PADINI: Retailer Posts Steady FY25 Performance, Buoyed by Margin Expansion and Positive Outlook

A prominent Malaysian retailer concluded its financial year 2025 (FY25) with a resilient performance, delivering core profit after tax and non-controlling interests (PATANCI) that was broadly in line with market expectations. The company reported a full-year core PATANCI of RM169.1 million, marking a 10.3% year-on-year increase. This figure accounted for 94% of the investment bank’s full-year forecast and 101% of consensus estimates.

Performance Review

The fourth quarter of FY25 saw a moderation in performance, with revenue contracting by 13.9% year-on-year to RM392.1 million, and core PATANCI declining by 38.8% year-on-year to RM13.9 million. This slowdown was largely attributed to a post-festive period, as the preceding third quarter had benefited from the double festive drivers of Chinese New Year and Hari Raya. Consequently, store traffic and average basket sizes eased, leading to softer discretionary demand and a 16.6% decline in same-store sales growth.

Despite the quarterly moderation, the cumulative FY25 results demonstrated strength, primarily driven by significant margin expansion. The company’s gross profit margin improved to 38.9% for FY25, up from 36.2% in FY24. This notable improvement was a direct result of tighter cost management and enhanced operational efficiencies, which effectively bolstered earnings growth despite a more subdued sales momentum. Full-year revenue still managed a modest 1.0% increase to RM1.94 billion, supported by its resilient value-for-money offerings.

Future Outlook

Looking ahead, the outlook remains positive, underpinned by the company’s established affordable pricing strategy and strong value-for-money market positioning. The broader macroeconomic environment is expected to be supportive, with stable employment trends, recent government cash handouts, and a central bank interest rate cut all contributing to a boost in household disposable income. Additionally, a stronger Ringgit is anticipated to provide a further tailwind by easing imported input costs. These collective factors are expected to support the company’s earnings resilience into FY26, despite lingering risks from softer discretionary demand. The investment bank has maintained a BUY recommendation.