Al-Ikhsan eyes up to 18 pct sales growth in next three years

KUALA LUMPUR: Sports equipment retailer Al-Ikhsan Sports Sdn Bhd (Al-Ikhsan) aims to grow its retail business between 15 and 18 per cent in the next three years.

Chief executive officer Vach Pillutla said the company would continue introducing new segmented concepts, providing options from entry to mid-level consumers in sports retail market.

"Our commitment is to keep Malaysia fit and active by making sports affordable for all. We also need to understand consumers well and must change ourselves based on what consumers want,” he said in a media interview here recently.

Al-Ikhsan will launch a new e-commerce online platform (website) next month, a move that will help the company become a global player in the sports retail segment.

“We are ranked 64th largest sports retailer in the world. Therefore, when consumers look at us, they don’t just perceive us as a Malaysian company but rather benchmark us as a global player,” Vach said.

He expects Al-Ikhsan’s e-commerce platform to contribute about 5.0 per cent of the total sales over three years.

“In general, the overall retail sector grows about 4.0 per cent to 5.0 per cent annually, while the sports retail around 8.0 per cent to 9.0 per cent.

“Globally, most markets are likely to remain stagnant but I think Malaysia continues to perform quite well in sports retail,” he said.

He also said Al-Ikhsan continued to learn about consumers and offered products and services at prices preferred by customers.

“As long as we continue to pursue it, we are not worry about competitions. For the next three years, we intend to open up to 14 stores annually in the Peninsular Malaysia with concepts including Football Republic and Sneakers Street, depending on the market and catchment to match consumers’ demand,” he said.

He did not divulge further on how much capital the company would invest, saying that it had sufficient money to fork out internally.

Ekuiti Nasional Bhd (Ekuinas) acquired a 35 per cent stake in Al-Ikhsan in July 2016 for RM68.6 million.

Ekuinas chief executive officer Syed Yasir Arafat Syed Abd Kadir said the first two years since the partnership with Al-Ikhsan were about stabilising the company, in particular improving its back-end support.

“We need to ensure that we have strong back-end processes before exploring growth. We focus on effective resource planning - an inventory software system - as well as execute strategic business plans, recruit the right talent and strengthen existing brands under us,” he said.

Syed Yasir Arafat said it was important for the government-linked private equity fund manager to strengthen Al-Ikhsan’s foundation and expand in certain areas, while offering different products not only active brands but promoting in-house products.

“We have about 30 brands under Al-Ikhsan. We employ around 1,200 staff and command about 30 per cent local market share in multi-retailer segment.”

Syed Yasir added that since Ekuinas invested in Al-Ikhsan, the former had managed to more than recoup its investment.

“From Ekuinas’ perspective, Al-Ikhsan has strong liquidity and sufficient cashflow to grow, with good inventory management. Hence, Al-Ikhsan doesn’t require further capital injection to expand further,” he added.

Al-Ikhsan founder and chairman Ali Hassan Mohd Hassan believes the sports retail business was growing with abundance of opportunities locally.

“Previously, there was a huge pressure from the sports brand principals as they demanded for growth based on the global trend.

“Similarly, they expected growth from Al-Ikhsan in Malaysia due to opportunities in sight. Hence, we decided to partner with Ekuinas to support our future growth and become more competitive,” he said.

Through the partnership, Ali Hassan said Al-Ikhsan had undergone due diligence exercise to evaluate the company’s weaknesses and strengthens.

“Ekuinas had helped us to find new team members, while consolidating our stores and improving the back-end processes.

“Ekuinas has done a professional job for us in setting up a strong foundation since our partnership in 2017,” he said, adding that the company was not looking for a new partner.

Presently, Al-Ikhsan has 130 stores in the Peninsular Malaysia.

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