Jamaican Teas sells supermarket outlet
JAMAICAN TEAS is about to dispose of its loss-making retail holding, the Shoppers Delite outlet based in Westmoreland, the sale of which should be finalised by month end, according to CEO John Mahfood.
Bay City Foods, another supermarket in which Jamaican Teas has a 49 per cent stake, will also likely be sold next year when the lease on the space it occupies expires, Mahfood told Gleaner Business.
“What we are finding is that because we are a relatively small company and some of the businesses are out of town and require management time and supervision, it’s not so easy. We felt that we would cut back on the retail side for more centralise type of activities,” he said.
Jamaican Teas is primarily a beverage company, but its holdings also include grocery assets as well as real estate.
Jamaican Teas bought the Westmoreland-based Shoppers Delite four years ago, but it has continuously weighed on the company.
“We are selling the fixed assets and the inventory,” he said. The grocery outfit operates from rented space. For the 2015 financial year, Jamaican Teas’ retail segment posted losses amounting to $10.7 million, but this was a much better outcome than 2014 when the segment took a $25 million hit. Mahfood now says that since 2016, Shoppers Delite has shown signs of a turnaround. “That particular store was bought in 2012. It lost money for a number of years but it is actually (now) making a small profit,” he said. Another Shoppers Delite holding in Kingston has consistently performed for the company and will be kept amid the reshaping of Jamaican Teas’ core focus, Mahfood said. “We are keeping the one in Kingston because it’s very profitable and it’s close to us,” he said, noting that the proximity made it easier to supervise the business.
Mahfood previously disclosed that inventory theft has been a major burden on the company’s retail operations over the years.
IMPROVED RESULTS
He was mum on the sale price for the Westmoreland store, saying only that the company’s operating results “will see improvement as a result of these actions”.
“The thought behind the sale is not so much the proceeds. We want to focus our attention more towards the tea business and, to some extent, the real estate development and commercial rental,” he added.
Group sales for the third quarter ending June 30, 2016 stood at $363.2 million, or 12 per cent more than the corresponding quarter.
Local sales of Jamaican Teas products grew 24 per cent for the review while export sales declined two per cent.
The growth was attributed to both exports and local sales, the company said in its third-quarter report to shareholders.
“Sales in the fully owned supermarkets have seen respectable increases to date but the 50 per cent owned supermarket in Montego Bay remains a challenge in a competitive environment,” the company said.
Supermarket sales were also up 10 per cent for the quarter, it said. John Mahfood, CEO of Jamaican Teas Limited.