Parkson Holdings Bhd will start building malls and leasing out space to
get better margins to deal with pressure on its turnover. The departmental
store company will build malls in Malacca & Cambodia, both scheduled to
open in 2017.
The company is also building a mall in Qingdao, China, which is set to
open its doors in the middle of next year. The cost of the mall in Malacca will
be between RM800mil and RM900mil, while the one in Cambodia will cost RM381mil.
The malls will be funded using internal cash. Parkson owns stakes in Parkson
Retail Asia (PRA) and Parkson Retail Group Ltd (PRGL), companies listed on the
Singapore Stock Exchange and Hong Kong Stock Exchange, respectively. PRA has 60
stores in Malaysia, Vietnam, Indonesia and Myanmar, while PRGL has 58
department stores in China. In addition, PRA has 10 stores under the brand name
of Centro Lifestyle Department Store and a Kem Chicks Supermarket in Indonesia.
The company, however, owns eight malls in China, one mall in Malaysia and
another in Vietnam. Parkson used to own malls under the Parade brand, but sold
them in 2000 to raise RM710mil to repay debts arising from problems caused by
the Asian financial crisis. Cheng said that costs would be cheaper by 30% if
Parkson were to build its own malls.
In addition to the ownership of malls, the group is also looking at
striking partnerships with brands, and even coming out with its own, to boost
margins. Selling third-party brands at its stores means margins of between 12%
and 16%, which will get compressed during sales, and deals with independent
brands where Parkson can distribute to South-East Asia will mean a healthier
profit margin. Having its own brand will mean margins of between 35% and 40%.
Parkson will be spending RM50mil this year and RM100mil next year to
promote brands carried by its stores. It will also start renovating its stores
in Malaysia. Cheng hoped Parkson would be able to generate 30% of sales from
its own brands in five years. The target is 50%.
Source:
http://www.thestar.com.my/Business/Business-News/2014/05/07/Parkson-to-build-malls-and-lease-out-space/
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