SOS hunts new space in MoBayFriday, November 26, 2021
With a solid footing in Kingston, Stationery and Office Supplies Limited (SOS) is hunting for new space in Montego Bay to meet the growing demand on the western side of the island.
SOS has an office in the Fairview Shopping Centre that handles orders of a certain size, but the store is not large enough to house some of the products the company has at its warehouse on Beechwood Avenue in the Corporate Area. The Montego Bay location was closed for four months when the novel coronavirus pandemic began last year. In late 2017, SOS acquired a quarter-acre property at 36 Collins Green Avenue, but it hasn't developed the space.
“In Kingston, we have the Collins Green property if and when we're ready to expand it. We... have been looking for expansion in Montego Bay,” newly appointed Managing Director Allan McDaniel said.
“In regards to the Collins Green property, we have not done anything with it as yet. We have looked at several different opportunities with it. The size of the property is not conducive to put a new warehouse up right now. So we're looking at various options... and it is something that we would imagine by the first quarter of 2022 we will have a finalised plan for it,” McDaniel told attendees of the virtual annual general meeting held on Tuesday.
McDaniel explained that the company will use internal cash flow resources to cover expansion plans rather than going to the debt market, which will cost more amid the increasing policy rates. At the end of September, SOS had $96.7 million in debt and $63.4 million in cash
Following the Government of Jamaica's decision to reopen schools to a limited extent, SOS has seen a boost in sales on items for school, including its Seek-branded products.
“We're very excited that school is reopening. Our Seek manufacturing [division] has taken an upturn and we have had a significant increase in our school-related items just with the announcement. We have had requests and they have been stocking up on their inventory,” SOS Chairman Stephen Todd stated.
Though SOS has been forward-looking to mitigate some of the risks associated with rising shipping costs by increasing inventory costs, it is now being faced with power outages in China, slowing down the receipt of some goods. This has pushed it to order inventory more frequently and in larger quantities to have stock. SOS's cash flow has decreased siginificantly from $110.22 million in the prior period to $368,889. During the period the company spent $47.84 million on inventory and other balance sheet activities.
“With the outages, you have to look at where it is and who's being affected by them. The majority of our suppliers are giving us a timeline of minimum of 60 days for production, where, previously, we were looking at 21 to 35 days. Sixty days is kind of the minimum now and others are taking up to 120 days. It is affecting us and it's something that we're dealing with. Fortunately, with the foresight and a little bit of luck as well, we've been able to increase our inventory levels by 25 per cent along with regular shipments just to make sure that our stock levels are maintained or continually coming even though shipping delays are longer,” McDaniel noted.
To this end, SOS has partnered with furniture manufacturer AIS Inc in the USA to fulfil shorter contracts in Jamaica. Apart from exporting small container orders to St Lucia earlier this year, the company is looking to fulfil the growing demand for furniture on the local market. With the shipping delays getting larger from the East, SOS expects this partnership to improve turnover to between three and six weeks.
“I will say confidently that there has definitely been an uptick in business, which is seen in the 14 per cent increase in revenues for the year. We have seen an uptake and believe that people are getting back to the way it was or trying to do the best they can. We believe that this will continue into 2022,” McDaniel closed.
— David Rose