City Market regains 82%of 2010 market share
City Market food stores have regained around 82 percent of their 2010 sales level, despite having essentially no inventory at the November 12 date when Bahamas Supermarkets Limited(BSL)took control of the retailer.
BSL’s Chief Financial Officer Philip Kemp, speaking withGuardian Businessin an exclusive interview Friday, said that the company’s sales increase was”right on target”and the added market share bode well for the company’s comeback, though careful attention still had to be paid to costs as well.
“In six weeks, from zero inventory in the stores, we are capturing 82 percent of the sales we had in, where we made$100 million in sales,”Kemp said.”That’s encouraging, to hit those kinds of numbers in six weeks.”
Comparing sales for Thursday, February 3, 2011 to the comparable Thursday last year, Kemp said that sales were at$171,000 this year compared to$210,000 last year, adjusted to reflect the loss of the Oakes Field and Village Road stores. He added that the South Beach store was actually ahead of its last year numbers in general, and the Seagrapes store was also now outperforming its 2010 levels and feeling’no material impact’from the new Robin Hood store which opened on Prince Charles Drive on January 8.
“With South Beach and Seagrapes we are in the 90s, with the other stores we are still in the 80s, in terms of recapturing what we had compared to 2010,”Kemp said.
In fiscal 2010 BSL reported$99.1 million in net sales, with a net loss of$7.4 million. The previous fiscal year, 2009 posted net sales of$118.6 million and a net loss of$6 million. Kemp said that although the company was pleased with where revenue was headed, costs were also receiving particular attention.
“Right now the rate of the cost increase is outstripping the rate of the sales increase, but only because we had to put the infrastructure in place to realize the sales growth,”Kemp said.
Supermarkets typically bring profits of around two percent, with three percent being”very good”, so in the industry the”devil is in the details,”according to Kemp.
Two devilish details the retailer must tackle are shrinkage and spoilage. Shrinkage represents the difference between the inventory that a company actually has compared to the inventory it should have according to its records, and may be caused by theft and damage, for example.
According to Kemp, in fiscal 2010 the company lost about$7 million to inventory shrinkage, which at$99.1 million in sales meant a seven percent shrinkage rate. Considering that the company lost$7.4 million that fiscal year, the impact on net profits is obvious. The industry standard for shrinkage, according to Kemp, was 1.5 percent.
“In the next 12 months we intend to bring shrinkage under one percent,”the CFO said. He added that the company was addressing inventory handling methods and making investments it thought would’plug the holes’that so much inventory was falling through. On the spoilage front, he said that strategies mostly involving increased diligence from management were being employed to bring spoilage down to more acceptable industry levels.
Kemp warned that fiscal 2011 would not be”pretty”, and that June 2011 would show a considerably different picture from June 2010, due largely to the low inventory levels between June and December 2010.
“It won’t be as bad as it would have been, but we are doing our best to close this fiscal year on the best footing possible so that fiscal year 2012 we’ll be back to where City Market was used to being.”