Isetan Singapore expects loss for first half of 2020
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Shoppers at Isetan's moving-out sale in suburban mall Westgate on March 7. The retailer says it expects a loss for the first half of this year, because of the disruptions to business from the coronavirus outbreak, the limited extent to which expenses can be reduced to offset the hit to revenue and the cyclical nature of its retail business.
ST PHOTO: OSMOND CHIA
Isetan (Singapore) expects a loss for the first half of this year, because of the disruptions to business from the coronavirus outbreak, the limited extent to which expenses can be reduced to offset the hit to revenue and the cyclical nature of its retail business.
The retailer said the post-Chinese New Year decrease in consumer spending and the onslaught of the outbreak have led to a decrease in the revenue for the first quarter of this year. All of its four stores (except the supermarket at Isetan Scotts) will remain closed until June 1 under the Government's circuit breaker measures.
To support tenants at Isetan Wisma Atria, Isetan has granted rental waivers, and this has, in turn, adversely impacted its rental revenue, the company said in a regulatory filing last Saturday.
Also, the completion of the Isetan Scotts renovation has been delayed as a result of work stoppage due to circuit breaker measures. This is expected to disrupt the store's operations until the second half of this year.
Even after the circuit breaker measures are lifted, business could take some time to return to normal as safe distancing might remain in place. Also, rental revenue of Isetan Wisma Atria could still be affected in the coming months, given that the outbreak is evolving.
To mitigate the effects of the decline in revenue, Isetan said it has been putting in extra effort to boost sales contributions from the supermarket and the company's online store.
It has also looked into further ways to reduce operating expenses. They include working closely with landlords on rentals after the circuit breaker period, reducing variable expenses as far as possible and shifting marketing communications to social media platforms.
Isetan also said it has not laid off any of its employees, in line with the Government's call to companies to retain workers, and has continued to pay all its staff salaries in full, with those working in and supporting the supermarket receiving extra incentives.
The company said it does not foresee any difficulties meeting its near-term obligations at present. But it will be monitoring its liquidity closely during this time as there is no clarity on when the outbreak would be over nor its impact on the retailer.
Isetan said its cash and cash equivalents amounted to $25.3 million, while its other investments under current assets stood at about $22 million as of March 31.
The counter closed six cents lower to $2.92 last Friday, a day before the profit guidance was issued.
Bricks-and-mortar department stores and retail chains, already grappling with competition from online shopping, have come under severe pressure with the outbreak.
Wage subsidies and property tax and rental rebates have prevented mass layoffs, though some outlets face closure if landlords do not provide more rental relief.
Robinsons Singapore announced this month that it will shutter its outlet at Jem mall at the end of August.
Earlier this year, Isetan closed its outlet at Westgate mall, while last year, Metro exited The Centrepoint after five years as the mall's anchor tenant.
THE BUSINESS TIMES
