KUALA LUMPUR: Stronger earnings beckon Al-Ikhsan Sports Sdn Bhd, the country's number one sports retailer which is partly owned by government-linked private equity firm Ekuiti Nasional Bhd (Ekuinas).
Al-Ikhsan founder Ali Hassan Mohd Hassan and Ekuinas chief executive officer Syed Yasir Arafat Syed Abd Kadir are confident that the multi-brand sports retailer company will continue to post double-digit growth despite volatile market environment.
They disclosed that Al-Ikhsan would embark on an aggressive five-year expansion with Ekuinas' help.
Ali expects Al-Ikhsan's earnings before interest, taxes, depreciation, and amortisation (Ebitda) to hit RM90 million-RM100 million this year supported by the opening of more stores and expanded in-house brands.
"The financial year 2023 (FY23) Ebitda margin is expected to expand due to more store opening, active management efforts in managing our working capital as well as cost controls in Al-Ikhsan's operations with better product mix," he told the New Straits Times in an interview.
For this year, Ali said Al-Ikhsan planned to open up to 40 new stores in Peninsular Malaysia and start expanding its footprint to Southeast Asia.
On whether it would consider expanding to Sabah and Sarawak, he said this was something the company would start doing this year.
The company will also be launching a new central warehouse for Al-Ikhsan Sports this year.
"I think this year will be a tough year for everyone. Thus, having the right product offering is extremely important as people will start to trade down to more affordable products.
"On top of that, we also plan to open more stores this year and I think that will surely help to drive our growth. Our principle is simple, we want to ensure 'sports for all and be truly accessible'.
"We are not targeting a certain income group but we want to target the entire community in Malaysia as a whole. For sporting goods to be accessible to all is really our aim, to make our sales and inventory better. With the opening of new central warehouse, we expected to see an increases in our sales," he explained.
With 173 stores throughout the peninsula hosting more than 30 brands, the homegrown retailer garnered some 40 per cent share of the multi-retailer market over the years.
In July 2016, Ekuinas acquired a 35 per cent stake in Al-Ikhsan for RM68.6 million.
Syed Yasir said post-Covid-19, Ekuinas - together with Al-Ikhsan's management - had taken a stance to grow the company aggressively following the pent up demand for sports equipment.
Al-Ikhsan had set an ambitious target of opening 300 stores in the next five years, he added.
"We have been growing at about 23 per cent annually in terms of revenue. So last year about RM500 million, this year we are targeting about RM600 million and the year after will be RM700 million.
"We see sporting goods as not as competitive as other types of retails as we have lower margin and cheaper capital expenditure from other forms of retail. We are very bullish. Based on the plans that the management has put in place, we are quite confident of achieving the targets," Syed Yasir added.