Says the board is fully committed to the brand and expansion strategy
(SINGAPORE) Robinson CEO John Cheston has refuted recent allegations that the company’s major shareholder, Indonesia’s Lippo Group, doesn’t cherish the Robinson brand in Singapore.
Speaking to The Business Times at the company’s headquarters in Orchard Building yesterday, Mr Cheston explained that Lippo, along with the current board of directors, have always fully supported the management’s growth strategy and its efforts to preserve the value of the brand here.
‘Lippo – as is the entire board of Robinson’s – is fiercely supportive of management’s strategy; 100 per cent supportive,’ Mr Cheston said.
And that’s come in the form of backing the management’s plans to bring in more lucrative retail brands to the Robinson fold, open more stores and increase the group’s retail floor space in Singapore – to expand its reach and influence.
‘We had three brands under the previous board: Robinsons, John Little and Marks & Spencer. Now, we have eight brands, having added on River Island, Fat Face, Coast, Trucco and Principles,’ Mr Cheston said.
Adding more brands to its stable – and only ‘hot’ brands, at that – is what the Robinson CEO believes is crucial to the group’s growth and continued profitability.
‘We don’t have real estate, we don’t own buildings, so we’re at the mercy of the landlords from whom we lease our space. As such, we have no choice but to seek growth in other areas – by bringing in new brands to boost our profitability and growth. This helps us to manage the rising rentals which eat into our earnings, and the threat of one day being booted out of our retail space,’ he said.
And he explains that it was Robinson’s current board – formed after Lippo became a major shareholder in 2006 – that has been behind Robinson’s aggressive strategy to recruit new brands.
Under the new board, the retailer has also more than doubled the number of its stores in Singapore and Malaysia to a total of 34. Its retail floor space has gone up to 670,000 square feet, from 444,000 sq ft under the previous board.
Its capital expenditure has shot up exponentially: from an average of just $4 million being spent every year, between FY2003 and FY2006, Robinson increased its spending to $28 million in FY2007 alone. For the first quarter of FY2008, it’s already spent $19 million.
Bolstering the Robinson stable is the group’s way of preserving the 150-year- old Robinson brand – a sentimental and sensitive matter for some Singaporeans.
And Lippo is very much a strong supporter of that, Mr Cheston says. ‘While the management and the current board are very much behind a regional expansion for the group, our focus is still Singapore. We want to grow a strong business here first and preserve the brand.’
Lippo has come under some form of scrutiny, after the Al-Futtaim Group made an offer this week to take over Robinson.
Tecity, a significant shareholder of Robinson’s, has offered to sell its stake to Al-Futtaim – believing the Middle- East group will better cherish the Robinson brand. That’s led some to question Lippo’s commitment to the same.
Lippo’s decision to set up a department store chain in China, called ‘Robbinz’, has also raised concerns about what this will do to the integrity of the Robinson brand here.
When asked, Mr Cheston said he could not comment on the effect the Robbinz chain would have on Robinson.
‘I can only talk about what I do know – which is the Robinson business here. I can tell you that we have no plans to go into China, only to South-east Asia, and I’ve not heard any plans from the board about merging the Robbinz and Robinson brands. As far as I know, the concept for the Robbinz chain is a very different one.’
He also said it’s business as usual at the company, with staff not being affected by news of Al-Futtaim’s offer. ‘If anything, they see it as an affirmation that we’ve been doing the right thing all along,’ he said.
Source: Business Times 25 Jan 08