Electronics, information technology and furniture retailer Courts Asia stumbled in the second quarter, as its profit margins in Singapore were hurt by sales promotions undertaken earlier this year.
Net profit fell 75 per cent to $1.51 million for the three months to Sept 30, from $5.98 million a year earlier. Gross profit was down 6 per cent year on year, with margins affected by ongoing renovation sale promotions in its Singapore flagship Courts Megastore, a drop in credit sales in Singapore and Malaysia, as well as an increase in impairment costs.
Revenue, however, dipped just 1.4 per cent year on year to $176.45 million.
"The retail landscape has been challenging and uncertain across our operating markets," said executive director and group chief executive Terence O'Connor. "While top-line performance held steady, our bottom line took a short-term impact from lower margins this quarter mainly due to ongoing renovation sale promotions at our Megastore and a dip in credit sales."
Earnings per share for the period was 0.29 cent, down from 1.15 cents the year before.
AT A GLANCE
$176.45 million (-1.4%)
$1.51 million (-75%)
The Megastore - said to be an integral part of the group's $10 million plan to rejuvenate its Singapore store network - is due to officially open tomorrow.
In Malaysia, Courts Asia intends to focus on driving profitability for existing stores before expanding in the country, in view of the prolonged weak consumer climate and legislative changes expected in the near to medium term there.
The group is preparing for the impending legislative change in Malaysia - which will see interest rates being capped at 15 per cent a year from January next year under the Consumer Protection (Credit Sale) Regulations 2017 - by reviewing new revenue streams and working to drive down operating costs.
"We have undertaken a cost-efficiency exercise to reduce the operating costs, which included right-sizing the workforce to the business. Moving forward, it is imperative that we continue to keep a sharp focus on increasing productivity and controlling costs," said Mr O'Connor.