Courts Asia's Q1 net profit slumps 27.9% on higher costs, dip in sales

SINGAPORE - Poorer performance in Singapore amid a challenging market has led to a plummet in net profit for furniture and IT retailer Courts Asia.

Net profit for the first quarter ended June 30 dropped 27.9 per cent to $5.1 million.

Earnings fell as revenue dipped 1.5 per cent to $194.1 million.

Higher distribution, marketing and administrative costs also ate into the profit.

Distribution and marketing costs went up 17.5 per cent to $17.8 million while administrative expenses rose 12.3 per cent to $35.8 million.

Courts Asia said the higher costs were due to the expansion of its operations in the region.

Sales from Singapore, which made up about 66.3 per cent of sales in the quarter, fell 5.9 per cent due to reduced participation in tradeshow days.

The firm cut its tradeshow days to focus on margin improvements.

Chief executive Terry O'Connor said in a statement: "Given the challenging retail market, we expect Singapore's performance to remain lacklustre in the short term.

"Apart from cost efficiency initiatives, we have been actively working on margin enhancing initiatives."

He added that while Malaysian sales went up thanks to the opening of new stores, the consumption pattern for the period leading up to the Hari Raya holiday was "fairly muted."

But Mr O'Connor said Courts Asia is on track to expand into Indonesia - its third major market - with its first 'Big-Box' Megastore slated to open in Jakarta by September.

Earnings per share for the quarter was 0.91 cent, down from 1.26 cents previously.

Net asset value per share rose to 54.8 cents at the end of June from 53.8 cents at the end of March.

Courts Asia shares closed unchanged at 52 cents. It reported its earnings after markets closed.