Courts Asia swings into red with $171k loss in Q3

Revenue for Courts Asia stood at $175.3 million for the third quarter, down 6.2 per cent from the previous year.
Revenue for Courts Asia stood at $175.3 million for the third quarter, down 6.2 per cent from the previous year.PHOTO: FACEBOOK/ COURTS

Retailer Courts Asia posted a net loss of $171,000 for its third quarter ended Dec 31, compared with a net profit of $3.51 million for the same period a year ago, on the back of lower gross profit margins and revenue as well as higher income tax expenses.

Revenue for the group stood at $175.3 million for the third quarter, down 6.2 per cent from the previous year. Singapore sales, which contributed 76.2 per cent of the group's revenue in the quarter, dipped 0.7 per cent, due mainly to lower earned service charge income.

Malaysia revenue, which accounted for 20.4 per cent of group revenue in the third quarter, fell 22.2 per cent in ringgit terms, weighed down by lower earned service charge income and lower sales of goods and other services.

Indonesia revenue, with 3.4 per cent of the total revenue, declined 7.3 per cent in rupiah terms, mainly due to lower earned service charge income and infocommunications sales.

Loss per share stood at 0.03 cent for the quarter, compared with earnings per share of 0.68 cent a year ago.

In its outlook, the group said Courts Singapore will continue to navigate the competitive retail environment by continuing to invest in five key areas, namely expansion of category solutions-selling, driving omni-channel, making offline store experience centres, driving furniture reinvention and leveraging credit as its unique selling proposition.

As for Malaysia, the group said it was keeping up its transformation of the business. A task force was set up in January last year to look into business processes and operations and execute transformation initiatives. Since April last year, the group has closed 12 underperforming stores, bringing the store count down to 54 in Malaysia. It also tightened credit-sanctioning policies within the financial year.

In Indonesia, Courts Asia said no new stores have been opened in the last nine months as the group consolidates its position in the market.

Last month, Japanese electronics retailer Nojima Corp announced a bid for Courts Asia at 20.5 cents per share as it seeks to gain a foothold in South-east Asia. Nojima has received an undertaking from Courts' majority shareholder Singapore Retail Group (SRG), which has agreed to irrevocably tender all its 382 million shares, translating to a 73.8 per cent stake in the company. Once SRG accepts it, the offer will turn unconditional.

After the offer is completed, Nojima may undertake a "strategic and operational review of Courts, with a view to realising synergies, economies of scale, cost efficiencies and growth potential", it said.

Courts Asia's counter closed unchanged at 20 cents last Friday, before its results were released.

A version of this article appeared in the print edition of The Straits Times on February 11, 2019, with the headline 'Courts Asia swings into red with $171k loss in Q3'. Print Edition | Subscribe