ON the heels of an outstanding 2021 financial performance that saw pre-tax profit rise 210 per cent to 105.5 million, Stationery and Office Supplies Ltd (SOS) is set to deliver a record-breaking year bolstered by a 97 per cent increase in sales revenue from its Montego Bay branch.
Speaking at the recently held annual general meeting (AGM), Managing Director Allan McDaniel declared that the company is leveraging the experience it gained in navigating the difficult years of 2020 and 2021. "We took that knowledge into 2022 and we have been able to improve in every conceivable way. It appears that we have continued to improve as we are on pace after the first nine months of the year to have our best year ever."
SOS's core business is the sale of office supplies, stationery and furniture. In 2018, it diversified into book production, including student notebooks and writing pads, through the acquisition of Book Empire Limited, the maker of the SEEK brand.
For the 2021 financial year, SOS delivered a 16 per cent increase in revenue from $972 million to $1.1 billion. It grew its gross profit by 18 per cent year over year moving from $445 million in 2020 to $551 million. The company also increased inventory by 28 per cent to 296 million, up from $232 million the previous year.
The undisputed leader in Jamaica's stationery and office supplies industry is now recording historically high results for 2022 en route to delivering a bumper year. A visibly delighted McDaniel shared highlights during his presentation, "Revenues are up 63 per cent this year and gross profit is up 60 per cent. SEEK sales from our manufacturing division are up 77 per cent, and our pre-tax profits are up 210 per cent for the year to date."
Company unaudited financial statements show that the period between July to September 2022 produced the highest revenues in a quarter in the company's 57-year history. Revenues for the third quarter totalled $473 million, surpassing the previous high set in the first quarter of 2022 by approximately $46 million, an 11 per cent increase while pre-tax profit climbed to 345 per cent to $87.2 million.
Key drivers include soaring sales from the Montego Bay branch as the economy sprang back to life with the reopening of the tourism sector and the launch of several new call centres. For the quarter, sales through the north coast outlet increased to $60 million from $33 million in 2021.
The launch of the EVOLVE furniture line has also been a runaway success with the first set of products generating revenues of $13.2m in its initial three months. "The EVOLVE line has surpassed all of our expectations. It's beautiful, it's new and it's fresh. We already have additional containers coming in so we expect the year to end at a very high level with EVOLVE," said Kelli Muschett, SOS deputy managing director, also speaking at the AGM.
Chairman Stephen Todd highlighted other contributors to their spectacular performance and future plans to continue igniting growth. "SEEK is a big factor. That has been ramping up very well and I think next year will be fantastic. We are also going to expand the industrial racking business, bring in different palette jacks and possibly forklifts which will also help expand the line."
For the year to date, SEEK sales have exceeded expectations and are 77 per cent higher than the sales for the same time period in 2021. Boosted by new machinery, labour and the ability to generate additional products, third quarter SEEK sales grew by 66 per cent over the same period in 2021. Meanwhile, SOS warehousing equipment sales including racking, mobile ladders and hand trolleys increased by 20 per cent during 2022.
The chairman also praised SOS' ongoing strategy to maintain high inventory levels as a key success factor. "Anyone can walk in and be able to make plans with us to start their business. Our customer service is phenomenal, second to none, and the person coming in is getting everything they want in a one-stop shop. That is one of the main reasons why we continue to do well this year."
Inventory levels have risen by almost 30 per cent in 2022 from $280m to $356m which drives SOS' ability to satisfy customers' needs right away. Metal furniture (filing cabinets, storage cupboards, and pedestals) has posted a 49 per cent increase in sales this year due to this focus on availability.
The managing director noted that the impact of their performance is reflected in the positive trend in the share price. "The stock price for SOS has increased 158 per cent and I'm sure we can all be happy about that. It has been a spectacular year so far and we will continue to make SOS the number one stationery and office supplies company in Jamaica."