SINGAPORE - A lackluster retail environment and lower bulk sales from digital products resulted in a sharp blow to earnings at electronics and furniture retailer Courts Asia in the second quarter.
Net profit for the quarter ended Sept 30 plunged 76 per cent to $1.7 million from a year ago, as sales fell 20 per cent to $178.6 million.
A 23 per cent fall in Singapore sales, which made up 68 per cent of the group's topline, as well as muted consumer sentiment in Malaysia during the Hari Raya festive period and the fuel subsidy cuts contributed to the decline in sales, Courts Asia said in a report to the Singapore Exchange.
Administrative expenses rose 10 per cent to $37.3 million, due to an increase in pre-opening expenses from its new megastore in Indonesia, a higher impairment allowance on trade receivables arising from a higher credit portfolio, as well as one-off expenses from a retrenchment exercise, the group said.
"We have reduced our workforce by 10 per cent across the group," said Mr Terence Donald O'Connor, Courts Asia's executive director and chief executive of Courts Singapore: "Courts Asia will fully complete the outsourcing of its call centre operations on Nov 14. Overall, the rigorous cost review, which includes other initiatives, remains on track."
While the group had planned to add six more stores to Malaysia by the end of the financial year, Mr O'Connor said that the pace of the openings will be slowed down as the group "takes a cautious approach in store expansion".
He added that the group's online store has shown "good progress", with a growth of 64 per cent in the first half, from a year ago.
Second-quarter earnings per share was 0.31 cent, down from 1.28 cents a year ago.
Net asset value per share was 54.4 cents, up from 53.8 cents at the end of March.
Net profit in the first half of the year slipped 52 per cent to $6.8 million, while sales dipped 11 per cent to $373 million from a year ago.
It did not declare an interim dividend, unlike last year when it paid out 0.76 cent a share.
Courts Asia shares closed half a cent lower at 43.5 cents. Earnings were reported after markets closed.