The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods yesterday pledged to re-open its still-closed Solomon's Freeport store once the fate of the Grand Lucayan and the island's international airport are positively resolved.

Gavin Watchorn, the BISX-listed food retail group's chief executive, told Tribune Business it "wants to see" progress made on two issues "very critical to Freeport's future" and the wider Grand Bahama economy before re-opening its Queen's Highway site.

Revealing that the store was inundated with six feet of water from Hurricane Dorian's storm surge, despite being built six-and-a-half feet above ground level, Mr Watchorn said AML Foods had not ruled out re-opening Solomon's Freeport at a different location.

The category five storm's impact drove the group into a $1m-plus net loss for both the second quarter and first half of its 2020 financial year, with $1.25m in interim insurance proceeds insufficient to completely offset total hurricane-related losses and expenses of around $3m.

However, Mr Watchorn said AML Foods was "very confident" that its full insurance claim will be settled in January/February 2020 and "more than offset" the $1.486m of "extraordinary" Dorian-connected losses it was forced to book for the quarter that closed at end-October.

While the group's Freeport workforce had shrunk by ten percent to around 250 compared to pre-storm levels, the AML Foods chief said it had managed to avoid any forced terminations. He added that some staff had transferred to Nassau, or were performing Nassau-based work from Grand Bahama, while others had left the island or requested separation packages to move on.

Acknowledging the "important role" the group's three stores play for Freeport's society, Mr Watchorn said he believed too few New Providence residents "truly understand what Grand Bahama and Abaco have gone through" with Dorian and just how hard the recovery will be.

While AML Foods' two other Freeport stores, Solomon's Lucaya and Cost Right, "came through largely unscathed" and are open, Mr Watchorn said its Queen's Highway location was unable to escape the flooding that impacted many other businesses.

"We're committed to re-opening in Freeport, but want to see resolution with what's happening at the airport, the ownership of the airport, and what happens with the hotel [Grand Lucayan]," Mr Watchorn told Tribune Business.

"Our company feels they're very critical to the future of Freeport, and wants to see some resolution of those two matters. We feel both of them are very important to the Grand Bahama economy."

As a major Freeport employer, with around 250-300 staff split between its three stores' pre-Dorian, AML Foods' position will add to the pressure on both the government and Grand Bahama Port Authority (GBPA) to urgently define the city's immediate economic future.

The Minnis administration is hoping to conclude the Grand Lucayan's sale to the Royal Caribbean Cruise Lines/ITM Group joint venture by year-end, the resort's chairman told this newspaper earlier this week, although the minister of tourism and aviation yesterday declined to be pinned down to a completion date.

The resort, which currently has only one of its three hotel properties open, represents Freeport and Grand Bahama's "anchor property" and more than half its potential room inventory. It also provides a customer base for Port Lucaya Marketplace's retail and restaurant tenants, thus making its revival critical to the island's economic fortunes.

As for the Grand Bahama International Airport, many Freeport businesses and residents have questioned whether its joint owners - the GBPA and Hutchison Whampoa - are truly committed to investing the eight-figure multi-million dollar sum required to restore its facilities to international aviation standards post-Dorian.

Inbound and outbound commercial international flights only resumed from Freeport on Monday, almost three-and-a-half months since the storm's passage, following final clearance by US aviation regulators. The fear is that Freeport's tourism and industrial sectors, and wider economic and business model, will be unable to function unless the airport is properly rebuilt.

Amid the ongoing uncertainty over both issues, Mr Watchorn yesterday said AML Foods had yet to determine a timeline for re-opening Solomon's Freeport. "We're not certain yet that we will re-open on Queen's Highway; we may look for another location," he added. "We are committed to re-opening that store, but don't have the time for it yet.

"At this point we have cleared out most of what needed to be taken out of that store. The store itself was significantly damaged. It was flooding; there was very little wind damage. That building was built six-and-a-half feet off the ground and had six feet of water inside it. Everything in there was destroyed.

"Freeport was performing well before the storm. It's an important market for us, and we know we play an important role in that society. Customers in Freeport are loyal. A lot of those who shopped at Queen's Highway are now shopping at Solomon's Lucaya or Cost Right."

Despite the loss of Solomon's Freeport for the final month of AML Foods' second quarter, and subdued economic activity on the island in Dorian's aftermath, the food retail and franchise group's overall sales were slightly ahead of prior year comparisons for both that period and the first half.

And, with selling, general and administrative expenses down on 2018, AML Foods' net operating profit for the second quarter rose more than five-fold to $1.478m. It was also up 62.2 percent for the first half at $1.89m.

However, this was undone by the net $1.468m Dorian-related loss that the BISX-listed company had to book as it awaits the full insurance payout. This pushed AML Foods into a $1.165m second quarter loss, and some $1.049m worth of "red ink" for the first six months.

Mr Watchorn confirmed that the Dorian loss was "net" of $1.25m in interim insurance payments received during the second quarter, which partially offset some $2.72m in storm-connected expenses.

"Our total hurricane exposure was $3m with loss of inventory, equipment and expenses in the immediate aftermath of the hurricane," he said. "We fully expect our claim to be completely settled in January, or maybe some time in February.

"We expect that will more than offset that $1.468m net expense you see there right now. You'll see a large loss in the October quarter, and a net gain in the next two quarters showing the full hurricane claim coming in. We're very confident of receiving it, and our insurance company has worked well with us."

Mr Watchorn said AML Foods other two Freeport stores had escaped any structural damage from Dorian, and only suffered a small inventory loss and minor issues. "For the most part they came through unscathed," he added, revealing that the company had also helped staff whose homes were impacted "get back on their feet".

"I've been in Freeport many, many times since the storm but I don't think too many people in Nassau truly understand what our friends in Abaco and Grand Bahama have gone through and are still going through," the AML Foods chief told Tribune Business.