Importer
and distributor Everything Fresh Limited (Efresh) recently secured US$2.31 million ($361.4 million) in capital, most of which it has used to settle expensive short-term debt and to stock up on inventory amid rising demand for its products.

The debt raise, which was arranged by GK Capital Management and will span a two-year period, comes as the company recovers from a fallout in sales to the hotel sector following the US State Department’s issuance of level- three travel advisories on Jamaica.

Efresh is also in preparation mode for the usually busy Christmas season.

On Wednesday, CEO Gregory Pullen told the
Jamaica Observer that $110 million was set aside to settle short-term debt it had been carrying and the remainder was spent on stock purchases.

“It was used to retire some debt and to fund additional stock purchases which are necessary to support increasing sales in Jamaica and The Bahamas,” Pullen said. “Sixty per cent of the demand is coming from the hotel sector and 40 per cent from non-hotel segment,” he added.

Sales to the hotel sector slowed for the food distributor over the first six months of the year as US consumers reined in spending on travel and leisure to Jamaica following the issuance of two travel advisories by the US State Department.

Efresh’s quarterly earnings statement, which was released earlier this week, offered the latest evidence of dampened interest in travel to Jamaica among American households amid warnings from US State Department on travel to Jamaica due to what it said were concerns around crime and poor medical services offered in the country.

The level three advisory was issued on January 23. It was followed by another level three advisory on July 24.

Overall, hotel sales for Efresh — a premier importer and distributor of fresh produce, dairy, pantry staples, and baked goods — were down 15 per cent for the first six months of the year. The brunt of the impact on its business appeared to be in the quarter January to March 2024, when the company reported a 20 per cent decline in hotel sales.

Nevertheless, Efresh reported an uptick in revenues for both the second quarter and half-year of 2024, as it pushed more business to the non-hotel sector.

“The group increased its gross profit for the period despite only a 3.2 per cent increase in sales. This was due to increases in margins in The Bahamas, and the 26 per cent increase in non-hotel sales in Jamaica,” Pullen said regarding the company Q2 results.

The company has been intentional in its efforts to do more business outside of the hotel industry following the advent of the COVID-19 pandemic which decimated businesses, particularly those in the tourism sector. Moreover, EFresh said it earns a higher margin in non-hotel sales relative to hotel sales.

Up to last year, more than 50 per cent of Efresh’s business in Jamaica came from the hotel sector.

The uptick in revenues, however, did not translate to higher earnings for the group which consists of Everything Fresh Limited and its subsidiary company in The Bahamas. Earnings were down 36 per cent at the close of the second quarter when compared to the similar period of 2023 owing to increased expenditure and rising staff costs.

“The increased expenditure was in areas which bolstered the capacity of the group to facilitate the future growth in revenue. These areas include a rise in employee costs as additional staff were recruited in 2024 for warehousing, purchasing, merchandising and transportation, as well as some major one-off truck repairs,” Pullen said.

Last year, Efresh shifted a sizeable portion of its inventory from its headquarters in Kingston to Bog Walk, St Catherine, in a restructuring exercise aimed at driving down costs. The company said it began operating its Bog Walk distribution warehouse at the end of the first quarter of 2023, but added that the costs for that location has risen significantly as it was in full operation throughout the first half of 2024 compared to being underutilised for most of the first quarter of 2023.

“The cost of operating our fleet of trucks and vans had also risen significantly in the first half of 2024 compared to the same period in 2023. Electricity and insurance costs also rose significantly in 2024,” Pullen said.