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Tuesday, June 16, 2009

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Abaco Market 1Q sales grow $2m By VERNON CLEMENT JONES ~ Guardian Business Editor ~ vernon@nasguard.com: Abaco Markets is boasting of a $2.2m increase in sales for the company's first quarter compared to the year ago period — that gain coming despite the loss of one of its food stores and the challenge the ongoing recession poses to inflation wary consumers. "We are very pleased with our group's continued profitability — $1.043m for the quarter compared to that of $82k last year — despite the increasingly challenging economic climate," President Gavin Watchorn says in a statement accompanying last Friday's release of results for the quarter ending April 30, 2009. "Our sales increase is being driven by the increase in customer counts — up 15 percent over the same period last year." It's a winning hand deal the company despite the closure of its Abaco Cost Right location and continuing flat sales at its Domino pizza division. The latter also lost a location since the previous year period. As Watchorn points out, however, net profit in excess of $1m was driven by a sales increase of $2.2m over the previous year period and, more specifically, a 12 percent increase in sales for its food distribution business. Gross margins improved by one percent and gross margin dollars increased by14 percent — what the company chalks up to improved buying and logistics. Also helping lift the AML bottom line were expenses that remained flat with the prior period. Watchorn attributes that to a reduction in utilities use, among "other stringent cost controls". It's worth noting that the BISX-lised company also saw its bank debt further dropped by $500k for the period, most of that, $400k, coming from the sell-off of equipment and inventory at the Abaco store. The premises have also been leased, with the renter holding an option to buy. "Our strategic focus on realizing the synergies among our locations is translating into better buying and improved logistics which is, in turn, allowing us to pass savings on to our customers while increasing margins for the Group," asserts Watchorn. His interest expenses were reduced by 25 percent against the year-ago period as a result of a cut to AML's overdraft facility. The rosy picture for one of the country's largest grocers is in stark contrast to the outlook for Bahamian consumers now grappling with food and beverage inflation running above seven percent. That hasn't changed even as pricing in the U.S. and other world markets begins to dip, with expectations inflationary trends will give way to price stability. Still, Watchorn acknowledges that the current economic conditions place an even greater pressure on pricing in this jurisdiction marked by growing unemployment. "This has challenged us to be more aggressive in harnessing our buying power and delivering special values to our customers," he said. "We are focused on preserving profitability while enhancing our sales and marketing efforts with our price cuts and club values, which combined affect thousands of products on a weekly basis, realizing strong gains over the past eight quarters." Abaco Markets also secured a three-year lease, with an option to purchase, on 2.65 acres adjoining Solomon's Freeport. The land will be used to increase customer parking and the company expects to exercise the purchase option for a sum of about $450k in 2010. Monday, June 15,2009