COURTS Jamaica Limited is one of the most profitable companies listed on the Jamaica Stock Exchange, and is the most profitable in the furniture, appliance and household retail sector.
Over the past five years its net profits have grown by 190.8 per cent while its turnover grew by 30.4 per cent. Shareholders equity has leapt by 185.6 per cent.
Courts Jamaica Limited has been operating in an aggressive and competitive market environment, but has been able to increase its market share. It has focused on marketing which is all done in house. Such is its confidence in its own abilities it has felt no need to court the services of the country's leading advertising and marketing agencies.
Speaking with The Financial Gleaner last year, Courts Jamaica's Managing Director, Hayden Singh gave an account of the measures taken to turn around the company's fortunes. "We had to re-examine the entire operations of the company and worked through our credit accounts. Our exposure to high risk credit was a problem and we worked on that to bring it back on line. We focused upon making our businesses more efficient. We closed a couple of regional warehouses, the first one was our Montego Bay premises, the second one was based in Mandeville. We built a new distribution centre of 100,000 square feet out in Twickenham Close, St. Catherine. It was completed at a cost of $180 million. This now allows us a just in time delivery service going to all our branches on a daily basis. We also did a lot of promotions on credit because we felt that's where our opportunities lay and we promoted the credit products agggressively."
The chart below outlines Court's performance over the last financial year. (See table 1).
The above table shows that turnover or total sales for Courts fell by 12.7 per cent at the end of 2002 when compared with the figure for 2001. The reduction has not unduly impacted Court's liquidity position. A contributing factor for the decline was the reduction in service charges from credit sales.
The table below shows the company's stock units between 2001 and 2002. (See table 2).
These figures reveal that return on investment declined by 22.3 percentage points. This ratio assesses the viability of a business; it enables an investor to compare how well management is performing. Despite the decline in the ROI ratio in 2002, a 31.6 per cent ROI is a very healthy position.
The current ratio shows a significant increase in 2002. This ratio compares current assets with current liabilities, and is a favourite with banks. A result of 1.3 per cent is accepted internationally, Courts ratio has exceeded that, demonstrating its corporate strength.
The quick ratio or acid test shows significant growth. This is a short-term liquidity ratio. Only a strong performing company will produce a quick ratio/acid test ratio of 3.9 per cent.
Managing director of Courts Jamaica Limited, Mr. Hayden Singh, says that the management and workers at Courts have played a significant part in the improved performance of the furniture giant with Mr. Singh favouring a democratic leadership style.
"We continue to work closely with the Bureau of Standards to ensure that the products we import are or of the highest quality, represent value for money and meet the highest possible safety standards. We continue to support our local furniture manufacturers, and we are pleased to say that 80 per cent of furniture and bedding sold through our stores is locally manufactured, said Mr. Singh.
