Courts Asia posts S$171,000 net loss for Q3

Singapore Exchange mainboard-listed Courts Asia reported a net loss of S$171,000 for the financial third quarter ended December 31st, due to a fall in revenue and gross profit margins. Higher income tax expenses also ate into margins and contributed to the loss.

The group had registered a net profit of S$3.5 million for the same period a year ago.

Revenue came in at S$175.3 million, 6.2% lower than the S$11.5 million the same period a year ago. The group’s Singapore revenue, which makes up 76.2% of total sales, fell by 0.7% due to lower earned service charge income, the group said.

Contributions also sank from the group’s other markets in Malaysia and Indonesia. Courts Asia’s Malaysia revenue, which contributes around one-fifth of total revenue, reported a 21.3% fall in revenue after conversion to the Singapore dollar due to lower earned service charge income and smaller sales of goods and other services following to the closure of non-performing stores. The group’s Indonesia revenue fell by 13.6% after conversion to the Singapore dollar.

Due to the strengthening Singapore dollar against emerging market currencies, the currency exchange from the local currencies to the Singapore dollar also added further pressure in the numbers.

Loss per share for the quarter was at 0.03 Singapore cent, reversing from the earnings per share of 0.68 Singapore cent a year ago.

Commenting on the results, Courts Asia said it will continue to manage costs and invest in growth areas.

For the Singapore market, the group is expecting an economic slowdown amid rising inflation for this year. The group will continue to invest in five key areas, namely the expansion of category solutions-selling, driving omni-channel, making off-line stores experience centres, driving furniture reinvention and leveraging credit as its unique selling proposition.

Over in Malaysia, the group had closed 12 underperforming stores since April last year, bringing their total store count to 54 stores. Courts Asia said it would continue to look into its business processes and operations and executive transformation initiatives as it navigates an environment with subdued consumer sentiment impacted by the consumer protection (credit sale) regulations.

Takeover from Nojima underway

Last month, Courts Asia said Japanese electronics retailer Nojima made an offer to buy over all of the group’s issued and outstanding ordinary shares. The offer price was at S$0.205 per share, which was a 34.9% premium from the share price of S$0.152 recorded prior to the offer.

The announcement had sent Courts Asia’s shares skyrocketing to as high as 31.6%, at S$0.200.

In the statement, Nojima Asia said it had been contemplating on entering the consumer appliance retail market in Southeast Asia, where it sees the potential for market growth. With the acquisition of the Courts Asia, Nojima Asia said it ‘expects to gain a strong foothold in Southeast Asia’.