By Andrew Green , Staff ReporterCOURTS JAMAICA Limited earned net profits of $179.9 million in the quarter ended June 27, 2004, according to its unaudited results.
This was a 43 per cent increase over the level in the quarter last year. But the sales volume was not as impressive.
The company had a turnover for the three months of $1,242.7 million (2003 - $1,203.8 million), representing an increase of $38.9 million, or three per cent over prior year, primarily due to transfer from unearned income, managing director Hayden Singh stated in his report to shareholders accompanying the results.
Courts transferred $79.7 million to the category of unearned income in the three month period last year while bringing $59.7 million into its accounts from that category in the June quarter this year.
"Their amount of Goods Sold fell," said Glenford McLeish, managing director of JMMB Securities. "That was a big driver."
Courts sold $834.6 million of goods in the June quarter this year. The company sold $880.7 million the previous June.
Courts sold $348.4 million on credit this June compared to $402.8 million sold on credit last June.
INCREASED UNCERTAINTY
"The slowdown is coming from last year," Mr. McLeish said. One factor behind this is the increased uncertainty facing consumers concerned by the level of
redundancies.
Additionally, Courts is faced with competition from Rooms to Go, Mainland and other companies trying to grab a bigger slice of the furniture market.
Operating profits increased by $88.9 million, or 45 per cent over the previous year, from $198.5 million to $287.4 million as a result of the foregoing.
And earnings per stock unit in the June quarter amounted to 7.5 cents. In the similar period last year earnings amounted to 5.27 cents.
CHALLENGING TRADING
ENVIRONMENT
"Turnover for the first few weeks of the second quarter has been impacted by the Jamaican economy and is currently below expectations," Courts' (Jamaica) managing director, Mr. Hayden Singh said. "However, our promotional calendar and product offer has been enhanced to counteract what is at present a challenging trading environment."
The industry is structurally attractive, and more recently, the company has been seeking more strategic locations for branches, especially those located in volatile areas, according to Mayberry Investments research. Mayberry stated that the company has also competitively positioned itself defensively amidst the array of retail stores, with intense marketing campaigns and attractive credit offerings.
Courts has positives such as a wide distribution network giving it short delivery times and good after-sale-support, Mr. McLeish said. But the company is still facing a tough time.
One issue now is the impact of Hurricane Ivan, Mr. McLeish said. That may affect the ability of some of their customers to meet their contractual credit obligations.
Another issue for Courts is the need to fend off their competitors, the JMMB Securities executive said. In its favour are its market leadership and the high standards it has established.
