Fontana revenues up but profits down for March quarterWednesday, May 27, 2020
BY ABBION ROBINSON
Fontana Limited has achieved revenues of $1.17 billion for its third quarter ended March 31, 2020. This represents a 33 per cent increase over the $885.1 million recorded in the previous corresponding quarter.
However, in its financial statement posted Friday last, company chairman, Kevin Chang indicated that Fontana has been significantly impacted by the ongoing COVID-19 pandemic and the government protocols that have been implemented.
“As an essential service, Fontana has been fortunate to be able to support the economy and our customers by continuing to operate during this difficult period. The combination of restricted hours imposed by ongoing curfews and the drastic decline in economic activity has resulted in a decline in consumer purchasing power,” Chang stated.
He added that the restrictions on opening hours and the corresponding effect on consumer behaviour affected the company's overall business in the second half of March.
Net profit for the three-month period amounted to $21.6 million, a 27 per cent decrease when compared with the $29.7 million recorded in the previous corresponding period.
According to Change, while the COVID-19 fallout is expected to continue to affect business for the remainder of 2020, Fontana is in the advanced stages of developing and implementing a new integrated point of sale and accounting system, which will improve its efficiencies, controls, and the customer experience.
Fontana, a pharmacy and retail chain with five stores in Mandeville, Kingston, Montego Bay, Ocho Rios, and Savanna-La-Mar, opened its sixth and largest at Waterloo Square, Kingston, in October 2019.
Citing the Waterloo store as the influence, Chang stated that operating expenses for the quarter under review increased by 32 per cent, with the store accounting for $79.7 million of the total increase of $84.6 million.
Meanwhile, total assets at the end of the three-month period stood at $3.2 billion, up from $1.8 billion in the comparative prior period, reflecting an increase of 75 per cent. This was due primarily to the increase in fixed assets for the new Waterloo store, as well as the impact of International Financial Reporting Standards (IFRS) 16, where the value and liability associated with right-of-use, leased properties are now recognised on the balance sheet. Finance costs were also impacted by the adoption of IFRS 16 on leases.
Shareholder's equity grew to $1.45 billion, up from $1.16 billion or 25 per cent over prior corresponding period.
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