FOLLOWING the correction of enterprise resource planning (ERP) system deficiencies that weakened its financial performance last year, Derrimon Trading Company Limited (DTL) has said its recovery is gaining momentum as its first-quarter gross profit more than doubled and group losses narrowed sharply.

For the three months ended March 31, 2026 the group reported consolidated revenue of $2.96 billion, while gross profit surged 120.9 per cent to $944.2 million from $427.4 million a year earlier. Net loss narrowed 73 per cent to $169.3 million, down from the restated amount of $628.1 million in the corresponding quarter of 2025.

At the company level DTL, however, returned to profitability, posting a net profit of $77.1 million when compared with a loss of $611.4 million a year earlier.

The turnaround follows an extensive overhaul of the company’s retail ERP platform, after configuration errors involving unit costs and units of measurement understated margins across its Sampars and Select Grocers supermarket chains throughout 2025. The anomaly suppressed reported margins throughout the year and was the principal contributor to the group’s full-year 2025 loss and the subsequent restatement of its 2025 unaudited financial statements.

“The deficiencies discovered in the group’s ERP system that adversely impacted the 2025 results have been significantly remedied. Consequently, this first-quarter report reflects significant margin recovery and reliable inventory balances,” the directors said in a recent report to shareholders.

Group CEO Ian Kelly described the recovery in retail margins as a return to normal operations, after what he called an extraordinary disruption to one of the company’s historically strongest business segments.

“The return to normalcy, coupled with other strategic initiatives across the group, augurs well for the business going forward,” he said.

The ERP challenges date back to 2018 when DTL began seeking a more sophisticated technology platform to support its expanding retail and distribution operations. Implementation was delayed by the COVID-19 pandemic before a pilot was launched at its May Pen Select Grocers store in late 2022. After a cybersecurity incident compromised its legacy systems in 2023 the company accelerated migration to the new platform, rolling it out across all locations in January 2024. Configuration and data issues, however, persisted until a comprehensive inventory revaluation completed in December 2025 uncovered the underlying deficiencies.

KELLY…the return to normalcy, coupled with other strategic initiatives across the group, augurs well for the business going forward.

The company indicated that correcting the issues took approximately 10 months and involved recalculating historical transactions, and changing the company’s inventory costing methodology from average cost to the first-in, first-out (FIFO) method.

The system failures ultimately forced Derrimon to restate its financial statements covering 2023 to 2025 after writing off $3.77 billion in inventory. The group reported a net loss of $2.58 billion for 2025, largely driven by inventory discrepancies that reduced its gross profit margin to just 3.24 per cent.

“The impact of this on our business, our shareholders, and our team has not been lost on us, and we are disappointed that it happened,” Kelly said. “Once we understood the materiality of what had occurred, we undertook a deliberate and thorough response…identifying the root cause, undertaking independent audits, restating our results, and reinforcing the systems and governance required to restore full confidence in our reporting.”

Alongside the technical fixes, Derrimon strengthened leadership and oversight by appointing new divisional heads for the wholesale, supermarket and distribution segments. The finance department was also restructured with the support of the audit committee.

“Our shareholders and stakeholders deserve a complete and transparent account of what took place, and that is what we have set out to provide. The board is confident that the corrective measures now in place will strengthen the company’s foundation for the years ahead, and we are committed to keeping our stakeholders fully informed on our progress,” Chairman Derrick Cotterell noted.

As DTL seeks to sustain the recovery, Kelly said significant focus will be placed on translating its financial foundation into sustained operating performance, while reducing debt through improved cash generation and selective asset monetisation.

Kelly described the first-quarter result as an early but meaningful indicator of the group’s improving trajectory, while cautioning that consumer spending remains weak and operating conditions difficult.

“Despite tighter market conditions the group is focused on product innovation and building its carrying inventory of products aligned to current consumer demand, with the objective of maximising sales performance through the remainder of 2026,” he said.