COURTS Asia has revealed a 3.7% dip in revenue from SG$740.5 million the year before to SG$713.1 million for the full year ended 31 March 2018. Profits were found to be at SG$8.1 million, down from SG$23.7 million the year before. This was due to its Malaysia business performance, the retailer said in a recent financials release.
Meanwhile, distribution and marketing expenses “remained relatively stable” at SG$56.5 million in FY2017-2018, at 7.9% of revenue, the group said.
Revenue from Malaysia, which contributed to 26.2% of COURTS turnover, slid 15.4% in Malaysian ringgit on a year-on-year basis in FY2017-2018. This was mainly due to lower sales of goods and earned service charge income.
According to COURTS Asia’s executive director and group CEO, Terence Donald O’Connor, the company faced headwinds in Malaysia following the introduction of the Consumer Protection (Credit Sale) Regulations 2017. This saw interest rates being capped at 15% per annum along with new compliance processes which led to a revenue drop.
“The fall in revenue, coupled with an increased credit cost and a more prudent credit sanctioning approach in Malaysia, affected our Group’s profitability,” O’Connor added.
Following the results, COURTS Asia has formed a dedicated transformation taskforce to look into business processes and operations and execute transformation initiatives. This is with the objective of driving productivity in Malaysia.
This saw the company closing seven under-performing stores, and ending with a current footprint of 63 stores. It added it would closely review and monitor store performance, and close under-performing stores to achieve an optimal store footprint in Malaysia. Other key actions it has taken in Malaysia include leveraging the expertise of a regional credit task-force comprising executives with “specialised credit collections and marketing skillsets”.
Addressing the recent reduction of GST from 6% to 0% from 1 June 2018, O’Connor added that Courts Asia welcomes pro-consumer initiatives, such as the zero rating of the GST.
“Whilst we agree that consumer sentiment has lifted with the changes sweeping through Malaysia, it will take some time for it to filter through to discretionary spending,” O’Connor said.
In the meantime, in anticipation of consumers holding back their purchases until 1 June, COURTS Asia has offered a 6% storewide discount at Malaysian outlets effective 18 May. Meanwhile, work has also commenced to ensure internal processes and communication guidelines are in place by 1 June.
In Singapore, COURTS Asia’s performance remained strong at SG$25.2 million, the company said. Revenue from Singapore accounted for 69.9% of the Group’s top line, and increased 1.5% in FY2017-2018. This was underscored by improved sales and comes on the back of the retailer’s increased focus on driving omni-channel solutions, with the relaunch of its online platform and the re-opening of COURTS Megastore at Tampines in November 2017.
Moving forward, the company will also continue to expand its solutions leadership in five key areas to deliver a better user experience. This includes an expansion of category solutions-selling, driving omni-channel with urgency, making off-line stores experience centres, centering furniture on home needs and continuing to leverage its unique selling proposition in credit.
As part of the group’s move towards offering furniture for modern home, COURTS Asia recently refreshed its furniture range leading up to the Hari Raya festive season.
For Indonesia, the group achieved a 13.7% increase in revenue in rupiah mainly due to contributions from newly opened stores. COURTS Asia “prudently widened its footprint” and is now present in 32 locations across the Greater Jakarta Region, including nine stores and 23 pop-up stores. O’Connor said that Courts Asia in Indonesia is seeing an improvement in the business performance, with EBIT improving year-on-year. However, it will halt expansion plans for pop-up stores for now. He added:
“We continue to focus our efforts on bringing our credit collections costs to our expected levels, and will be temporarily putting on hold our expansion plans for pop-up stores. We continue to leverage our Megastores through our tenants, and positioning them as one-stop shopping destinations.”
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