PADINI: Retailer Posts Steady Full-Year Earnings Amid Margin Gains

Performance Review

Padini Holdings Berhad reported a resilient financial year 2025, with core earnings reaching RM169.8 million. This performance was largely in line with expectations, accounting for 97% of the investment bank’s full-year estimate and 102% of consensus figures. The group’s revenue experienced a modest 1.0% year-on-year increase, reaching RM1.9 billion, while core net profit saw a more robust growth of 9.9% year-on-year. A significant driver for this positive outcome was a stronger Gross Profit (GP) margin, which improved notably to 38.9% in FY25, up from 36.2% in the previous financial year, indicating effective cost management and operational efficiencies.

However, the fourth quarter of FY25 presented some challenges. Revenue for 4QFY25 declined 13.9% year-on-year to RM392.1 million. This quarterly dip was primarily attributed to the absence of festive season spending, which also contributed to a 16.6% year-on-year drop in same-store sales growth (SSSG). Despite a higher GP margin of 37.2% recorded in the quarter, core earnings for 4QFY25 fell sharply by 69.8% year-on-year to RM13.9 million, primarily due to the weaker revenue performance and reduced overall operational efficiency. In response to its full-year results, the group has declared a first interim dividend of 1.8 sen per share for FY26, which is payable in September 2025.

Future Outlook

Looking forward, the group is embarking on strategic initiatives aimed at bolstering future profitability and market position. A key focus involves the ongoing transition of its Vincci brand into standalone outlets. This repositioning is expected to enhance brand visibility, expand the customer base, and leverage the typically higher margins associated with the Vincci brand to support overall profitability. Furthermore, the group plans to expand its retail footprint by opening an additional 4-8 new outlets in FY26, building upon its existing network of 156 outlets across Malaysia.

Following the integration of the FY25 results into its financial models, the investment bank has revised its earnings forecasts for FY26-27 downwards by 4.5%. Despite these adjustments, the investment bank reiterates a “BUY” recommendation for the company, affirming its confidence in the long-term strategic direction and the effectiveness of its planned initiatives.