Sri Lanka’s Softlogic in the black, retail recovery dampened by Coronavirus
ECONOMYNEXT – Sri Lanka’s Softlogic Holdings, which has interests in retail, leisure, financial services information technology and healthcare is recovering from an economic slowdown in 2018, but the novel Coronavirus is a threat as Chinese visitors decline, an official said.
Softlogic Holdings posted profits of 52 million rupees for the December 2020 quarter, recovering from a loss of 346 million rupees a year earlier, helped by strong performance in healthcare and financial services, interim accounts showed.
The group reported earnings of 04 cents per share for the quarter. In the nine months to December Softlogic Holdings reported a loss of 1.23 cents per share on total profits of 1.4 billion rupees.
Retail sector revenues had grown 20 percent in the December quarter, helped by a ‘Black Friday’ sale which brought in 550 million rupees in a single day.
“The quarter saw a turnaround in volumes following the slowdown of tourist and local shopping in the aftermath of Easter attacks,” Chairman Ashok Pathirage told shareholders.
“The Black Friday sale, which covered our Branded Apparel, Consumer Electronics, Furniture, Supermarket and Restaurant businesses, reported a single day sale in excess of Rs. 550 Man which is more than double to that of 2018 Black Friday sale.
“This signifies the powerful position of consumer disposition to Soft logic’s retail proposition.”
However Pathirage warned that Chinese tourists, who are buyers of Softlogic branded goods, have declined after the novel Coronavirus spread.
“Odel Flagship store is a prime shopping location for tourists, particularly, the Chinese customers with a penchant and purchasing power for branded and luxury goods,” Pathirage said.
“However, with the outbreak of the Novel Coronavirus, Chinese tourists would decline sharply and this could affect our business in the forthcoming quarter while the ongoing construction of the mall with restricted parking has affected our footfall.”
He said the new administrations tax cuts and falling interest rates will drive growth.
Sri Lanka’s consumer demand and economic output was hit by a collapsed of the currency in 2018, which was worsened by suicide bombs on hotels and churches by an Islamist extremist group in April 2019.
In the December quarter revenues grew 15 percent to 22.2 billion rupees, cost of sales grew 13.8 percent to 13.7 billion rupees, and the firm grew gross profits 14.6 percent to 8.4 billion rupees.
But net finance costs rose 23 percent to 1.8 billion rupees.
Financial services, which include insurance brought 501 million rupees in profits, up from 171 million in the quarter, and healthcare 513 million rupees, up from 443 million a year earlier, interim accounts showed.
Retail and telecoms lost 99 million rupees, down from 122 million a year earlier, leisure and property lost 214 million rupees, down from 248 million rupees. (Colombo/Feb17/2020 – Update II)