Al Edwards, Staff reporter
Harris and Singh
POPULAR furniture and electrical store Courts (Jamaica) has cut the rate of interest it charges on its higher purchase plans in a bid to encourage sales in the run up to the crucial Christmas period.
The tough economic times appears to have caught up with the furniture and electrical retailer as customers appear less willing to make long term pledges on credit.
Courts finance director Dennis Harris was confident this week that the renewed push would have the desired affect, despite a sluggish third quarter. He outlined a refreshed credit strategy that it is hoped will bring credit-seeking customers back into the stores in droves.
He said: "Our cash sales are up at the expense of our credit sales, mainly because there is a reduction in demand for credit. We have discovered that many of our customers are now reluctant to make long term commitments."
Mr. Harris said: "We have attempted to make our credit terms even more attractive. We have extended payment terms from 30 to 34 months and we have reduced interest rates from 20 to 18 per cent."
Mr. Harris noted: "October to December tends to be our strongest quarter and during this period we will be looking to see an increase not just in cash sales but in credit sales too."
Courts unaudited results for the three months ended July 2, 2000 saw sales fall by $100 million to $960 million, when compared to the corresponding period a year ago. Operating profit came in at $167 million, a significant fall on 1999's $282 million.
Lower credit sales has seriously impacted on the company's operations and this is largely attributable to the prevailing economic climate and many customers' unwillingness to be caught in a recurring debt trap.
Courts managing director Hayden Singh conceded that lower credit sales and higher discounts adversely affected turnover.
Courts has developed a popular higher purchase credit facilities in its Ezee Payment Plan, which captured the public's imagination and was hailed as a flagship for consumer credit facilities in Jamaica.
Not so long ago Courts even considered going into micro financing largely as a result of the success of its stores' popular credit plans but stuck to its core business of retailing.
Last year Courts wrote off 7 per of its bad debt portfolio and that may well increase this year.
Mr. Harris further pointed out many of the local banks were no longer making consumer loans but Courts continued to buck the trend with credit facilities being a major fillip to its retailing operations.
Despite this recent setback to its credit sales, Courts still offers a highly competitive credit package. When the Financial Gleaner rang stores this week troubled rival Homelectrix offered credit terms of 24 months at 24 per cent per annum, while Singer offers terms for 4 months for cash with hire purchase terms of 24 months at 30 per cent per annum.
In the third quarter the electrical and furniture retailer made a concerted effort to off-load old lines and re-possessed stock and its senior management believes this may account for the upsurge in cash sales but insists this remains a temporary sales aberration.
