By NEIL HARTNELL
Tribune Business Editor
AML Foods is targeting an improvement in inventory shrinkage during its current 2022 financial year after failing to achieve the anticipated reduction during the 12 months to end-April 2021.
The BISX-listed food retail and franchise group, in its 2021 annual report, revealed that shrinkage for that year was equivalent to almost 4 percent of its $174.898m annual sales - placing this at around $6.821m.
Shrinkage refers to product that is lost to internal theft, or goes off, before it reaches consumers, and the Solomon’s, Cost Right and Domino’s Pizza operator revealed that “over-ordering” of perishable goods was partially responsible for the failure to hit reduction targets.
“Shrink performance for the year did not improve as expected and was 3.9 percent of sales,” AML Foods told shareholders. “Several factors impacted our shrink levels including over ordering in our perishables department.
“Management has implemented several tools to better align purchases with forecasted and historical sales data. We have continued our focus on this area, and expect to see an improvement in shrink in the upcoming year.”
Despite failing to meet shrinkage expectations, the group still enjoyed an improvement in gross margins compared to prior years. “Gross profit margin percentage for the 12 months ended April 30, 2021, increased for a third consecutive year to 30.8 percent compared to 30.7 percent for the year ended April 30, 2020, and 30.6 percent for the year ended April 30, 2019,” AML Foods added.
“Within our food distribution division, customer habits continued to trend toward larger basket sizes but lower shop frequency. Compared to 2020, transaction counts decreased by 16 percent while average spend increased by 23 percent. Overall, our food distribution segment recorded sales of $168.1m, an increase of $3.7m or 2.2 percent over prior year. Food distribution sales accounted for 96 percent of total sales.”
However, AML Foods said its Domino’s Pizza division was impacted more heavily than the rest of its business by COVID-19 lockdowns and other restrictions. “Our franchise division sales struggled during the year amidst the various lockdowns and reduced operating hours as imposed by the Government throughout the year,” it added.
“For the majority of the year, our Domino’s locations operated on reduced hours and there were periods of extended closures, particularly during the month of August 2020 when the operations were closed for the entire month. This had a significant impact on our franchise division’s performance, and sales decreased by $1.3m or 15 percent for the year ended April 30, 2021.”
AML Foods added that it also managed to reduce its annual utilities spend by $0.9m for the year to end-April 2021, aided by a 9 percent reduction in energy usage. Looking ahead, and beyond its Exuma Markets purchase and securing a new store site in Freeport, the group said it was looking at another eastern New Providence location and was “exploring opportunities for additional sites”.
“While the Government has provided various support for individuals including stimulus packages, we expect that the short to medium-term outlook will impact customer spend especially within our value brands,” AML Foods said of the COVID-19 fall-out.
“It is more important now than ever that the company looks for ways to provide better value to our customers during this time of downturn within our economy. We continue to believe in driving the best possible value in our product offerings, building supplier relationships and looking for ways to protect our supply chain from any foreign currency risks that may arise.”