Income Statement
Our revenue for the quarter was $2.07 billion, representing an increase of 16.2% over the $1.78 billion for the corresponding quarter of the previous year. Operating profit grew by 26.9%, going from $80.8 million to $102.6 million. Despite increased income tax liabilities (see below), net profit for the quarter was $60.5 million, or 1.5% less than that reported for the same period last year.

We saw increased revenues in all our locations, including our newest store in Portmore which has largely maintained their break-even monthly sales. Transaction counts, average spend per customer, and prescription counts continue to show month over month gains as we grow our footprint in St. Catherine.

Cost of sales increased by 9.9% (compared to 16.2% for revenues) resulting in gross profit moving from $603.2 million to $774.5 million, a 28.4% increase over Q1 last year. Our efforts to capitalize on economies of scale within our procurement and inventory management activities, resulted in a higher gross margin of 37.5%, up from 33.9% in the prior year.

Operating expenses grew by 28.6%, ending the quarter at $671.9 million compared to $522.3 million last year. This was partly attributable to the opening of our Portmore store in November 2023, along with increased staff costs across the network. As we continue to focus on staff retention, engagement and satisfaction, costs and benefits contributed to 58% of the operating expenses increase over last year. Provisions were also made for senior staff retiring in 2025, some with over 50 years of service. We continue to make inroads into industrial security and insurance rates, as well as improve on our conservation efforts as we saw increases in our utilities.

Finance costs saw an increase of 25.3%, moving from $52.6 million in Q1 last year to $65.9 million this quarter, this was mainly attributable to foreign exchange losses on the lease liability (IFRS16) as well as the new store. Other income also grew by 7.7% ending the quarter at $35.7 million as we seek to tap into new revenue streams in the Portmore store.

Fontana Pharmacy has now been listed on the Junior Stock Exchange for 5 years as at January 2024. This achievement means that we now have liability to corporate income taxes, which required a provision of $11.9 million for the quarter. Earnings per share remained constant at $0.05 for both comparable quarters.

Balance Sheet
Total assets at the end of the quarter stood at $5.6 billion, up from $5.2 billion in the previous comparative period, reflecting an increase of 6.2%.
Our cash and cash equivalents remain favorable at $1.2 billion, 4% less than the previous comparative period, this is after the August 2024 dividend payment of $312.3 million. Shareholder’s equity grew to $2.7 billion, up from $2.5 billion or 6.1% over the prior corresponding quarter. This puts us in a strong position to pursue further expansion opportunities as they come up.

Outlook
At the end of this quarter, we were far advanced in the development and adaptation of 2 efficiency tools:
PIMS integrated point of sale system for the pharmacy department – accommodating patient profile access across all stores, adding to the efficiencies for central ordering and inventory management A new integrated HR software – improve efficiencies as well as enhance the experience of team members. Faster processing times, better data analytics and a reduction in errors is expected.

We continue to invest in technology that will improve our efficiency and contribute to a better control environment.
These two initiatives are the ones among the many that keep us relevant and differentiated from our competitors. We are cognizant of the ongoing impact of Hurricane Beryl on the Jamaica’s economic landscape. Early indicators such as the softening of demand for non-essential home items, toys and home décor have been noted. We will continue to monitor these indicators and implement the required strategies to manage the potential impact.

At 7 stores strong, the organization is experiencing a tremendous period of growth and development, well positioned as one of the most recognized retail brands in Jamaica and the premier pharmacy chain across the country. Our second quarter is anticipated to be the best yet!

Anne Chang Director CEO Fontana Limited 

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