Ashford W. Meikle, Business Reporter

Hayden Singh, managing director of Courts Jamaica Limited, says preferred bidder still has to finalise financing and hurdle regulatory approvals. - File

Managing director of Courts Jamaica Limited, R. Hayden Singh, has warned investors that the company will have a flat second quarter against the background of the rainy season and the closure of one of its stores because of violence.

"We expect to have a relatively flat second quarter," said Singh, speaking at the company's annual general meeting last Thursday at its Constant Spring Road store.

"In August we were affected by Hurricane Ernesto and on top of that we had to close our store in May Pen because of rioting and violence in the area."

Sombre profit forecast

Singh's sombre profit forecast came alongside news of some progress on negotiations for the sale of the UnitedKingdom-based business, which is in receivership.

"As far I as I know, the administrator has entered into a memorandum of understanding with a preferred bidder. In fact they just signed a new MoU about three weeks ago," he said.

"That bidder has certain milestones to reach at a certain time. In other words, they have got to get their financing in place as well as regulatory approval."

Almost two years ago the company's parent company, Courts Plc, was placed into receivership. Since then, its administrators have been in negotiations to spin-off the troubled U.K.-based store and its highly profitable Caribbean operations.

Singh shied away from commenting on a timetable for concluding the negotiations.

"As to when completion is going to take place, I really can't say because I don't know. I really don't think anyone knows [and] I am not privy to their modus operandi. I think we just have to wait and see."

Courts Jamaica, a dominant player in the furniture retail market, had a relatively flat first quarter performance in which the furniture and electronics retailer posted a one per cent decline in total sales, to $1.4 billion, and which saw its net profit decline by seven per cent, to $203 million.

That outturn followed relatively weak profit growth recorded in its year-end accounts to March 31, 2006 when the furniture retailer posted net profits of $895 million, a four per cent increase over the previous year.

Growth in its sales also remained in the single digits with total goods amounting to almost $4.6 billion, six per cent up over the $4.3 billion earned in 2005.

Singh attributed the first quarter's flat performance to the rising oil prices, the cement crisis ... both of which impacted on the disposal income of consumers and the recent football World Cup competition which reduced customer flow.

Glimmer of hope

But he did offer some glimmer of hope to shareholders.

"It is true to say we are hoping for a reasonably good third quarter," said Singh. Third quarter sales would incorporate the normally- lucrative Christmas season.

"We have a very aggressive promotion going on and we are hoping that that we will see some results from that," Singh told shareholders.

ashford.meikle@gleanerjm.com