KUALA LUMPUR: With its wholesale division hit by the weaker ringgit, Hai-O Enterprise Bhd is banking on its newly launched fashion and beauty business to bring in the money.
“We expect the fashion and beauty business to contribute significantly to our earnings, probably double in two years’ time,” said managing director Tan Keng Kang, who is also the founder.
“We have already launched skincare products and women’s scarfs. The business will start contributing this month,” he said, adding that the group will also introduce other fashion accessories, perfume and beauty products.
Speaking to reporters after the group’s extraordinary general meeting, Tan said fashion designer Prof Datuk Dr Choo Yeang Keat, better known as Jimmy Choo, will be the group adviser for its fashion business. The new business is parked under its multilevel marketing (MLM) division.
“We believe we can benefit from his vast contacts in the high-end fashion world,” he said.
Choo, who was present at the shareholder meeting, said he will be working closely with Hai-O to train and nurture talented local designers, too.
Hai-O ventured into fashion business after Choo was appointed as a non-independent and non-executive director last October. He is renowned for his handmade women’s shoes, which are sought after by the world’s rich and famous.
Tan said Hai-O is looking to build a fashion brand similar to Armani, offering mid- to high-end products. The Italian fashion house also markets fashion products and accessories under several labels such as Giorgio Armani, Emporio Armani and Armani Exchange.
“The investment will not be substantial, as we will be leveraging on our existing MLM distribution channels. The products will be mainly produced by original equipment manufacturers in China and Malaysia,” he shared.
Meanwhile, the weaker ringgit has hurt the profits of Hai-O, especially its wholesale division where 40% of the purchases are imported.
“As the ringgit weakened from about 3.20 to 4.50 against the US dollar, we see our profits affected by about 10%,” said Tan.
Tan is confident that the group can achieve double-digit growth in revenue and profit for the financial year ending April 30, 2017 (FY17), supported by its MLM division, in view of the stellar performance in the first half of FY17.
For the first six months of FY17 (6MFY17), its net profit was 67% higher at RM25.65 million, versus RM15.38 million in 6MFY16, due primarily to its MLM business, which performed well during the period.