KUALA LUMPUR: MIDF Research expects the quantum of stores closure is likely to be lower for Padini Holdings Bhd, if any, going forward.

The research house, in a note on Thursday, said it expects no new stores opening soon due to uncertainties in the overall business environment.

MIDF Research analyst Ng Bei Shan said a total of 10 stores were closed in first half of financial year 2021, of which six were in the first quarter, followed by for more in the second quarter.

Following the closure of six stores in the first quarter of 2021, Padini closed another two Brands Outlet at Da Men Mall and Getaway@klia2; Vincci at First World Plaza, Genting; and Padini Concept Store at Gateway klia2.

Ng said compared with the previous quarter, there were 49 Brands outlets (from 51), 47 Padini Concept Store (from 48), and 25 free-standing stores (from 26).

"In the absence of new store opening, new brand introduction and further overseas expansion, the recovery is likely to be driven by the uptick in traffic at its existing outlets.

"Recovery in sales is also expected to be affected by consumer sentiment, as well as any possible movement control going forward," she said.

Hence, the research house said it expects sales recovery to be limited by the number of people allowed in the stores to observe the social distance standard operating procedure.

"While the rollout of vaccination has begun in the country, we think it will take time for the majority to be inoculated and in the meantime, the social distance rule is likely to remain until further improvement of the pandemic," she said.

Menwhile, AmInvestment Bank Bhd said in the medium to long term, Padini is looking to improve and enhance its e-commerce channels as it considers these complementary and not substitutes to its outlets.

"E-commerce would also provide an omni-channel experience for its customers.

"In expanding into other geographical areas, Padini believes it needs to establish an online and physical store at the same time and hence, Padini is strengthening its e-commerce channels in Malaysia first," it said.

Locally, Padini sees the market consolidation as a potential acquisitive opportunity as the other retailers do not have the luxury of a strong net cash position to weather the storm of the pandemic.

"Moving forward, we believe that Padini is well-positioned to reap the benefits of a cyclical recovery with an expected increase in consumer spending in full year 2021.

"Padini's low price point and value-for-money product offerings appeal to the mass market, which will underpin the group's recovery as it navigates through a challenging business environment," AmInvestment said.

-- BERNAMA