Transformational year for Fontana


Transformational year for Fontana

Observer writer

Sunday, January 12, 2020

Print this page Email A Friend!

Fontana Limited held its annual general meeting at the Grand-A-View Restaurant and Event Place on Thursday, January 9, 2020. The event followed on the heels of the 2018-2019 fiscal year which the chairman, Kevin O'Brien Chang, described as a “truly transformational one” in which the company was listed on the Jamaica Stock Exchange (JSE) Junior Market through an oversubscribed initial public offering (IPO).

Since the IPO, shares have increased in price by over 400 per cent. Fontana's revenue has increased from $3.4 billion to $3.7 billion, representing growth of 8.3 per cent while net profits experienced an increase of 24 per cent moving from $247,306,359 to $306,626,171, or from $0.22 to $0.26 per share.

Chang has attributed factors such as being able to meet the challenge of an “underserved” retail market through a wide and high-quality product range, the identification of “new markets and customer segments” as well as a focus on both customers and employees through staff training as the catalyst that has driven the company's success to where it is today.

This success has manifested an increasing number of customers with a growing average customer spend.

Reflecting on the future of Fontana's five stores in Mandeville, Montego Bay, Kingston, Savanna-la-Mar and Ocho Rios, the chairman expressed in his message in the annual report that “we anticipate similar organic growth at these stores in the coming fiscal year.”

“We are confident in the expected growth from our new Waterloo Square branch,” he expressed. “We have increased our focus on ensuring that our customer experience is peerless, offering a distinctive range of products that provide exceptional value at competitive prices.

“This 35,000 sq ft store includes an escalator and elevator and, 140+ parking spaces, making it Jamaica's largest, most convenient pharmacy. We expect this to be our flagship store in terms of both customer impact and revenue.”

The $222.58 million net of transaction costs, which was raised from the oversubscribed initial IPO in December 2018, was used to “further invest in the new store and pay off high cost debts”.

The fiscal year 2018-2019 saw an increase in cost of goods sold as a percentage of sales from 62 per cent the year before to 64 per cent, this year. This was due to beauty products with lower margins being a significant component of the growth in sales.

Investment in staff welfare, an infrastructure build-out in anticipation of growth, bolstering of the management team, lease expenses and higher staff costs contributed to an eight per cent increase over the previous year of “administrative, selling and promotion and other expenses” to $1.079 billion.

The Management Discussion and Analysis section of the annual report also revealed that the company's listing on the JSE Junior Market entitles it to a “full remission of income tax for the first 5 years and 50 per cent remission for the following 5 years, according to the rules and regulations of the Jamaica Stock Exchange Junior Market. The 5-year tax free status goes from January 2019 to December 2023.”

Expanding operations have meant an ongoing increase of net assets with non-current assets growing by $123 million representing a 21 per cent increase over the year before.

“With only a 4 per cent increase in total liabilities for 2019 when compared with 2018, we still have a healthy current ratio of 1.7 for 2019,” the report read.

The intention of the company is to have Fontana seen as the “go-to store” and retail destination for pharmaceuticals, home and personal products as the “brand continues to maintain strong equity” based on financial performance.

In keeping with its focus on customer relationships, as well as strong staff relations, the company's recent IPO, according to Chang, sought to offer “top customers a preferential right to buy shares, and ensuring that the very engine that runs our business, our employees, also shared in the benefits through gifts of shares”.

Now you can read the Jamaica Observer ePaper anytime, anywhere. The Jamaica Observer ePaper is available to you at home or at work, and is the same edition as the printed copy available at




1. We welcome reader comments on the top stories of the day. Some comments may be republished on the website or in the newspaper � email addresses will not be published.

2. Please understand that comments are moderated and it is not always possible to publish all that have been submitted. We will, however, try to publish comments that are representative of all received.

3. We ask that comments are civil and free of libellous or hateful material. Also please stick to the topic under discussion.

4. Please do not write in block capitals since this makes your comment hard to read.

5. Please don't use the comments to advertise. However, our advertising department can be more than accommodating if emailed:

6. If readers wish to report offensive comments, suggest a correction or share a story then please email:

7. Lastly, read our Terms and Conditions and Privacy Policy

comments powered by Disqus



Today's Cartoon

Click image to view full size editorial cartoon