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Courts Asia swings to Q3 net loss of S$171,000

MAINBOARD-LISTED Courts Asia posted a net loss of S$171,000 for its third quarter ended Dec 31, compared to a net profit of S$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 S$175.3 million for Q3, down 6.2 per cent previously. Singapore's revenue, which contributed 76.2 per cent of the group's revenue in Q3, dipped 0.7 per cent due mainly to lower earned service charge income.

Malaysia revenue, which contributed 20.4 per cent of the group's revenue in Q3, reported a 22.2 per cent decline in ringgit terms, weighed down by lower earned service charge income and lower sales of goods and other services.

Indonesia revenue, which makes up 3.4 per cent of total revenue, registered a 7.3 per cent decline in rupiah terms, mainly due to lower earned service charge income and infocomm sales.

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Loss per share stood at 0.03 Singapore cent for Q3, compared to earnings per share of 0.68 Singapore cent a year ago.

In its outlook, the group said that 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 stores experience centres, driving furniture reinvention and leveraging credit as its unique selling proposition.

As for Malaysia, the group said that it is keeping up with its transformation of the business. A dedicated transformation taskforce was formed in January 2018 to look into business processes and operations and execute transformation initiatives, with the objective of driving productivity in Malaysia.

Since April 2018, it has closed 12 underperforming stores, bringing the total store count down to 54 stores in Malaysia. In addition, the group tightened credit-sanctioning policies within the financial year.

In Indonesia, Courts Asia said that no new stores have been opened in the last nine months as the group has taken the decision to consolidate its position in the market.

Earlier in January, Japanese electronics retailer Nojima Corp made a bid for Courts Asia at 20.5 Singapore 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. It will also consider delisting Courts from the Singapore Exchange if it gets enough acceptances to do so, said the Japanese retailer.

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