The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods yesterday confirmed the second outlet for its Carl’s Jnr burger franchise will open on Carmichael Road during the 2016 fourth quarter, as it continued to bridge “the huge confidence gap” among consumers.

Gavin Watchorn, the BISX-listed food retail and franchise group’s chief executive, told Tribune Business that construction on the outlet, which will be located near the Royal Bank of Canada (RBC) branch and Faith Avenue junction, had already begun.

“Construction has commenced on it, and we’re looking forward to opening it,” Mr Watchorn said. “As for timing, we will get it open in the fourth quarter this year,”

He declined to provide details on the number of jobs created, and value of the investment involved, but the Carmichael Road outlet will be the first expansion since Carl’s Jnr launched in the Bahamas with its first location opposite the Mall at Marathon.

Elsewhere, AML Foods continues to shrug off the soft economic and consumer environment, with group sales for the three months to end-April 2016 up by 12.2 per cent year-over-year at $39.052 million.

The $4.2 million jump from $34.81 million the year before was driven almost entirely by increased customer volumes and transaction counts, rather than average spend.

“We’re driving our sales with extra transactions, getting more people into the stores, and that’s driving extra volumes for us,” Mr Watchorn told Tribune Business.

“Our sales are up around 12 per cent, so that’s pretty much equivalent to the increase in customer transactions. We’re just very focused on delivering value to our customers, and they’re responding to that with extra transactions coming through our doors.”

Mr Watchorn added that the increased sales trend had continued through the current quarter set to close at end-July, and was spread across all the group’s formats.

“All of our brands are doing well at the moment,” he said. “They’re all recording sales increases, and we’re pleased with the performance of all of them.”

AML Foods’ retail formats include Solomon’s SuperCentre, Cost Right and Solomon’s Fresh Market, while Carl’s Jnr is complemented in the franchise segment by Domino’s Pizza.

Despite an 8.4 per cent rise in selling, general and administrative expenses to $10.709 million for the three months to end-April 2016, the sales growth was enough to deliver a 16.2 per cent year-over-year profit increase to $1.707 million, up from $1.469 million.

The group’s results indicate it has largely been able to shrug off a tepid economic environment, marked by low consumer and private sector confidence.

“The main pressure on business is consumer confidence and consumer spending power,” Mr Watchorn told Tribune Business.

“It’s very real out there that people don’t have the spending power they had before, whether that’s because of stagnant wages, loss of a job or less hours of work. There’s real pressure on consumers right now.

“It’s not just affecting retail. It’s every business in the Bahamas. I imagine there are a lot of businesses in the Bahamas feeling the effects of that. There’s just a huge gap in confidence in the country right now.”

AML Foods has just closed a 15-month financial year, as it switches its year-end from January to April, making year-over-year comparisons difficult. However, for the five quarters to end-April 2016, net income was up by more than $1 million at $6.9 million, compared to $5.86 million for the prior period.

Mr Watchorn expressed confidence that the BISX-listed group would be able to match the previous year with its performance in 2016-2017.

“We expect our sales, in terms of dollars, to remain pretty consistent,” he told Tribune Business, “and expect to maintain the profits recorded last year.”

While AML Foods still wanted to undertake more energy efficiency and savings initiatives, Mr Watchorn said these had been deferred due to lower oil and electricity costs, which mean “the return on investment isn’t there right now”.

“That’s not to say we’re not going to do them,” he added. “There are a few things we want to do, but the return is not there at the moment to justify doing them at the expenses of something else.”

Amid speculation that the Symonette family is seeking a purchaser for its 50 per cent equity stake in the Town Centre Mall, Mr Watchorn said that Cost Right’s lease at that location would not be impacted.

“We have a lease here for another couple of years until 2020, and fully expect the lease to be honoured,” he added.