EFresh ends short-term storage arrangements in anticipation of heightened need for space
Everything Fresh Jamaica has terminated short-term lease arrangements for its cold storage and dry goods warehouse spaces, in anticipation of the need to store more inventory items as business in the tourism sector comes roaring back.
The company, which has been doubling up efforts to lessen its dependence on the hotel industry over the past two years owing to a massive fallout in business from the outbreak of the COVID-19 virus, got revenues to be evenly split among retail business and the hotel industry.
But Chairman Gregory Pullen reckons that the revenue scale will again, in short order, tilt in favour of the hotel industry as business rebounds from summer vacationers and a growing number of bookings heading into the festive season.
“You’re gonna find that skew towards tourism, and that is intentional because as an operation the size of EFresh requires a great deal of hard currency to stay in operation and we also earn US dollars from the tourism industry so we never have to go market to source foreign currency which can be difficult and costly,” Pullen told the Financial Gleaner.
As a precaution, the company has ended short-term lease arrangements at both its Marcus Garvey, Kingston property – from which it operates its head office – as well as the property in Bog walk, St Catherine, where it runs the Meat Experts division. Although the meat plant ceased production during 2021, Efresh repurposed the location to have a large portion of the facility be used for external cold storage and dry goods space.
As a means of replacing income lost to the pandemic, Everything Fresh’s lease contract of the Marcus Garvey Drive property provided for payments to increase each year by 7.5 per cent at the beginning of each year, while the lease contract for the Bog Walk property would see payments increasing by 10 per cent after the first two years.
“We have discontinued all those arrangements … Those were all short-term measures to plug the revenue gaps, but we are moving away from that now. We need all the space, all the cold and dry goods space for ourselves now or else we’ll have to rent and fortunately we’ve never had to look outside for space,” Pullen said.
For the year ended December 2021, rental income of the group grew 200 per cent over the year 2020 to $8.3 million. It contributed to overall revenue growth of $1.6 billion, 54 per cent up on the previous year’s flows of $1.1 billion.
Over the course of 2021, the company ended the year with losses of $27.5 million but managed to begin the 2022 financial year with earnings of $7.2 million over the period January to March.
Pullen is upbeat that the company will continue along the growth trajectory, both from improved sales in Jamaica and its newest market, Bahamas.
Recently, EFresh Limited acquired an additional 20 per cent stake in Everything Fresh Bahamas, bringing its total ownership stake in the company to 80 per cent. The price paid for the additional share purchase was not disclosed.
During its year of operating, EFresh Bahamas has built a client base near 50:50 split between institutional and retail sales to eliminate over-reliance on any one segment. Pullen said the company has also placed significant effort behind building up strong expertise in the retail trade, along with merchandising expertise and inventory management.
Market conditions in the Bahamas are similar to Jamaica, with tourism earnings declining due to the COVID lockdowns. However, many of the hotels and restaurants in Bahamas remained open so the business was not as badly affected by restrictions, the company said.
At the close of the year, EFresh Bahamas emerged as the sole profitable segment. The company intends to continue to seeking out untapped potential in the market.
“We have ventured into all the segments necessary. It’s just about capitalising on that now because there is room for growth,” Pullen said.