Malaysia stifles Courts Asia performance
Regulation changes in Malaysia dragged down both revenue and profits for Southeast Asian electrical, IT and furniture retailer Courts Asia.
For the year to March 31, Courts Asia had a 3.7 per cent dip in revenue to SG$713.1 million (US$532.5 million). Profits slipped to $8.1 million from $23.7 million.
Meanwhile, distribution and marketing expenses “remained relatively stable” at $56.5 million, or 7.9 per cent of revenue, the group says.
Revenue from Malaysia, which contributed to 26.2 per cent of total turnover, slid 15.4 per cent on a year-on-year basis. This was mainly because of lower sales of goods and earned service charge income, says the group.
Courts Asia executive director/group CEO Terence Donald O’Connor says 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 cent a year along with new compliance processes that 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 profitability,” says O’Connor.
As a result, Courts Asia has formed a transformation taskforce to look into business processes with the objective of driving productivity in Malaysia.
Meanwhile, seven underperforming stores have been closed, ending with a footprint of 63 outlets. Other key actions taken in Malaysia include deploying a regional credit taskforce comprising executives with “specialised credit collections and marketing skill sets”.
“While we agree that consumer sentiment has lifted with the changes sweeping through Malaysia, it will take time for it to filter through to discretionary spending,” says O’Connor. Initiatives such as zero rating GST from 6 per cent from today have been welcomed.
In Singapore, Courts Asia’s performance remained strong at $25.2 million, the company says. Revenue from Singapore accounted for 69.9 per cent of the group’s top line, and increased 1.5 per cent. This was underscored by improved sales and follows an increased focus on driving an omni-channel approach with the relaunch of its online platform and the re-opening of Courts Megastore at Tampines in November.
As part of its move toward offering furniture for the modern home, Courts Asia has refreshed its furniture range leading up to the Hari Raya festive season.
For Indonesia, the group achieved 13.7 per cent growth in revenue in rupiah, thanks mainly to new stores. After “prudently widening its footprint”, Courts Asia now has 32 locations across the Jakarta region, including nine stores and 23 pop-ups.