MESB expects moderate growth for FY15

KUALA LUMPUR: MESB Bhd, which is involved in the trading of leather products, is expecting moderate growth for its current financial year ending March 31, 2015 (FY15) due to weakened consumer spending in the retail segment.
"Overall we did quite well last year but the retail market is facing a slow down due to the compounding effect of the minimum wages and also the rationalisation of government subsidies that has put a lot of cost pressure on us," its executive director Ricky Ng Chee Leong told reporters after its AGM yesterday.
"The cost of goods and services has increased, pushing inflation rate higher. As a result, consumer spending has weakened. We're still very cautiously optimistic about the retail environment. There will be a moderate growth (for FY15), in the region of 5%," he said.
Ng said for fashion brands, sales will usually pick up during the festive season and the company expects sales to grow from the second week of November leading up to Christmas this year.
The weakened sentiment has the company, which opened its first multi-brand specialty boutique called What's Bag three months ago, holding back on plans to set up more such stores. This is despite response for the store being good so far.
Ng said however that it will continue to be on the lookout for better locations and opportunities for future expansion.
The What's Bag boutique, located in Nu Sentral in KL Sentral, offers men's accessories and ladies handbags in a variety of brands including Alain Delon, Pierre Cardin, Pierre Balmain, Giamax and Giossardi.
Ng said the capital expenditure for a boutique sized between 1,200 sq ft and 1,400 sq ft is about RM500,000 while for counters, it costs about RM150,000 to set up.
On the expansion of boutiques for its individual brands and consignment counters, Ng said it will ride on the expansion of departmental stores as most of its products are sold in departmental stores. So far this FY15, it has already opened more than 15 consignment counters.
"Most of our marketing network are all over Malaysia and with a very close operation with all the leading departmental stores like Parkson, Jusco and such," he said.
On expansion of its products, Ng said it is "always on the lookout for new opportunities" and will stick to its expertise in leather products.
"In this industry the competition is stiff thus our company philosophy is to stay focused. So, whatever expansion will be within our core business so that we can compete effectively. The best way to maintain a healthy balance sheet is to stay focused," he said.
MESB's core business is in the trading of quality leatherware products including ladies handbags, ladies small leather goods, gents bags, gents small leather goods and gents accessories via its subsidiary Miroza Leather (M) Sdn Bhd.
Miroza holds the exclusive licence to design, source and market international brands such as Alain Delon, Pierre Cardin and Pierre Balmain. It also holds the Alain Delon distribution rights in Indonesia and has its own in-house brands Giossardi and Giamax.
On Budget 2015, Ng said it hopes for more goodies for consumers such as income tax rebates.