The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods yesterday continued its transition away from the “mega destination store” model with the groundbreaking for its $14 million Solomon’s Yamacraw property, its chairman saying he was “very bullish” on the company’s prospects.

Dionisio D’Aguilar told Tribune Business that the BISX-listed food retail and franchise group felt a “more neighbourhood store” model would “serve us better” in generating future growth.

Emphasising that the group’s two New Providence-based Solomon’s Fresh Market stores, and Solomon’s Lucaya in Freeport, represented the first steps in this strategy when opened in 2011-2012, Mr D’Aguilar said they had been “the engine” for AML Foods’ consistent profitability over the past five years.

As a result, the publicly listed company is moving away from the 80,000-90,000 square foot ‘destination stores’ that characterised its early years, such as Solomon’s SuperCentre and Cost Right, to locations such as the 38,000 square foot Solomon’s Yamacraw.

Mr D’Aguilar emphasised that AML Foods was also focused on owning its own stores as opposed to leasing real estate, believing that the former option enabled it to “control our own destiny”.

Speaking after the groundbreaking ceremony for a store that will create 75 full-time jobs when construction is completed in early November 2017, Mr D’Aguilar confirmed: “The company is moving from larger, mega stores to more neighbourhood stores.

“That model serves us better than the big mega stores. Old Fort Bay is a neighbourhood store, Harbour Bay is a neighbourhood store and Lucaya is a neighbourhood store in Freeport.

“That’s been our trend of late. The ideal size is 35,000-40,000 square feet, not the 80,000-90,000 square feet. Our neighbourhood stores have been the engine of the company; they’re the ones driving the profitability of AML Foods.”

The BISX-listed group acquired the five-acre Solomon’s Yamacraw site in a $3-$3.5 million deal with Luxury Homes (Bahamas), the Arawak Homes affiliate, which has retained ownership of 100 acres adjoining the property.

Mr D’Aguilar suggested that AML Foods’ project will “act as the anchor, the catalyst” for Luxury Homes’ plans to develop the adjacent 100 acres, which are thought to include a shopping centre and gated residential community.

The AML Foods chairman confirmed that the company’s $14 million investment was an ‘all-in’ price, including both the land acquisition and construction costs, plus those that will be involved in outfitting the store and purchasing inventory.

Explaining why the group was increasingly seeking to own is stores, he told Tribune Business: “In an ideal situation, we would lease properties. Somebody builds it, and we’ll lease it.

“But you have no control over your own destiny if you do that. We have begun to shift a lot of our projects to ownership as opposed to leasing, especially our newest ones. We bought [Solomon’s Fresh Market] Old Fort Bay, and we bought this.”

Both Mr D’Aguilar and Gavin Watchorn, AML Foods’ president and chief executive, indicated to Tribune Business that the group intends to seek out further ‘neighbourhood store’ opportunities. It now has eight locations, five of which are in New Providence.

“It’s the next phase for us,” Mr Watchorn said of Solomon’s Yamacraw, “and we’re pretty confident it’s going to be very successful for us.

“Then it’s on to the other areas that we’re not in. We do have a multi-year plan that will allow us to continue to grow in New Providence.”

Mr Watchorn emphasised that, as a public company with more than 1,000 Bahamian investors, AML Foods could not afford to “sit down and just rest”, and had to continue seeking out growth opportunities that would “add value” for its shareholders.

“When you sit still, people pass you by,” he added. “We’re going to continue to push forward. Our Fresh Market stores have certainly changed food retailing. We’ve done things that have not been done before. The Fresh Market concept is new to the island, and the scale we’ve done it.”

Mr D’Aguilar argued that Bahamian consumers were “yearning” for better, more modern food stores, adding that many existing locations were “old and in dire need of an upgrade”.

Solomon’s Yamacraw, when it opens, will be competing ‘head-to-head’ with Rupert Roberts, who currently dominates food retailing in eastern New Providence with his SuperValue store at Winton, and Quality Supermarkets outlet at Prince Charles Drive.

The remaining competition is provided by the Budget food stores and ‘Mom and Pop’ operations, and Mr Watchorn said: “It’s good for the Bahamian consumer to have choice. We’ve never been scared of the competition.

“Competition makes you better, makes you smarter, and more focused on your customers.”

Mr Watchorn added that AML Foods had conducted extensive market research to ensure there was a sufficient consumer population in eastern New Providence to support Solomon’s Yamacraw.

“We believe there’s sufficient population out here now for us to be successful with the growth plan in this area,” he told Tribune Business.

“We think this will be a very similar situation to Old Fort Bay, where there was sufficient population to warrant our investment, and we were in position to capitalise on the area’s growth.”

Solomon’s Yamacraw, which is located opposite St Andrew’s School, is in close proximity to high-end gated communities such as Palm Cay, Port New Providence and Treasure Cove, plus middle class areas such as Winton, Twynam Heights and Nassau East.

Mr D’Aguilar also emphasised how AML Foods had completed a turnaround “in the most difficult of times”, shedding an unprofitable past to deliver consistent earnings for shareholders.

He added that this had been achieved “despite the dismal economy and negative GDP growth that the Bahamas has experienced for the past two years”, pointing to the 72 per cent sales growth - from $90 million to $155 million per annum - since 2010.

Mr D’Aguilar also noted the 250 per cent appreciation in the company’s share price, from $1.17 to $4.05, over the same time period.