This article first appeared in The Edge Financial Daily on November 29, 2017

KUALA LUMPUR: After an 8% fall in revenue in the previous financial year, Bonia Corp Bhd expects to see another “high single-digit” decline in top-line growth when it reports its first-quarter results today.

Group managing director Datuk Albert Chiang Heng Kieng blamed this on the continued slow pace of sales.

“Consumer sentiment was very soft since July to September this year, immediately after Hari Raya. Our 1Q (first quarter) will be affected by a high single-digit drop in revenue.

“Even the retail market was soft at that time,” Chiang told the media after the group’s annual general meeting yesterday.

The fashionable leather goods, apparels, footwear, and accessories manufacturer’s net profit rose 30.2% to RM31.73 million in the previous financial year ended June 30, 2017 (FY17), from RM24.37 million in FY16, on improved gross profit margin.

Revenue, however, dropped to RM613.16 million from RM665.44 million due to the fragile consumer spending and softening retail environment.

However, Chiang expects the group to sustain both its profit before tax (PBT) margin and profit after tax (PAT) margin at between 6% and 9% for FY18, fuelled by new stores and closing of some non-performing stand-alone boutiques and consignment counters.

“Our PBT and PAT should be okay, but our top-line growth is a bit tough for us because the market is very uncertain,” he said. “Sales would be difficult to sustain as consumer sentiment remains weak.”

“Having said that, we will try to do our best to deliver better results or at least maintain our growth momentum in FY18 as we try to capture the shortfall,” he added.

Bonia’s PBT margin stood at 9.16% in FY17, from 6.78% in FY16, while its PAT margin increased to 6.43% from 4.40% previously.

Chiang said Bonia, whose brands include Braun Buffel, Carlo Rino and Sembonia, will continue to focus on expanding its boutiques business segment as it offers higher margins and better brand recognition.

"Our strategy is to open more stand-alone boutiques which generate better margin and we will have a better brand image as compared with consignment counters," he said.

Chiang said the group aims to open 10 new stand-alone boutiques, mainly in Malaysia, by the end of 2018, and at the same time close up to 30 consignment counters, which are non-performing and non-profitable.

As of June 30, Bonia managed to reduce the consignment counters to 1,172 from 1,254 previously, with the majority located in Malaysia and Indonesia.

Going forward, the group remains cautious about the state of consumer sentiment amid the ever-changing and evolving retail environment.

“We are always positive but in reality market sentiment is a bit soft to us. With the oversupply of malls, we have to be more selective. Hopefully next year we can bottom up with the festive season coming in,” he added.

Bonia shares closed half a sen or 0.85% lower at 58 sen yesterday, giving it a market capitalisation to RM467.28 million.