The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods yesterday said an 8-9 per cent same-store sales increase helped to grow its second quarter profits by 148.4 per cent before pre-opening costs, as it braces for an anticipated “banner year” in 2013.

Unveiling its results for the three months to end-July 2012, the BISX-listed food retail and franchise group’s chief executive said it was “quietly confident” about the future earnings that will flow from three new store openings over 12 months.

Gavin Watchorn, who is also the company’s president, told Tribune Business that even with $158,000 in pre-opening costs for its new Lucaya store factored into the equation, AML Foods still saw an 83.6 per cent net income increase to $448,000, as opposed to $244,000 the year before.

Much of the net income growth came from an $8.3 million, or 36.9 per cent, year-over-year increase in its total sales to $30.7 million, but AML Foods did not have to rely totally on its Solomon’s Fresh Market store at Old Fort Bay Town Centre for the rise.

That store was not open during the 2011 comparative period, hence the large top-line rise, but Mr Watchorn said the BISX-listed group also enjoyed sales growth in like-for-like sales at its existing Solomon’s SuperCentre and Cost Right formats.

“We had quite strong same store sales,” he told Tribune Business. “I’m going to say they were up 8-9 per cent for stores across the formats. We’re pleased that sales are not only increasing with new stores, but we’re increasing business at existing locations.”

Elsewhere, Mr Watchorn said AML Foods was “still on track for early December” when it came to opening its second Solomon’s Fresh Market store at the former City Markets location in the Harbour Bay Shopping Centre.

The store was “taking shape”, with refrigeration and other equipment being installed at Harbour Bay, and the AML chief executive revealed that about 30 staff for the outlet - around one-third of the planned 90-strong workforce - had already been hired.

Those hires were “in various stages of training” around the AML Foods group, and Mr Watchorn told Tribune Business: “The response we’re getting from consumers in the east is pretty astounding: ‘We just can’t wait for you to come’.

“The fact there is a much larger density of population out east compared to the west makes us pretty confident we will do well with it. We’re very excited.”

For the second quarter of AML Foods’ current financial year, which ends on January 31, 2013, the company saw net margins hold steady with prior year levels at 29.45 per cent.

General and administrative expenses, meanwhile, as a percentage of sales fell from 28.39 per cent to 27.18 per cent year-over-year.

The decline was aided by the synergies and economies of scale being generated by AML Foods’ ongoing expansion, which is enabling the company to decrease unit costs because they are being spread over a much greater sales base.

Meanwhile, Mr Watchorn said the $158,000 in pre-opening costs related to salaries and other expenses associated with its Lucaya store, which could not be capitalised.

That store, AML’s third in Freeport, it set for its official opening today, having “opened up very well for us in July”.

“It is somewhat of a seasonal store, based in town,” Mr Watchorn added. “We opened up as the season was just finishing. It’s doing well, and its meeting expectations right now.

“We feel this is a bit of a slow period, and once winter residents come back to the island and the tourist season kicks in, we feel we’re positioned to do quite well with that store. We’re a little ahead of expectations, top and bottom line. We’re ahead of budget.”

Mr Watchorn also told Tribune Business that plans for the first store in AML Foods’ new franchise, Carl’s Jr, were set to be submitted to the Ministry of Works for approval within the next 10-14 days.

“You’ll soon start seeing blocks on the ground,” he added of Carl’s Jr. “We’ve started to hire a couple of people for it, and sent them away for intensive training for a couple of months.”

The AML Foods chief executive also conceded to Tribune Business that the company had never planned to undertake an ambitious expansion of three new store openings - Solomon’s Lucaya and the two Fresh Markets - within a year.

Yet, with the demise of City Markets, key store locations had become available, and “a once in a lifetime” opportunity for AML Foods to grow and gain scale had arisen.

“We wouldn’t have planned to open three new stores in 12 months, but the opportunity arose and we looked at this as a once in a lifetime opportunity to grow our company, establish ourselves in the marketplace, and we took it,” Mr Watchorn said.

“Profit and sales increases over last year are great, but we remain focused on the job in hand and strategy. We think next year will be a banner year for us, once we get these projects set down, bedded in and together.”

Reiterating that AML Foods expected to generate $150 million in top-line sales for 2013, he added: “There’s a lot of transition going on, but we’re quietly confident with the results we’re going to have for next year with both Fresh Markets, east and west, and a full year of Port Lucaya.”