We are at the half way mark of fiscal 17-18 and the picture remains quite the same as at the end of Q1. Our turnover at the end of Q2 is down 11% and is expected to follow that trend at best. In addition to the economic environment posing the obvious challenges, we continue to struggle with the acquisition of foreign currency. Although the Minister mentioned that the GOVTT will allow supply and demand to influence the exchange rate, we believe that it will still be managed to some extent, such that any devaluation will be slow and spread out over the next two to three years. In other words the demand for foreign currency will not change dramatically at this point and we expect the difficulty in sourcing will continue into the future.
The other main difficulty we face as a business is the increase of potential bad debts which is typical in this type of environment. We expect that all staff will be very mindful of this threat when extending credit especially to new customers who do not have a proven track record of success.
There was some good news recently however in that the Minister did not increase import duty on beverage alcohol. It appears that the technocrats have finally come to the conclusion that pushing the taxes higher at this time will result in lower overall tax receipts to the Country’s coffers. I hope this realization impacts their thinking for some time as the higher prices due to the last tax increases has certainly slowed our volumes quite considerably, especially in whisky.
We continue to monitor our expenses carefully and spend where necessary. We have made the decision to do some building upgrades such as paving and painting, which have been long overdue and were postponed due to the uncertainty we faced. We are also planning some renovations to make better use of the office space as well as accommodate the needs of various Departments and Divisions. You should start seeing these changes in the coming months. We ask for your cooperation and understanding during this phase but rest assured that the end goal is a better work environment for us all.
In terms of the Divisions the results are mixed. The Food & Grocery Division’s turnover is down approximately 7% on last year, and although their profit to date is flat, the Division is trending downward. Stephen and his team continue to search for innovative ways to return to a growth position.
The Food Service Division remains flat in both sales and profits for the first half. This business continues to be challenging as the restaurant sector has slowed due to the economic environment. Hayden is working on a few new products that we anticipate will boost our profitability in the coming months.
The Premium Beverages Division is experiencing a slowdown in sales but they are managing their margins quite well versus the same period last year. Their profit figures are down but this is mainly due to provision for bad debts. The Naughty Grape duo turned a profit in September and we hope that things will continue to improve as time goes by and the Maraval branch develops its clientele. We are ready to open the Arima location but we are experiencing delays with the acquisition of the license. The Chaguanas store is also coming along well now and we anticipate that both new units will be operational for the Christmas Season.
SkyWay continues to impress and posted a topline growth of 20% over the same period last year. We have submitted designs for the second SkyWay location upstairs and also our proposal for the product mix. We are having challenges securing approvals for the exact product mix we desire but expect that we will proceed with the build out soon and should be operational in Q4. The Piarco Airport continues to be a challenging environment within which to operate as the AATT continue to allow other operators to enter the space and sell the same product categories as Brydens which of course impacts our sales and profitability. Kudos to Tinneal and team SkyWay!!
The Hardware and Housewares Division is seeing a continued slowdown in sales and are now behind by 16% compared to the same period last year. Andrew and his team continue to manage their expenses well but the reduced turnover has been too much to avoid quite considerable reduction to their profits. The Division recently executed their Christmas Showcase which I have to say was exceptional and we hope to see strong sales in Q3 as a result. We anticipate they will continue to face challenges as they operate in a matrix distribution arena which limits their potential.
I want to recognize the support department staff in anticipation of the tremendous work they will do during the busy October to December period. This is the most important quarter for our business, and the large increase in volumes which we process during this Season puts a strain on them all. On behalf of all the Sales Division staff I will take this opportunity to express heartfelt gratitude to you all!
In closing I ask that all staff give of their best, such that we can maximize our sales and profitability at this important time of year. Keep living by the Company’s values and fostering your passion for growth!
