Benjamin posts record Q4 loss as tourist numbers dwindle, costs up sharply

A sharp fall in spending by tourists from China and Indonesia pushed Singapore-based luxury retailer FJ Benjamin Holdings to a S$22.1m loss for its fiscal year ended June 30. The year’s performance, which was also hit by a sharp rise in domestic costs, felt the brunt in the April-June Q4 with an operating loss of S$12.9m.

Chief executive Nash Benjamin told the Singapore Times: “The fourth quarter was the worst we’ve seen in decades. We faced pressures on all fronts, with falling demand and rising costs.”

The company added: “Demand for the group’s portfolio of fashion and timepiece brands was particularly depressed in the fourth quarter, with tourist arrivals and spending dampened by the fallout from the [Ukraine] MH370 [airline tragedy]”.

In the first five months of 2014, tourist arrivals from China, the second biggest source market for Singapore, fell 27%.

Revenue for the final quarter fell 14% year-on-year to S$77.3m. For the year, group revenue fell 1% to S$368.2m.

For the 12 months overall, fashion business sales rose 5% to S$275.2m while its timepiece business fell 16% to S$92.1m.

Full-year revenues for Hong Kong, China and Taiwan, where the group operates a timepiece distribution business, were also down by 33%, 43% and 45%, respectively.

Operating expenses for the year rose 2% to S$167m. Cost-to-revenue ratio was 45.3%, up from 43.8% in the previous financial year.

Nash Benjamin said the firm has taken steps to reduce inventory, downsize and close under-performing stores and cut costs, and he does not expect a meaningful upturn in sentiment and consumer spending in the near to medium term.

“Like all retailers in Singapore, we will have to manage the triple whammy of lower demand, rising costs and labour shortage,” he said.
The group said by the end of fiscal 2015, its number of stores in Singapore would be cut to 35 from 40. It will instead focus on expanding to the large, growing markets of Indonesia and Malaysia, raising the number of stores from 185 to 202 in the same period with all but one opening in Indonesia.

It noted sales in Indonesia “held up well”, rising by 13% and gross margin remaining constant, although exchange rates skewed figures.

Nash Benjamin added: “Looking ahead, we don’t expect a meaningful upturn in sentiment and consumer spending in the near to medium term.”

But the company believes that its strategy of expanding in Malaysia and Indonesia, and strengthening its brand portfolio in the region will improve operating results.

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