RE&S posts Q2 net loss of S$263,000 on temporary store closures

CATALIST-LISTED restaurateur RE&S Holdings, which operates brands such as Ichiban Boshi and Kuriya Dining, sank into the red in the second quarter, which the group attributed to temporary store closures at Great World City and Jurong Point, in results released on Monday.

RE&S posted a net loss of S$263,000 for the three months to Dec 31, 2019, against earnings of S$1.45 million in the same period the year prior, as revenue slid by 7.1 per cent to S$34 million.

That made for a loss per share of 0.07 Singapore cent, a contrast with the earnings per share of 0.41 cent before, while the group's net asset value fell to 8.82 Singapore cents a share from 10.8 cents as at June 30, 2019.

During the quarter, RE&S finished converting some full-service restaurants at Jurong Point into quick-service outlets - a change that it fingered as partly responsible for the 12 per cent drop in contributions from its full-service segment, which contributes about two-thirds of group revenue.

Another blow came from the interim closure of full-service restaurants at the erstwhile Great World City, which has been under renovation since April 2018.

Meanwhile, other operating income fell from S$1 million to some S$100,000, on the absence of compensation from the landlord over the impact of renovation on three outlets at Great World City.

For the half-year, RE&S lost S$3.86 million, compared with a net profit of S$2.15 million before, while revenue was down 7.5 per cent to S$66.5 million.

The company anticipates full-service restaurants to take a hit from lower revenue and higher operational costs as the food and beverage industry faces rising demand for online food delivery services and foreign manpower curbs in the services sector, the management said.

But it added that it plans to explore "new service channels to secure its current market share", as well as technology solutions in both the full-service and quick-service segments.

It also warned that "unforeseen circumstances such as the 2019 coronavirus would significantly impact our business in general" - a reference to the killer virus outbreak now stalking Singapore. As such, the group "may consider re-evaluating its major project commitments", it said.

In a statement, RE&S chief executive officer Fenton Foo said: "Recently, we have introduced new concepts for our (quick-service) segment, and have also launched &JOY Dining Hall multi-concept food hall at Jurong Point in October 2019 and Great World City in February 2020.

"However, we are now faced with the unexpected coronavirus, which is impacting diners' sentiments. We are mindful to take cautious measures to control our operational expenses and stay vigilant to mitigate the potential headwinds."

No dividend was recommended for the period, as it is the company's practice to make such recommendations for its full-year results, said the board.

RE&S shares shed 0.2 Singapore cent or 1.33 per cent to S$0.148 on Monday before the results were announced.