SINGAPORE - Second Chance Properties wants to turn its apparel business into a Malay version of the internationally successful H&M retailer, following a dismal quarter in which its net profit plunged by 88 per cent to $5.7 million.
Revenue for the three months to Aug 31 shrank by 16.1 per cent to $17.9 million.
In a statement, the board said it had come up with a new strategy to increase revenue and profits under its First Lady apparel business in the wake of intense competition in Malaysia where it faces "strong headwinds from hundreds of new boutiques".
"The barrier to entry in this segment is low, especially now with numerous government schemes helping small bumiputra businesses and easier access to suppliers compared to a few years ago," it noted.
In the last 18 months, Second Chance closed eight stores in Malaysia that had marginal presence.
"This new strategy will be focused around operating fewer but much larger stores and to regain our competitive advantage through stronger branding, wider selections and lower prices.
"This is akin to the Malay market's H&M."
It expects to open its first mega First Lady store in May 2015 in Kuala Lumpur.
Unlike its present stores which have a floor space of 1,000 to 5,000 square feet, the new mega stores will have a retail space of 10,000 sqft to 40,000 sqft over several floors.
It also intends to build up and dominate the wholesale business of ready-to-wear Islamic clothing and accessories.
For the full year, Second Chance turned in a 71.1 per cent drop in net profit to $16.5 million on the back of a 10.1 per cent decline in revenue to $48.5 million.
Earnings per share fell to 2.44 cents from nine cents previously while net asset value per share dipped by 0.23 cent to 38.87 cents.
Revenue from the apparel business decreased by 10.5 per cent to $19 million, of which contributions from Malaysia accounted for $16 million.
The fall in revenue in Singapore and Malaysia was due the closure of several outlets during the year.
Revenue from gold retailing fell by almost 20 per cent to $15.2 million while rental revenue from properties was flat at $9.8 million.
The board has recommended a final dividend of 1.5 cents a share, down from 1.7 cents last year. Total payout, including interim dividend, will amount to 3.5 cents.
In line with the group's commitment to distribute high dividends, the directors intend to distribute dividend of not less than 3.55 cents in 2015.
Second Chance shares inched up half a cent to 45.5 cents. The results were announced after market closed.