I think i just found out why Courts share price fell for these few days.
COURTS Singapore has issued a profit warning saying that it expects to dip into the red for the three months to September, blaming an expected ‘substantial loss’ from its Thailand operations. ‘It is expected the group will suffer a loss in the second quarter as a result of a substantial drop in sales and the increased provision for credit sales debtors in Thailand due to the difficult operating environment there,’ the company said yesterday.In August, Courts reported a 31 per cent fall in net profit to $734,000 for its first quarter ended June 30, although sales grew 12 per cent to $85 million.
At the time, the company said that sales from Thailand fell 18 per cent on a like-for-like basis, after it put in place strict measures to lower credit risk ‘particularly in north-east region, in view of lower customer accounts quality’. Overall, its Thailand sales – which contributed 11 per cent of group turnover – still rose 23 per cent in the first quarter, boosted mainly by three new stores there.
The actual sales for Thailand for the second quarter to Sept 30 are expected to be ‘significantly lower’ when compared to the corresponding period last year, Courts said in yesterday’s statement. ‘This is due mainly to the tightened credit sanctions in Thailand,’ it added.
‘The company deems it appropriate to issue a profit warning. Thailand is expected to reflect a substantial loss which will in turn result in a loss for the group on a consolidated basis,’ it said. The financial results are expected to be published on Nov 8. According to data from Bloomberg, the company has been profitable for the past 11 quarters, except for the three months to March 31 this year.
The furniture and electronics retailer opened its first store in Thailand in 2003, and began an aggressive expansion drive in the country, opening more than half a dozen new stores there since then.
In Singapore, it has 11 stores and is also building its largest store to date – the 115,000 sq ft Courts Megastore in Tampines slated to open at the end of the year.
Credit sales are an important feature of its business. Consumers are attracted by the option of paying for purchases in monthly instalments at fixed interest rates.
Yesterday, managing director Terry O’Connor said: ‘We would like to highlight that the second-quarter results are due to the loss reflected in the Thai business. The Singapore business continues to maintain healthy sales records.’
Courts’ share price, which has risen 13 per cent since the start of the year, closed unchanged at 70 cents yesterday.