Image to expand retail network in major cities

December 9, 2021 (MLN): Image Pakistan is looking to expand its retail network in high per capita income cities as a move to increase its market share and sales volume, the management revealed during a corporate briefing held on Wednesday.

“Retail expansion focused on higher capita income cities: Image sells niche and premium quality product and its targeted audience is high-end consumers. This is the reason that it is expanding its retail outlets in higher capita income cities namely Karachi, Lahore, and Islamabad to keep working capital requirement under control as well,” a KASB research note said.

Recently, the company inaugurated stores in two new cities, Peshawar and Rawalpindi that would support Image’s top-line. Another store in Emporium Mall, Lahore is underway that would be functional in Mar'22. This would take the store tally to 10. Meanwhile, the management conveyed that new Schiffli embroidered machinery is expected to achieve operations during the first week of Mar’22. This would further add value.

Further, with the shift to FBA (fulfillment by Amazon) model, the company expects higher sales going forward. For FY22, the management is eyeing sales of Rs500mn. To note, Image commenced the current fiscal year on a strong note, posting a top-line growth of 94% YoY in 1QFY22.

With regards to the upcoming hike in interest rate, the management informed that the company is debt-free and would remain insulated from the increase in the policy rate ahead.  To recall, the company preferred equity injection of Rs640mn through the issuance of rights to finance its growth plans, it added.

For a well-functioning retail business, the company aims to improve inventory turnover. The management highlighted that in an ideal case, inventory turnover is 120 days. However, this has increased to 170 days because of the ongoing gas supply shortage. The company targets to reduce this cycle through the FBA model and retail expansion.

On the flip side, over the past three months, the stock price saw a sharp decline of 51% from its peak of Rs 28.45. the research report attributed this decline to the risk of sales contraction amidst declining purchasing power.

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