FY22”, Chiang sees improved prospects in FY23.

With a strong net cash position of RM62.3mil, it is also on the lookout for a synergistic retail business where both parties could leverage on market know-how, products and capital.

However, it has yet to identify any potential target although there have been talks with some brand owners.

To reward loyal shareholders, the Bonia group recently adopted a dividend policy to distribute not less than 30% of its consolidated profit after tax and minority interests.

“This is our commitment in delivering sustainable shareholder value,” he says.

In the fourth quarter of FY22 (4Q22), the group posted a net profit of RM17.9mil, bringing its full-year profit to RM45mil. It had declared a total dividend of 12 sen per share for 4Q22, including a special dividend of 10 sen.

CGS-CIMB Research, in a recent note, says it expects the group’s net profitability to rise some 9% in FY23, to be driven by ongoing brand building efforts as well as the opening of more boutique-type stores.

The research firm believes Bonia stands to benefit from consumer down-trading activities, given its market positioning as an “affordable” luxury brand that competes in the mass and prestige segment.

Bonia shares closed at RM1.76 yesterday, giving the stock a market capitalisation of RM355mil.