We know that Padini has more individual outlets and is less reliance on consignment sales. Collection hence is not a problem. The sales are mainly cash sales. By having its own outlets and franchisees outlets, it is able to control where and how it does its sales promotions. The challenge here for Padini is to bring traffic or customers that buy. From its growth in sales through its performance review, that seems to be not much of a problem. Over the last few years, the profit margin it seems is the problem due to higher costs and price competition.
Does it need to throw huge discounts to attract customers, that's the question and more importantly, can it continue to sell with so much impending competition?
However - Immediate challenge for Padini is reducing its stocks as highlighted in its review for 2Q15 (previous quarter for ending 31 December 2014).
|Performance review for 2Q2015 (ending 31 Dec 2014)|
And I would say, it manages to show that it is able to do that. Just look at the drop in inventory and how it manages to increase its cash balances (highlighted below in red).
GST is a situation where it needs to test out its ability to execute and it delivers as I see it. Long story short, it is able to execute what it wanted to do - reduce stocks, increase sales and maintain margins while the purchases will come later.