KEY POINTS

Fontana expanded to 11 stores after an $854-million acquisition of Monarch Pharmacy, driving revenue to $9.52B.

New retail concepts, including a discount outlet and specialised health & beauty departments have been tested.

Profit growth was tempered by a tripled tax bill and a 20% rise in expenses from new costs and higher staffing.

FOLLOWING the acquisition of four Monarch locations and growing its revenue by 17 per cent to $9.52 billion, Fontana Limited is now plotting the next steps to expand its range of services for its growing customer base.

The pharmacy and retail business published its audited financial statements last Friday as it revelled in the numerous developments in its June 2025 financial year (FY). One such development was the company’s footprint expanding from seven to 11 locations across Jamaica following the acquisition of the Monarch Pharmacy assets. Three locations reopened under the Fontana brand during the company’s fourth quarter (April to June) while the Sovereign Liguanea location reopened on July 8.

“Having additional doors for us in the Kingston marketplace allows us to potentially specialise and expand certain types of departments at certain locations. That kind of differentiation in the Kingston marketplace allows us to do these types of things while expanding on our base of home and beauty,” said Raymond Therrien, Fontana’s chief operating officer (COO), on a call on Monday.

Fontana acquired the Monarch assets in early March for a consideration of $854.47 million, which included $504.47 million in cash and $350 million in promissory notes to Gerk Limited, a company controlled by the Loshusan family. The cash component was funded by a $633.75-million, unsecured, five-year bond.

Although these new locations deepen Fontana’s reach in Kingston, the locations had to be restocked and renovated in some instances to meet Fontana’s standards. The closure of the Sovereign location also resulted in the company reassigning staff to different Fontana locations while the renovations took place. Fontana retained the Monarch staff after the acquisition.

Despite those short-term costs the company is redesigning the concept of the newly acquired locations to differentiate them from their main locations. Fontana is currently testing the idea of having the new Portmore addition act as a last-stop location where it could bundle remaining inventory and sell it at a discounted price. The company is also considering the expansion of certain departments at certain locations to broaden its offerings and make those spaces known for key concepts. The Fontana COO referenced an expanded home and health segment featuring products like wheelchairs, crotches and home supplemental items for individuals.

“We’ve been looking at trying to utilise that particular location and have it as a discount centre. We’re open to trying new things, and it’s an opportunity to see if things can work or how we can look at different ways of merchandising or setting up product offerings at the various locations,” Therrien added on the rebranded Monarch Portmore location.

The former Monarch Loshusan Plaza location is a four-minute walk from Fontana’s main Barbican location, while the Sovereign Centre location is a four-minute drive from Fontana Barbican. The former Monarch Portmore location is within eyeshot of Fontana’s main Portmore location, about 200 metres away.

Apart from expanding its physical footprint, Fontana is expanding the experience component of the various Fontana locations to drive more traffic to the different locations. Fontana recently launched the MyJPS Care Hub at its core Portmore location in March, with Therrien highlighting the Jamaica Public Service Company Limited (JPS) approaching the company to expand this concept at other locations. Fontana has other complimentary offerings at its various locations such as optical services, photography, food services, and technology and business centre services for people seeking to print and engrave products.

The company also launched its Ora by Fontana luxury beauty concept stores at its Fairview and Waterloo branches in April, which included the addition of the Fenty Beauty by Rihanna to its product range. Fontana attributed its 22 per cent rise in Q4 revenue to the expanded beauty segment and three Monarch locations during the period.

“We did the renovation of the Waterloo beauty centre which became Ora. There are renovations happening at our Mandeville branch this coming fall. We’re upgrading the dispensary there; we’re going to be doing some work at the original Barbican location as well. That’s a critical part of making sure that the stores stay fresh and they have the level of look and feel from a customer perspective,” Therrien explained on the upcoming renovations.

Fontana has grown its earnings since listing in January 2019. The company’s revenue stood at $3.70 billion in June 2019, with profit before tax (PBT) of $270.27 million and an asset base of $1.91 billion across five locations. Fontana’s revenue stands at $9.52 billion with a PBT of $695.06 million and an asset base of $6.87 billion across 11 locations.

While all these moves are positioning the company for a bigger growth path, they have come at a relatively heavy cost. The company’s total expenses grew 20 per cent, from $2.36 billion to $2.83 billion, for the 2025 period. Staff costs was the main driver of increased expenses as it moved from $984.18 million to $1.23 billion — a $246.98-million difference or a 25 per cent change. The company also had to contend with higher operational costs and legal fees from the new Monarch locations, and increased marketing costs related to the Fenty and Ora brands. Although the company was able to contain insurance costs, security costs went up 34 per cent to $117.68 million.

Despite these higher costs, Fontana’s operating profit grew 13 per cent to $784.69 million, with the EBITDA (earnings before interest, tax, depreciation and amortisation) rising 11 per cent from $986 million to $1.1 billion. The company opened its Portmore location in November 2023, which meant that the 2025 financial year was the first full period with this location open. Fontana noted that sales at this location improved 91 per cent during the 2025 FY.

Fontana’s finance costs went up 22 per cent to $249.57 million as the company paid more in loan interest, credit card commissions, and bank charges. As a result, PBT went up 10 per cent from $629.83 million to $695.06 million. However, the company’s tax bill nearly tripling to $103.50 million meant that the company’s net profit marginally moved from $589.78 million to $591.56 million. Earnings per share was unchanged at $0.47.

Fontana listed on the Jamaica Stock Exchange Junior Market in January 2019, which entitled it to five years of no income tax. The 2025 FY saw the company pay income tax at half of its statutory rate.

“When it comes to Fontana, we are always open to look at expansion opportunities if the timing and the location is right. Even with the Monarch acquisition, there’s opportunities to continue expanding in Kingston,” Therrien noted on growth opportunities which also consider Ironshore, St James and Drax Hall, St Ann.

Fontana’s asset base expanded by 21 per cent to $6.87 billion with $2.04 billion in inventory and $1.60 billion in cash. The company’s liabilities increased 44 per cent to $4 billion as its debt load grew to $1.50 billion while its trade payables balance grew to $1.39 billion. Shareholders’ equity declined to $2.87 billion as the total dividend of $624.69 million paid during the year was greater than net profit.

Fontana’s stock price closed at $8.85 on Tuesday, which leaves it up nine per cent in 2025 with a market capitalisation of $11.06 billion. Burbank Holdings Limited, the main shareholder of Fontana, sold 16,648,472 ordinary shares during the 2025 FY to reduce their stake to 961,298,275 ordinary shares or 76.94 per cent.

“We’ve taken on debt with this integration of Monarch. Do we potentially start to pay down some of that debt with the cash that we have on hand? That’s probably what we’re looking at to see what is the best-possible use of capital for us in the near term — being aware of the expansion opportunities in the next two to five years — and we’ll be weighing all those things and looking at our shareholder value as we look to the future,” Therrien closed.

THERRIEN…when it comes to Fontana, we are always open to look at expansion opportunities if the timing and the location is right.