Parkson buys stakes in 3 companies

KUALA LUMPUR: Parkson Holdings Bhd, which has acquired stakes in three companies for RM59 million, hopes to grow its in-house brands by generating 20% to 30% sales from this segment over the next three to five years.
Its chairman-cum-managing director Tan Sri William Cheng said the acquisition plans would be able to help the firm to grab better profit margin, especially in the online sales division.
"Right now we need a change, we used to carry consignment not belonging to Parkson, but without our brands, it's difficult to do online sales…this is the trend in China," he told a press conference here yesterday in conjunction with the signing ceremony with joint venture partners.
The group has set a target to further increase its in-house brands' contribution to 50% of total sales in the long term.
Parkson is buying a 60% stake each in AUM Hospitality Sdn Bhd and Giftmate Sdn Bhd for RM48 million and RM8 million, while a 50% stake in Valino International Apparel Sdn Bhd worth RM3 million.
AUM Hospitality has 12 brands under its portfolio in the food, beverage and entertainment area; Giftmate is involved in the premium gift segment; and Valino specialises in menswear and owns the "Kent" brand from Indonesia.
Cheng said Parkson is looking to acquire another six in-house brands by year-end, with three brands each in the Malaysia and China markets. He said Parkson would also be looking to bring the "Bonia" brand, which is currently looking to re-enter the China market, with it.
"Brands are the most important thing for retail market…it helps us to improve net profit," he added.
Even though the acquisitions are only expected to contribute an additional RM200 million to RM300 million revenue to the company, Cheng said he expects it to grow substantially in the next three to five years.
When asked about its overall business operations, Cheng said the local market is still able to maintain its growth, with some stores even registered a double-digit growth.
The strategy for China, which has seen a slow down, however Cheng said, is to offer more low and medium priced brands in order to increase its sales performance.
For the nine-month ended March 31, 2014, Parkson's net profit dropped 47.01% to RM111.39 million against RM210.21 million in the corresponding period, due to weaker consumer sentiment in its operating markets.