Metro City Square is to close down at the end of the year as its parent company Metro Holdings tries to restore profitability.
The news was included in a summary of the company’s second quarter results which showed net profit slumped from S$60.6 million to $18.6 million year on year. A large amount of that difference was due to an extraordinary gain last year rather than poor performance in the latest quarter, where group revenue increased by 22.3 per cent to $38.3 million.
Metro Holdings has four department stores in Singapore, nine Monsoon Accessorize shops and one M2 specialty store. But the lion’s share of its business is property investments in China and Singapore.
The company said the major contributor to the revenue surge was the new Metro Centrepoint store in Singapore which started trading in the third quarter of last financial year, together with improved trading in its other stores.
Metro’s chairman, Winston Choo, said the retail outlook “remains challenging” and expressed concern about the discounted trading environment and high operating costs.
“As such, we anticipate these factors to continue impacting our Retail Division. As part of our plans to consolidate our human resources and redirect it to areas which would further enhance shareholders’ value, we will be ceasing operations at Metro City Square in late 2015 upon the expiry of its lease. We also expect Metro Centrepoint’s sales to remain affected as The Centrepoint has been undergoing a makeover since May 2015,” said Choo.
While the company’s Metro Paragon flagship store on Orchard Rd is positioned at the high end of the market, the Metro City Square on the city fringe is positioned as a ‘family-friendly store’.
The retail division recorded an operating loss of $2.1 million in the quarter, primarily die to the high costs of opening the Centrepoint store. In the same quarter last year the division lost $1.2 million.
However overall, the group’s profit from operating activities made a turnaround from a loss of $14.6 million in the second quarter last year to an operating profit of $8.8 million in the latest quarter. The increase was mainly attributable to a five-time growth in ‘other income’, mainly due to a $4.3 million gain on disposal of Frontier Koishikawa, Tokyo, and exchange differences on bank balances of $6.7 million.
