Listed Singapore retailer FJ Benjamin says it will close some stores in Singapore and scale down others as it manages a downturn in sales.
The company’s plans – of which there were no further details – were included in the first quarter financials released on New Year’s Eve. FJ Benjamin posted an improved profit despite a massive 22 per cent slump in sales.
In the three months to September 30 sales totaled S$75.4 million, compared with $96 million in the same period in 2013. Gross profit fell by $7.5 million, or 18 per cent, to $33 million, but net profit trebled from $336,000 to $1 million.
The company’s Achilles’ Heel is North Asia and China. In North Asia, sales of the timepiece business in Hong Kong slumped 82 per cent and its business in China fell 98 per cent. The company attributed this mainly due to the continued slowdown in China, the decline in mainland Chinese spending in Hong Kong and the loss of sales from Girard Perregaux timepiece following the expiry of the distribution agreement in February 2014.
In a statement, the company said the retail industry “remained challenging for this quarter amid declining tourist arrivals and lacklustre consumption”.
“Although sentiment in the near to mid term remains weak, the group expects its productivity to improve with the planned closures and downsizing of some of its stores in Singapore, the rationalisation of its North Asian operations and continued focus on cost efficiencies.”
The drive to extract cost efficiency is already working, with gross margin up two percentage points, from 42 per cent to 44 per cent.
Group turnover from the fashion business decreased by 13% to $59.7 million and the timepiece business declined by 44 per cent to $15.3 million.
In Southeast Asia, the fashion business fell a more modest 10 per cent, mainly due to lower exports to Indonesia. The timepiece business decreased by 20 per cent.
“The retail industry in Singapore and Malaysia continued to see falling sales as tourist arrivals declined for another quarter and spending particularly by shoppers from mainland China and Indonesia remained soft,” the company said.
“Sales from our Indonesian joint venture continued to do well and registered increased sales of 13 per cent.”