SABINA assesses that its sales in the first half of 2023 is on track to meet the goal, maintaining the growth of its net profit margin. From SABINA’s perspective, the minimum wage increase will positively contribute to consumer buying power and bolster sales. The company plans to stimulate spending after the new wage rates take effect. In preparation for rising production costs, SABINA is equipped with efficient and innovative manufacturing machinery.
For the second half of the year, SABINA will introduce new goods from its green product line and also launch lively campaigns in the overseas market following its expansion into the Philippines.
Ms. Duangdao Mahanavanont, CEO of Sabina Public Company Limited (SET: SABINA), manufacturer and distributor of SABINA lingerie, disclosed that the company’s first-half sales are on the path to the set target, with more sales made through the retail channel in department stores and Sabina Shops than through retailers. Likewise, sales through TV shopping in the non-store retailing (NSR) channel rose whereas sales through the OEM channel accounted for only 10% of all sales in line with the global economic slowdown, particularly in Europe.
“We keep a finger on the pulse of sales through all our channels and adjust each channel’s strategy as appropriate to the overall situation at the moment. The climbing sales from retailers, the online channel, TV shopping, including the slowed down OEM channel, resulted in a mild contraction in our gross profit margin, but our main aim is to buoy the growth of our net profit margin (NPM) which reflects our profitability, and we are on the right track. Before the coronavirus outbreak in 2019, our NPM stood at 12%. Now in the latest quarter of 2023, our NPM has risen to 13.4% and shows a steady upward trend, which is instrumental in sustainable profitability–one of SABINA’s core missions,” said the CEO of SABINA.
As regards the issue of the minimum wage increase that has sparked concern among several parties, SABINA holds an optimistic view that the rate hike will increase the population’s income and boost their purchasing power. At the same time, SABINA as a retail business directly benefits from spending surges, so the company might need to prepare to stimulate consumer spending after new wage rates take effect. For the anticipation that the minimum wage hike will escalate production costs, SABINA already made preparations since 2022 by investing in cutting-edge machinery. In 2023, the allocated budget for this matter is approximately 50 million baht from the usual 10-20 million baht per year.
Currently, SABINA’s workforce has decreased by about a thousand employees because some of them decided to exit the labor force during the pandemic, and this has gradually reduced the company’s payroll expenses.
“Looking on the bright side of the minimum wage hike, given that we are in the retail sector, our sales could go up because higher income would lead to more spending. We may even outpace the increasing production costs owing to our use of innovative manufacturing machinery with greater efficiency, enabling us to raise product prices in certain segments, which in turn will continue the growth of our NPM,” Ms. Duangdao said.
The CEO of SABINA added that for the second half of 2023, SABINA plans to launch new goods in its green product line, which has been well received by environmentally conscious consumers. Furthermore, in Q3 SABINA will start organizing activities and events in the Philippines following its acquisition of 77% of shares of Moda SBN, a local retailer that is the distributor of SABINA brand goods in the Philippines. Revenue per shareholding proportion will be recognized starting Q2 2023, so the second half of the year will be bustling with more lively activities.