King Koil announces new strategy in the US

KUALA LUMPUR: Kumpulan Perangsang Selangor Bhd’s (KPS) 60 per cent subsidiary, King Koil Licensing Company Ltd (KKLC), has shifted its business strategy in the United States (US) market in line with changing dynamics in the country’s bedding industry in the past 24 months.

KPS chief executive officer Ahmad Fariz Hassan said the change in King Koil’s business strategy would give the company a larger revenue base as the company moved to wholesale revenue by selling its own products from royalties derived from licencing.

“In the longer run, we will be seeing sustainable growth coming from having greater control of product quality and distribution in the market, translating into higher sales volume and profits.

“We expect to see positive impact from the new strategy to the group’s financials starting in the current financial year ending Dec 31, 2018,” he added.

The new US strategy entailed King Koil gradually taking over its product distribution throughout the country upon expiry of its current licence agreements over

In the longer run, we will be seeing sustainable growth coming from having greater control of product quality and distribution in the market, translating into higher sales volume and profits. Ahmad Fariz Hassan, KPS chief executive officer

the next three years.

As a start, the company was well underway to launch its first manufacturing facility for direct distribution in the Western region of the US by the second quarter of 2018.

Another initiative under the new strategy involved a strategic partnership with one of KKLC’s top-performing licensees, Blue Bell Mattress.

In addition to their long-held licence in the Northeast region, the strategic partnership would see Blue Bell manufacturing and distributing King Koil products in the Midwest region of the US under a contract manufacturing arrangement.

King Koil has a presence in over 80 countries including the US, via licenced manufacturing arrangement between KKLC and 27 mattress manufacturers, worldwide.

The company maintained the licencing business model for its international markets as it represented high growth potential with steady stream of revenue from royalty payments while requiring lower operating costs and minimal capital expenditure.

However, changing dynamics in the US bedding industry in the past 24 months have created accessibility issues and triggered the need to reassess the brand’s strategy in one of the largest mattress markets in the world.

In May 2016, KPS first acquired a 60 per cent stake in the US-based King Koil mattress brand licencing business from prominent Malaysian businessman, Yeoh Jin Hoe, who still held a 40 per cent equity in the venture. —