Tomei cautious on expansion, may close weak stores
KUALA LUMPUR: Gold jewellery manufacturer and retailer Tomei Consolidated Bhd is taking a cautious stance on expansion, with plans to open only a limited number of new outlets.
Group managing director Datuk Ng Yih Pyng said the company is also reviewing and closing underperforming stores amid a challenging operating environment.
He added that Tomei is in discussions with several shopping mall operators but is carefully assessing the pace of its retail rollout, as rising costs and softer consumer sentiment continue to weigh on the industry.
Ng said Tomei expects to maintain a near-flat network expansion, with any new store openings largely offset by closures of weaker outlets.
“As a result, we may open a few outlets and close a few outlets, but on a net basis we are looking at not more than one or two additional outlets,” he said.
He said the cautious expansion strategy comes as the group anticipates business momentum to moderate in the coming quarters, following a peak festive period and amid elevated gold prices that have affected affordability and demand.
Ng noted that gold prices have remained volatile this year due to geopolitical tensions, rising sharply before correcting from recent highs.
Despite the fluctuations, he said Tomei’s profitability remains relatively stable due to its mark-to-market pricing approach, where retail prices are adjusted in line with prevailing gold prices.
“When the price drops, we reduce prices accordingly, and when prices rise, we adjust according to the market,” he said.
Ng added that the group does not hedge its gold inventory, instead replenishing stock based on daily sales volumes.
“If we sell 10kg, we buy back 10kg every day. The margin does not depend on whether gold prices go up or down because when prices fall, we sell lower but also buy back at lower prices,” he said.
However, he acknowledged that accounting based on average costing can lead to temporary margin fluctuations during sharp price movements, although margins tend to normalise over time.
“There will be times when gold prices rise quickly and we enjoy slightly higher margins, or vice versa. But over time, it averages out,” he said.
Ng said demand is expected to soften in the second and third quarters as the key festive-driven sales period has passed, with fewer major celebrations in the calendar.
“Traditionally, our peak season is Chinese New Year and Hari Raya. This year, Hari Raya came earlier, so we anticipate the second and third quarters will slow down,” he said.
He added that higher gold prices have also weighed on consumer demand, prompting Tomei to focus on lighter and more affordable jewellery designs, supported by improved manufacturing technology.
“With technology, we are able to produce lighter products that look bigger and more appealing to consumers,” he said.
The group is also targeting younger buyers through branded and licensed collections, including Sanrio-themed jewellery.
Chairman Raja Tan Sri Aman Raja Haji Ahmad said gold price movements remain closely tied to global financial conditions, including the US dollar, interest rates and central bank reserve strategies.
He said increased gold allocations by some central banks had contributed to earlier price gains, though the market has since entered a correction phase.
He added that Tomei manages these fluctuations through continuous pricing adjustments and disciplined inventory management, helping the group remain resilient amid volatility in the gold market.
© New Straits Times Press (M) Bhd
المصدر: New Straits Times
