Wing Tai to consolidate retail operations

SEPANG: Property developer and apparel retailer Wing Tai Malaysia Bhd plans to streamline its retail operations in view of the challenging retail landscape in Malaysia as consumers adjust to the Goods and Services Tax (GST).
The group has 85 retail outlets in major cities in Malaysia distributing 12 international fashion brands, namely Topshop, Topman, Dorothy Perkins, Miss Selfridge, Warehouse, Karen Millen, Pumpkin Patch, Wallies, BCBG, Ben Sherman, Burton and Furla, which are under UK fashion retailer Arcadia Group Limited.
The group's 45% joint venture with Japan's Fast Retailing Co Ltd, Uniqlo (Malaysia) Sdn Bhd operates 24 Uniqlo outlets in Malaysia as well as an online store.
Wing Tai general manager of finance Lee Kong Beng said Uniqlo will continue to expand here as it caters to the mass market, including in suburban markets like Ipoh, Penang, Malacca and Johor. However, the group will consolidate the Arcadia brands for the time being, as it cannot enter the suburban markets.
"We will not expand (the Arcadia brands). Currently there is no intention (to cut stores) but if there's any store not generating positive cashflow or profit, we may consider (cutting)," he told reporters after its EGM here.
He said compared with its Singaporean counterpart where retail margin has been squeezed, the Malaysian retail space is doing much better, as overhead (rental) is still low.
"For retail, we'd just consolidate because it's challenging. So no point being a hero, where you open outlets and the sale is not there," said Lee.
However, he said the retail division will continue to contribute to the group's earnings, bolstered by higher tourist arrival in the country.
"We expect retail sales to pick up because of the weakening of the ringgit, so it's cheaper to shop in Malaysia rather than in Singapore. It's a matter of time people get used to GST. We see that it (retail sales) is more stabilised now."
Lee expects a 50:50 contribution from its retail and property development division, and foresees a challenging but profitable financial year ending June 30, 2016 (FY16).
Despite softer property market sentiments, the group believes there is still growing demand for the property development business in Malaysia, and its Le Nouvel condominium project on Jalan Ampang is expected to increase its FY16 earnings.
"We feel optimistic because of the location of our project. If priced correctly, people will buy (the properties)," Lee said.
The development is currently under construction and it is expected to be completed by the first quarter of 2016, and planned for sale in the last quarter of calendar year 2015. It will have 195 units.
The group has a landbank of over 300 acres, mainly in the Klang Valley and Penang.
"We'll continue to look for suitable landbank for future development in the Klang Valley and Penang," said Lee.
At the EGM, shareholders approved its proposed renounceable rights issue of up to 164.2 million new shares of RM1 each on the basis of one rights share for every two existing shares.
The group told the stock exchange yesterday that its rights issue exercise is expected to raise gross proceeds of up to RM188.8 million.
The proceeds would be used for development expenditure, mainly for property development, as well as working capital requirements.
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