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Keeping Cortina ticking
CORTINA Holdings has never lost money - not even in the dark days of the SARS outbreak and the Great Recession. ''From the day we were listed, we've not been in the red - and we hope to maintain that trend,'' says the homegrown watch retail chain's chief operating officer Jeremy Lim.
That covers the period from 2002 till today, including 2003 when the Severe Acute Respiratory Syndrome (SARS) flare-up hit most Asian businesses; and 2009 when the Great Recession sank Swiss watch exports.
Cortina's clean record of profitability isn't about to be broken. A challenging business environment with the company's sales flat at S$460.8 million hasn't stopped it from making a record S$30.8 million in net profits in the financial year ending March 2019, up 33.2 per cent from 2018.
Cortina's net earnings have continued to surge - up 69 per cent to S$9.5 million - in the latest April-June quarter, even as the economy is tipped to soften more this year.
It's no mean feat for a business started by his father, Anthony Lim, who began work as a waiter.
Jeremy, the man's younger son, claims no credit for Cortina's success. Still, much of it was achieved under his watch as chief operating officer.
While he reports to his brother Raymond, the deputy chief executive, Jeremy runs the bulk of what is essentially a family business concentrated largely in Singapore, Malaysia, Indonesia and Thailand.
Raymond is more active in Cortina's business in Taiwan and Hong Kong.
In any case, when asked about the secret of the company's success in staying above water all this while, Jeremy is equipped with the answer.
Keeping costs down is a ''very important part'' of the explanation, according to him. Rentals and salaries cannot be cut because they are practically fixed, he noted. However, inventory can be cut.
SO at the first sign of trouble, Jeremy, who had worked as an auditor before joining Cortina, will check the company's stocks. ''I'll always make sure we don't over-stock,'' he says. ''There'll be fewer replenishments and we'll be more selective in replenishing.''
Cortina, which sells timepieces of over 50 renowned brands in six Asian markets, is prepared for a downturn at the moment.
Jeremy says he has, in the past two years, put in place a sound inventory management system that's ''very clean and very healthy''. He explains: ''Our stock turnover is probably below 180 days, half a year of stock, which is not bad for the high value items (we carry).''
Cortina's inventory turnover stood at around 360 days five years ago. This was slashed to 240 days about year ago and further cut to roughly 180 days today.
''We want to go to 150 days if possible,'' Jeremy says.
''As we reduce the number of days, we will get a healthier inventory turnover.''
Increasing sales would help to keep stocks in check but that's tough to do in a soft market, he says. It's easier to be more selective in restocking.
Cost is often on Jeremy's mind - and it's almost a fixation whose seed was planted in 2003, when he was barely three years into his job at Cortina.
Like many other businesses, the company was hit hard by SARS that year. While the epidemic left an indelible impression on many people, it left an even deeper one on him. The experience was Jeremy's baptism of fire. ''It's the worst time I've had in the business,'' he recalls. ''There was literally no sales.''
TOGETHER with his dad Anthony, who is the CEO, and his brother, Jeremy had to make the decision - a painful one especially for a family business that embraced its staff as part of the family - to retrench employees.
''I had a list of people (to cut),'' he says.
''I had to say 'We can't go on like this.' While sales were close to zero, our overheads were still there. We were in a dilemma. Many of the staff were old and experienced. If we'd chopped them off, how were we going to get them back (when we needed them)?''
But it was clear that it had to be done: Costs had to be cut to save the company.
''That's really the time you really learnt what cost is,'' Mr Jeremy Lim says. ''You've no choice, you're forced to do it.''
Thankfully, it didn't come to that. The crisis blew over and it was business as usual after five months.
JEREMY had previously worked as an auditor at tax firm KPMG after he graduated from an Australian university. He was contemplating a move to Sydney for work when his brother, who is 11 years older and had already worked in Cortina for nearly 20 years, asked him to join the company.
''Growing up in the family business, you know that eventually you would be recalled,'' he says. ''But it was slightly earlier than I expected.''
Since he was seven, Jeremy had spent time in Cortina. He officially started work in the company in 2000 at the age of 29. Two years later, Cortina was listed on the Singapore Exchange, kicking off its aggressive expansion into the regional markets.
''Mr brother guided me a lot during the initial years, he showed me the ropes of the industry,'' says Jeremy.
''But in terms of influence on how I do business, it's my father who taught me, especially in keeping promises to staff, customers and suppliers.''
His dad, now 84, is no longer involved in the day-to-day running of the business, which he has left to both his sons.
''My brother will update me whenever he comes back on what's happening in the watch markets in Taiwan and Hong Kong,'' Jeremy says. ''If we have any big problems, we go to the old man for advice.'' But this hasn't happened often.
After nearly 20 years in the company, Jeremy is still ''very motivated to do better''. ''Maybe it's because my job scope has changed over the past two years.''
''I used to be very operational. Now I'm looking at things which are more strategic - making long-term plans, setting the direction of the company and plotting which markets to expand into. It's a new challenge for me.''
Jeremy has just finished drawing up Cortina's five-year plan but can't say much about it without spilling company secrets. But he can tell you the plan is more about efficiency than to make more money.
''There will be expansion as well as consolidation according to how we feel each market can be sustained. It doesn't mean that to have more stores is better. We've room to grow in certain countries, in others we may be over-represented.''
Cortina, which currently operates a total of 24 multi-brand shops as well as mono-brand boutiques, including the world's biggest Patek Philippe boutique and the biggest Rolex showroom in Singapore, will look at opening more boutiques.
It will also look into penetrating promising new markets - and the ''obvious'' ones are Vietnam, Cambodia and Myanmar.
Such concerns are a far cry from those Jeremy faced in his early years with the company, when the challenge was more on how to ''professionalise'' Cortina.
''Over the years we've trained enough people,'' he says. ''Today, we have managing directors and general managers in different countries, department heads as well. In the bigger markets, we have a fullfledged team to run the business.'' Jeremy is counting on the more professional set-up to provide the ''good foundation'' for Cortina's next move.
APART from optimising its presence in existing markets and conquering new ones, he is also taking the company down the digital path. Jeremy is especially proud of the online watch manual Cortina has created on YouTube.
''Most people know how to use the chronograph, for example, but it's important to reinforce it to say that we have something online, accessible all the time, to remind you how to use that particular watch, that particular function,'' he says.
Such self-help manuals might have already flooded the Internet, but going online with its own version gives Cortina's name more visibility. What's more, Cortina ''has the legitimacy to tell people how to use a watch because it sells the watch''.
Jeremy isn't sure if digitisation will bring in more business, but it must be done.
''We need to have it ready just in case things change.''
Still, with customers' penchant for touch-and-feel when it comes to buying luxury items like timepieces, he says brickand- mortar retailing remains Cortina's core business.
''An online presence is only an extension of our services.