The Straits Times / The Business Times News on OSIM

OSIM's earnings up 11% on turnaround at US retail unit

LIFESTYLE products maker OSIM International said yesterday that its net profit for the second quarter ended June 30 rose 11 per cent to $13.3 million, from $12 million a year earlier, partly driven by a revival of fortunes at its United States retailer Brookstone. Group revenue in the second quarter surged 36 per cent to $183.3 million from $134.5 million a year earlier.

The healthy performance was due to strong worldwide demand for OSIM's massage chairs and its healthy lifestyle products, as well as the turnaround at Brookstone, a US-based specialty retailer that was acquired by an OSIM-led consortium last October.

Brookstone was partly to blame for a 95 per cent plunge in OSIM's net profit in the first quarter ended March 31. But its revival started in April after OSIM put in place a new chief executive, Mr Lou Mancini, to initiate a new sales-driven culture in its network of 307 stores across the US and Puerto Rico.

During the results briefing yesterday, OSIM founder and chief executive Ron Sim said: 'We are pleased that Brookstone achieved positive same-store growth this quarter, after five consecutive quarters of contraction.'

The improved performance was partly due to a new commission structure for Brookstone's salesmen, he added.

Without revealing the specifics, Mr Sim said Brookstone's sales force now gets to see their financial rewards almost immediately. For example, the salesmen now get their commissions on a weekly basis, compared to the previous practice when they were paid towards the year-end or after Christmas.

The old practice, Mr Sim said, had resulted in Brookstone doing well only in the last quarter of the calendar year - a culture that OSIM sought to change.

OSIM's first-half net profit dipped 31.8 per cent to $13.7 million from $20.1 million, mainly because of its less-than-impressive first-quarter performance.

Earnings per share in the first half fell to 2.54 cents from 4.49 cents in the previous corresponding period. Net asset value per share fell to 29 cents at the end of June, from 36 cents at the end of last year.

Despite this, OSIM has declared an interim dividend of 1.3 cents a share, up from 0.47 cent in the same period last year.

OSIM shares yesterday fell two cents to $1.46. The results were announced after the market closed.