The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Excluding one-off Dorian gains, AML Foods generated a 3.8 percent net profit increase for its 2022 third quarter despite grappling with inflation and supply chain issues that produced “high levels of out-of-stock” products.

Gavin Watchorn, the BISX-listed food retail and franchise group’s chief executive, disclosed that the group’s inventory levels had reduced by $600,000 year-over-year despite the acquisition of the former Exuma Markets store.

The results for the three months to end-January 2022 showed that, excluding the prior year’s $2.35m Dorian insurance recovery, AML Foods’ net profits had risen slightly to $1.521m compared to $1.475m in the year-before period.

“Sales for the period were $46.9m, an increase of $2.2m or 4.9 percent compared to the same period in the previous year, and $3.9m or 9.2 percent to two years prior. Net profit for the quarter was $1.5m compared to $3.8m for the same period last year,” Mr Watchorn said in his message to shareholders.

“During the quarter, increases in supplier costs continued to have an impact on gross margin. As a percentage of sales, expenses were flat to prior year but were up $625,000 compared to the same period last year. The addition of our Exuma store contributed approximately $350,000 to the overall increase. With continued focus, shrink expenses have now begun to show signs of improving.”

Confirming that the company has not been immune from the global supply chain woes, Mr Watchorn added: “Compared to the same period last year, inventory levels are down $0.6m despite the addition of our Exuma location. Due to the global supply chain challenge, we are experiencing high levels of out of stocks from vendors. However, our entire merchandising team is working to mitigate the impact of this, as well as the effects of inflation as best as we can....

“As we look to the future, we are leveraging the strength of our core assets and differentiating attributes to capitalise on the structural changes coming out of the pandemic, turning them into long-term competitive advantages that drive sustainable growth and profitability.”

Elsewhere, Mr Watchorn said that AML Foods’ new Exuma location “continues to exceed our budgets, and we expect to open Solomon’s Downtown Freeport in the summer of 2022”. AML Foods previously said it was targeting $12m in annual sales from its new Solomon’s Freeport location despite it being two-thirds the size of its former Queen’s Highway site.

Mr Watchorn last year told Tribune Business it aims to do more with less space as it unveiled the latest phase in a neighbourhood food store roll-out that aims to drive total annual sales to $250m by 2030. He voiced optimism that Solomon’s Freeport, which will re-open at the former Winn-Dixie (City Markets) site following a $3.5m investment, will “do all if not more of the sales” generated previously at Queen’s Highway despite being 10,000 square feet smaller.

The AML chief, though, explained that the group’s neighbourhood outlet strategy was based on reducing store footprint and associated real estate costs by cutting “back-of-house” areas. It will instead “maximise” space by serving these stores from a central warehouse location, which in Freeport’s case has been achieved by converting a portion of the Cost Right location for product/inventory storage.

AML Foods has secured a long-term 30-year lease on the former Winn-Dixie location at York Street, but Mr Watchorn confirmed that Solomon’s Freeport will only use 20,000 square feet or two-thirds of the total 30,000 square feet available due to the Cost Right-based warehouse.