Courts faces some challenges in Malaysia market
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Electrical, IT and furniture retailer Courts Asia has narrowed a quarter-on-quarter loss following transformation work in its Malaysia operations.
In its first quarter results, the company said its business in Malaysia had been hit hard by regulatory changes in the territory. The group’s profitability was impacted by the introduction of the Consumer Protection (Credit Sale) Regulations 2017 (“CPAA”), which came into operation on January 1.
Courts reported a 3.6 per cent year-on-year dip in revenue to S$179.8 million (US$130.86 million) for the period, mainly attributable to Malaysian revenue decline. Correspondingly, a first-quarter net loss of S$2.2 million (US$1.6 million) was reported.
Courts Asia’s executive director and CEO Dr Terence O’Connor said the group’s business performance continues to be impacted by the interest rate cap imposed by CPAA in Malaysia.
“However, there are early indicators to suggest that the business transformation work in Malaysia is delivering green shoots. Revenue in Malaysia improved by 16.8 per cent and loss before tax reduced by 36.5 per cent, to S$6.1m from S$9.6 million in the first quarter, compared to the preceding quarter.”
As part of the group’s ongoing store-optimisation efforts in a post-CPAA environment, five underperforming outlets have been closed, leaving 58 in Malaysia. The group is redefining its store strategy there and will be downsizing its Megastore at Sri Damansara to make way for an incoming tenant. Marketing spend has also been reduced in alignment with a smaller store footprint.
O’Connor added: “The team recognises the urgency and is in overdrive mode to deliver the transformation work in Malaysia. It is a significant undertaking that will take time to execute and finetune. That said, we have reason to believe that the results are trending in the right direction.”
Questions & Answers
Q.What specifically caused Courts Asia's profitability to be affected in Malaysia?
What specifically caused Courts Asia's profitability to be affected in Malaysia?
The introduction of the Consumer Protection (Credit Sale) Regulations 2017, known as CPAA, impacted the group's profitability. This regulation came into effect on January 1 and imposed an interest rate cap.
Q.How much revenue did Courts Asia report for the period and what was the main reason for any change?
How much revenue did Courts Asia report for the period and what was the main reason for any change?
Courts Asia reported a revenue of S$179.8 million, which was a 3.6 per cent year-on-year dip. This decline was primarily attributable to reduced revenue from its Malaysian operations.
Q.What steps has Courts Asia taken in Malaysia to adapt to the post-CPAA environment?
What steps has Courts Asia taken in Malaysia to adapt to the post-CPAA environment?
The company has closed five underperforming outlets, reducing its total to 58 stores in Malaysia. They are also redefining their store strategy, including downsizing the Sri Damansara Megastore and reducing marketing spend.