Rising costs eat into Challenger profit

Singapore’s largest IT retailer Challenger Technologies says retail sales remained flat in the last nine months.

But net profit declined due to higher overheads.

The company reported group revenue rose by $6.2 million or two per cent to $256.7 million for the nine months ended September 30. Third quarter sales rose by $5.7 million or seven per cent, year on year. The increased sales came from stronger corporate and large-format show sales, rather than its core retail business.

Net profit increased by about eight per cent to $10.8 million for the nine months but decreased by about five per cent to $3.5 million in the quarter. This was largely as a result of lower gross profit due to a change in product sales mix, and offset by lower operating expenses.

“Q3 retail sales continued to be sluggish after a slow Q2. Overall, retail demand continued to be weak” said CEO Loo Leong Thye.

“Some factors include bad weather and major local events happening that brought retail sentiment down. However, Q4 is traditionally a good quarter for retailers like us, and we are looking forward to the seasonal uplift.”

In Singapore, Challenger has 46 stores comprising one flagship Challenger megastore, 23 Challenger superstores and 22 small format stores. Loo said Challenger will continue to grow its retail footprint at suitable locations where available in order to serve its customers within close proximity. In the last quarter of this year, one new store will open at White Sands.

“Manpower constraints and higher store rentals continue to be our main challenges. While we try to manage costs to increase profitability, we are also finding ways to accelerate our growth,” said Loo.

“Over the next five years, we will grow our Digital Lifestyle Ecosystem with offline and online eCommerce offerings, e-payment options, software technology development, call centre and extended warranty services, marketplace platforms for valuation and certification of mobile devices, logistics, e-Human Resources and other strategic investments within the digital landscape.”

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