PETALING JAYA: Padini Holdings Bhd
’s third quarter of its financial year ending June 30, 2026, is likely to come in a little better from Chinese New Year and Hari Raya festivities.
However, analysts expected a softer consumer sentiment.
Kenanga Research noted that the group saw a decrease of 6% in its same-store sales growth for the first half of its FY26.
While some selected tourist-driven destinations like Pavilion KL and Fahrenheit88 in Kuala Lumpur were benefiting from the improved tourist arrivals, the uplift was not group-wide.
“In our view, apparel demand recovery remains uneven despite broader consumer sentiment improving amid easing policy uncertainties such as RON95 subsidy rationalisation. We believe this is also potentially due to more intense competition, including from online channels,” it said.
“While the sales and services tax rate cut to 6%, from 8%, is expected to reduce the additional cost burden, the net impact is still significant at an estimated RM6mil to RM17mil annually, equivalent to roughly 4% to 13% of our FY26 earnings forecast,” said the research house.
Padini aimed to open up to six new stores in FY26 while refurbishing 10 stores at the cost of between RM3mil and RM5mil per store.
It noted that its 1H26 gross profit margin strengthened to 39.8%, mainly due to lower markdown intensity and better inventory management.
However, upside from a stronger ringgit was limited as the group operates on a cost-plus model, with cost savings largely passed on to customers.
“As such, we expect margins to remain within management’s guidance of 36% to 40%, with no material uplift in the near term,” it said. The target price for the stock has been lowered to RM1.90 from RM2.20.
