This article first appeared in The Edge Malaysia Weekly on March 13, 2023 - March 19, 2023
FEW outside the retail industry may know this, but Datuk Andrew Lim Tatt Keong — the new owner of the Giant, Cold Storage, Mercato, TMC and Giant Mini stores in Malaysia — has a reputation for being somewhat of a turnaround specialist.
The media-shy lawyer-turned-businessman, who hails from Bukit Gelugor, Penang, and turns 67 this year, has two renowned retail brands — Sogo and Gama — under his belt.
Back in 2002, Lim famously bought the ailing-but-iconic Sogo department store in Batu Road (now known as Jalan Tuanku Abdul Rahman), Kuala Lumpur, from its Japanese owners. Interestingly, he was their lawyer at the time.
“He was their lawyer-turned-white knight,” a source close to Lim tells The Edge. “He had been working for the Japanese for 13 years and when they were looking for buyers, he raised his hand. They said, if you can fund it, we will sell it to you.”
And so, with backing from partners and a local bank, he initiated a management buyout of Sogo. He paid a “nominal” sum for the business but had to take on RM290 million worth of liabilities.
He then immediately set about transforming the business and managed to turn it around in a year.
Lim, when sought for comment by The Edge, corroborated the source’s account of the Sogo takeover. Though chatty, he declined to speak about his acquisition of Giant and the other brands from Hong Kong-based DFI Retail Group, as the deal has yet to be completed. It is expected to be wrapped up this month.
On Sogo, he says: “The problem with Sogo back then was that it was a five-star department store in the wrong location. It had high-end stores like Salvatore Ferragamo, Miki Moto, Bally and Ralph Lauren that did not sync with the customers there. Batu Road was more suited for a two-star, three-star and four-star niche. So, we niched down and started putting in the appropriate merchandise and brands for our customers. As the Batu Road market is traditionally a Malay market, we had to bring in the right goods at the right prices … and it was the right time. That was how we turned things around in one year.
“We restructured the sixth floor — there were six international restaurants there and we turned them all into food courts,” he recalls with a laugh. “We had ample space at the KL Sogo building — about 750,000 sq ft of net lettable area — which enabled us to do anything we wanted, and there were also car parks.”
Asked whether he owns the land occupied by Sogo KL, Lim says: “At the request of the government [led by Tun Dr Mahathir Mohamad] at the time, we sold it to the Employees Provident Fund (EPF) and then took a 20-year lease. We have since extended it for another 20 years, until 2042, by which time I will be 86 years old.”
Today, two decades since the Sogo KL acquisition, there are two other Sogo department stores — in Shah Alam and Johor Baru — with one more expected in Kuala Terengganu possibly at year-end.
Sogo (KL) Department Store Sdn Bhd (SKDS), which operates the three stores, is on track to generating RM1 billion in revenue in the financial year ending March 31, 2024 (FY2024), according to the source close to Lim. “When Lim acquired Sogo KL in February 2002, it was doing about RM220 million-plus in sales,” the source states.
In 2015, Lim managed to get Datuk Alfred Cheng to come in as a business partner. Cheng was seen by many as a particularly good match for the business, having been the group managing director of Singapore-listed Parkson Retail Asia Ltd and Hong Kong-listed Parkson Retail Group Ltd. He had quit working for Parkson in May 2013 after 25 years with the group.
Like many retailers, however, Sogo and Gama started losing momentum and making losses during the years of Covid-19 movement restrictions. A check on CTOS shows that SKDS slipped into a loss of RM1.19 million in FY2020 from a net profit of RM3.81 million in FY2019. In FY2022, it made a net loss of RM510,439 compared with RM4.33 million in FY2021, even as revenue improved 13.4% to RM169.06 million.
On Feb 23, DFI Retail Group issued a statement saying it had entered into an agreement to sell off all its food businesses in Malaysia, including Giant, to a Malaysian retail group, Macrovalue Sdn Bhd, which is led by Lim. Lim, who is group deputy chairman of SKDS, has said this new investment is in his personal capacity and unrelated to Sogo Malaysia.
Lim is also executive chairman of Gama Group, which owns and operates the sole Gama Supermarket and Departmental Store (GSDS) in Penang, as well as president of the Malaysia Retailers Association.
GSDS slipped into a net loss of RM1.27 million in FY2021 ended March 31 but managed to narrow the loss to RM30,262 in FY2022, even as revenue declined by 4.2% to RM42.43 million. Retained earnings stood at RM51.22 milion. In FY2020, its revenue stood at RM62.8 million, the highest in at least five years.
“What is interesting about Gama is that every time there is an economic crisis in this country or worldwide, Gama does well, because the belief is that Gama is cheap and good. For example, when there is a period of inflation, people can’t afford meat, so they will take more Giffen goods, which are a cheaper alternative. Inflation benefits retailers like Gama as we can give you cheap and good propositions and alternatives,” Lim says.
Prior to reading law, Lim, a Penang Free School boy, had worked for one of the state’s earliest newspapers — the original Straits Echo — first as a cub reporter and later as a sub-editor.
“This was in 1977, 1978, and then I left for England to study law. My family are all barristers. I was a lawyer for 20 solid years, 13 with the Japanese, until they sold the company to us in 2002,” he recounts. Young at heart and active, he recently scaled Mount Kinabalu at the age of 65.
It will be interesting to see how quickly this illustrious Penangite and father of two can transform and turn around the loss-making business he is buying into.
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